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Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

Peter Andrus owned an apartment building and has been operating as sole proprietor from its inception. Recently, he has been delegating much of the running of the building to his newly hired administrative assistant. Mr. Andrus has been reading about the concept of agency relationship and is becoming concerned about liability should anything happen during the course of his administrative assistant acting on his behalf. You have been tasked with responding to Mr. Andrus’ questions and concerns as follows:

Explain the requirements for a valid agency relationship. Provide a real-world example of an Agent-Principal relationship you are familiar with and explain why you consider this an agency relationship.
Discuss what is required to ratify an agency contract and what would be the responsibility of the principal.

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