B law 2
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School
Humber College *
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Course
342
Subject
Law
Date
Feb 20, 2024
Type
docx
Pages
3
Uploaded by BarristerTitaniumBat25
Facts
Principal Resources Corporation contracts with Quality Construction to build an addition to Principal’s corporate office building.
Quality contracts with Rite Supply Company for materials for the addition
Principal hires Skye, a Certified Public Accountant (CPA) to work in its cost-accounting division as an employee, with no authority to hire or supervise others.
Principal also contracts with Uma, a salesperson, to solicit orders for its products in a designated territory.
Issues Multiple miscommunications have led to a variety of losses. Verity Industries has suffered a loss, because Ulma failed to follow through with submission of the paperwork.
Principle Resources may now be held liable due to the wrong doings and miscommunications of those contracted with the organization.
Quality refuses to pick up the supplies that are dealt from Rite Supply.
Skye has asked Theo, an outside experienced accountant, to help her and advise her on specific accounting practices but does not pay Theo for the service.
Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law. Rules
According to Miller (2021), “Section 1(1) of the Restatement (Third) of Agency defines agency as ‘the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act in his [or her] behalf and subject to his [or her] control, and consent by the other so to act.’ In other words, in a principal-agent relationship, the parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties” (Pg. 569).
A couple key rules behind agency law include:
Legal evidence is required, and a competent principle for a contract of agency.
The agent requires either implied, expressed, or apparent authority in order to represent the principal.
Responsibility of the acts of an agent lie on the principal.
Consideration is not needed when creating an agency contract.
Application/Analysis I do believe Principal Resources and Uma created an agency relationship. Uma is contracted by Principle as a salesperson to solicit orders for their needed products. Uma works as their agent that acted on the supply transaction between Principal Resources and Verity Industry, Inc. I believe that Uma should be held liable under agency law given these circumstances. Uma was hired as the agent that was supposed to handle all business with the third parties on Principals behalf. Uma had failed to do so as she was the one who did not follow through with the paperwork that Principal Resources needed to submit to Verity,
which Principal Resources did not know was needed. Which then caused Verity to suffer a huge loss leading to them claiming that Principal Resources should be held accountable under agency law. Conclusion
In conclusion, Uma and Principal Resources formed an agency relationship. Uma oversaw certain tasks needed to complete company transactions and failed to do as promised. Among all the other facts, Principal Resources also to be held liable under Agency law. Since Principal had contracted out multiple parties, they oversaw making sure everything was in line.
References
Miller, R. L. (2021, February 22). Business Law Today - Standard Edition, Text and Summarized Cases
[Review of Business Law Today - Standard Edition, Text and Summarized Cases
]. Cengage Learning; 13th edition.
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