Agency Law and Contract Information - Essay Example

Potter fired Aker in 2008; the reason behind this was not mentioned. Like for example in the case of a sales manager, the head department has given the sales manager the authority to sell the products of the company, but then eventually the head department has decided to put an end to the authority that was previously given without giving information to the customers. In this scenario, the sales manager still has apparent authority, since the basis of apparent authority is the consumer’s assumption of who has the authority and not the current relationship status of a principal and an agent (Rasmusen, 2004, p. 5).

Aker has served a total of 200 clients that is from the start-up to his final day at Potter's agency. The agency was then abolished in the same year of Aker's termination. Since the 200 clients to whom Aker has rendered his services do not have an idea that he and the agency no longer exist, Potter is now burdened with the responsibility to handle future complaints, but that will only happen if Aker continues to do business with the 200 clients despite the fact that he is no longer connected with the agency. Potter stopped from creating any arguments towards any agreements or transactions made by Aker, not unless Potter will inform the clients that Aker no longer has the authority to act on behalf of the agency and that the agency has already been terminated.

The clients (third party) are only allowed to ask Potter (the principal) to compensate for the losses if it was a result of Potter's negligence to inform them of Aker's (agent) termination. It does not make the agreement in a contract null and void as it only refers to the principal’s responsibility to pay for the damages, but the clients may only claim for damages if there is ratification or when the principal affirms to an agreement that is entered into by one who no longer has the authority to do it, as in the case of Aker (Rasmusen, 2004, p. 22-25).

Case Study 2

Pete Principal instructs Al Agent, his employee, to repossess some property owned by Ted Turner. Al knows that the repossession is illegal but performs it anyway. Please prepare a written discussion on all aspects of the potential liability in this case. Consider in your answer Agency Law and the right of third parties. Also, demonstrate your understanding of the relationship between the principal and the agent and the authority conferred upon the agent by the principal.

Pete, who is the principal, ordered Al the agent to perform an illegal repossession of the property owned by Ted Turner, the third party. Although the repossession was against the law, Al did not bother to complain about it since it was the instruction of his principal. It is absolutely clear in this situation that something wrong has been committed and that would refer to the illegal repossession of a property. It gives the third person the right to file for a criminal case against the principal and the agent because his rights as the owner of the property were violated. It is obvious that both the principal and the agent are liable for the commission of this unlawful act.

Pete being the principal is responsible for all the actions done by Al on behalf of Pete’s agency simply because he has given him the consent or the actual authority to do those things, whether it is in accordance with the law or not, while Al, on the other hand, who knows that the act was illegal still pursued with the repossession not minding its consequences. It is stated under the Law of Agency, that agency binds A the principal and B the agent into a relationship that has been established right after A has given to B the permission or authority to act on his behalf and that B is bound to follow the rules that are set by A before acting in behalf of A's agency (Rasmusen, 2004, p. 4). Yes, it is true that an agent has the obligation to follow the commands of his principal, but in this case, seeing that the act has violated the rule of law then it is a must to let both of them suffer the consequences of their actions.