Principal-agent Agreement and Tort Warranty Theories - Assignment Example

Principal-agent Agreement and Tort Warranty Theories Introduction The relationship of confidence and trust taken by the agent is called the fiduciary relationship whereby the agent has a duty of trust and loyalty to the client and at the same time has a performance duty according to the terms of the employment contract. According to Goldman & Sigismond (2014), the principal has some responsibilities towards the agent and each of them has pre-established responsibilities towards the third parties. Rights and Responsibilities of agents to their Principals Fiduciary functions requires that the agent acts in the best interest of the principal. On the other hand, agents fulfil duties set forth in the agreements, follow and keep lawful instructions of the principal, inform the principal of the developments, and keep in contracts to the principal. The law implies certain responsibilities to the principal. Performance Agents cannot avoid their duties and responsibilities that they have been assigned to by the principal by delegating or assigning to the other party. The relationship is highly personal by nature, and therefore non-delegable in that it cannot be performed by any other than the agent selected. Obedience An agent is supposed to obey all the lawful and reasonable instructions assigned to him by the principal in the performance of the agency. If losses occur to the principal due to an act committed by the agent acting more than its authority, the agent shall remain liable to those losses. Loyalty In the relationship, the urgent is appointed by the principal, and is working for the principal. Therefore agents must remain diligent, faithful, and loyal to their employers, and act in an ethical manner, and in the most professional way putting forth their best interests and efforts towards achieving their principal objectives. Care and skill The agent must act with reasonable care and poses the skills required to perform such duties. Agents must have reasonable judgments in rendering the service and in advertisements. Agents hold themselves to the public as possessing skills and certain abilities and that have a duty to perform with full competence. In addition, agents cannot escape responsibility due to lack of ability, negligence or pleading ignorance , and therefore they should keep informed of legal developments, economic, and social developments in their fields of expertise Rights and Responsibilities of principal to Agents Principals have several duties to the agents in their relationships such as fulfilling the obligations set forth in the agreements, paying the agents like indemnify the agents for liabilities incurred in carrying out the agency duties and for reasonable expenses. Principal may be relieved of the obligation if agents breach the agency agreement or act in illegal manner. Duty to perform Principal must abide by the terms of contract and has a duty of fair dealing, and of good faith to the agent. If the principal breaks the contract wrongly, then the urgency is terminated and principal shall remain liable to the damages made to the agent. Indemnity for loss Principal is responsible for creating restitution to the agent who losses, without fault, injury, or sustain damages as a result of the relationship. Reimburse expenses When agents in the act of performing their duties to the principal incur some costs or expenses, the principal has duty to reimburse the agents for all the costs and expenses incurred. Services compensation If the agent does the work as was agreed, the principal has the duty to pay the commission amount as was agreed. The principal must pay the agent current market rate for the services in locality if no amount of compensation was agreed upon or stated. In some cases the agents may not be compensated if broker represents others with the interest adverse to the principal without consent and knowledge of the principal, Creation of agency Agency is created when a person called agent is authorised by another person called the principal to act on the principals’ behalf, and is empowered to perform a duty the principal could lawfully do in person. The principal therefore assumes all the liabilities and responsibilities of the agent’s acts in altering legal relationships with third parties on principals’ behalf. In doing so an agency is formed thus brings the law of agency, which describes certain liabilities and responsibilities to the agent and principal. Termination of agency Agency may be terminated on the following bases: i. By the principal effecting the termination immediately when an event of default occurs ii. By either the parties, that’s the principal or the agent without cause upon giving to the other party a notice note less than one month in writing to the termination effect. Tort theories of product liability Manufacturers and sellers face numerous greater damage recoveries and liability for defects in their products. Therefore, a product liability may be brought under the following three theories. Negligence The manufacturer or the seller breached a duty to the plaintiff through failing to eliminate foreseeable of human in the product. Such suits shall automatically claim one or more of the following: (1) improper inspection (2) negligently defective design (3) negligent manufacturer of the goods (including improper packaging and materials) and, (4) negligent failure to provide proper warnings of defects or hazards. Strict liability Its relatively recent developments of the tort law theories. Its where by not requiring plaintiffs to prove a breach of duty, strict liability makes it easier for plaintiff to recover, and therefore sellers are therefore supposed to pass on the costs of the liabilities through charging higher prices. It stimulates the manufacturers to design and make safer products. It’s therefore a liability without fault for an injury proximity caused by product that is not reasonably safe and defective. The injured need proves that: (1) the product was defective, and (2) the defectiveness was the cause of the injury. Breach of warranty The law assumes that a seller or manufacturer always provide some kinds of warranty, promise, claim or representation made about the type, performance, number, and quality of a product, and he should be required to meet the obligations created by the warranty. If the seller do not meet the obligation, he faces the law according to the contract agreement. Warranty theories of product liability Warranty claim is a potential tool that must be considered when recovering damages caused by defects in products. It provides the basis for recovery of damages in situations where the strict product liability claim cannot be asserted. Express warranty Its created through: (1) spoken words during written or negotiations into a sales contract (2) silence in situations where not saying something poses the effect of making a mistaken impression of the quality of goods sold, and (3)through an affirmation of facts made by the manufacturer or seller to the buyer. Implied warranty An implied warranty presume to exist unless the manufacturer or the buyer unambiguously or clearly disclaims it in writing as one or part of the sales agreement. There are two types of implied warranty: (1) implied warranty of fitness for a particular purpose which imposes same requirements where the seller has a reason to know or knows the reason why goods are required, and (2) implied warranty of merchantability which is a minimum requirements warranty, for example goods that will pass without objection in the trade. Common law warranties These are laws that are created by the judiciary. An example of a common law warranty is the implied warranty of habitability (Twomey, Jennings, Fox & Anderson, 2008). The common law warranties are never created by express language in a contract or by the legislature. Conclusion In most cases courts apply the theories of product liabilities interchangeably. However, the elements plaintiff must prove, and the available defences’ dividends paid. Additionally, the warranties must be memorised in writing to bring familiarity within the public and be able to properly allocate liability among the various defendants. References Twomey, D. P., Jennings, M., Fox, I., & Anderson, R. A. (2008). Anderson's business law and the legal environment: Standard volume. Mason, Ohio: Thomson/South-Western. Goldman, A. J., & Sigismond, W. D. (2014). Business law: Principles and practices. Read More