Agency Fidcuiary Relationship

In: Other Topics

Submitted By bobgrahams
Words 803
Pages 4
ISSUES Rock star, Herman Phillips, hired retired ABC executive Wilson Bills to “find him work in television.” No written documentation existed of this work relationship, but at meetings with industry people, Phillips said to “work with Bills, he looks after me.” Bills negotiated and signed a six month acting contract with Valley Television Productions on Phillips’s behalf; however, Phillips quit the show two weeks into employment. In a subsequent meeting, Phillips told Bills that he would pay his traveling expenses if Bills could find him another acting gig. The next night in a room at the Bay Hotel, Bills and Phillips were smoking marijuana; Bills’s lit marijuana cigarette caused a fire and burned down the hotel. Phillips was sued by Valley Television Productions for breach of contract and by the Bay Hotel for Bills’s negligence of starting the fire. Bills was also sued by the Valley Productions for breach of contract and filed for unemployment compensation after Phillips terminated their business relationship.
RULES
A fiduciary relationship results when one person (the principal) manifests her consent that another person (the agent) will act on her behalf and subject to her control, and the agent manifests his consent to so act. An agency by agreement relationship is based on an express or implied agreement that the agent will act for the principal. As per the Equal Dignity Rule, if a contract being executed by an agent on the principal’s behalf is written, most states require that the agent’s authority must also be evidenced by writing; otherwise, the contract executed by the agent is voidable at the principal’s option. However, a principal’s express or implied affirmation of a previously unauthorized contract made by, or other act of, a purported agent will result in ratification by the principal. Express or implied affirmation entails:…...

Similar Documents

Agency Theory

...AGENCY THEORY The agency theory concept was initially developed by Berle and Means (1932), who argued that due to a continuous dilution of equity ownership of large corporations, ownership and control become more and more separated. This situation gives professional managers an opportunity to pursue their own interest instead of that of shareholders.. In ‘theory’, shareholders are the only owners of a company, and the task of its directors is merely to ensure that shareholders’ interests are maximised. More specifically, “The ‘duty’ of directors is to run the company in a way which maximises the long term return to the shareholders, and thus maximises the company’s profit and cash flow. However, Jensen and Meckling (1976) observed that mangers do not always run the firm they work for to maximise shareholders’ wealth. From this observation, they developed their agency theory, which took into account the principal-agent relationship as a key determinant in determining firm performance. According to their definition, “An agency relationship is a contract under which one or more persons (the principal[s]) engage another person (the agent) to perform some service on their behalf which involves delegating some decision-making authority to the agent . The problem is that the interest of the principal and the agent are never exactly the same, and thus the agent, who is the decision-making part, tends always to pursue his own interests instead of those of the principal. It means......

Words: 727 - Pages: 3

Agency

...Agency Costs (Fama and Jensen 1983) Contracting problem or principal/agent problem. Agent is person tasked to do something on behalf of the principal. Jensen and Meckling (1976) Definition: “ We define an agency relationship as a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf, this involves delegating some decision making authority to the agent”. Examples: Patient – Doctor (delegate authority to doctor to choose medication), Client – Lawyer, Client – Taxi Driver. CEO and management team are agents of the stock holders with aim to raise stock price as high as possible. Why hire agents? * To access their skills or expertise(main reason) * To free up time for other things (Opportunity Cost), Eg. Tiger Woods does not cut his own grass at home, he knows his grass. * To fulfil a legal requirement – eg. External Auditor, Priest for marriage. * To send a signal– eg. Hire best law firm or investment bank in a takeover situation, not necessarily because you need them but because it will intimidate the other side. Eg. Goldman Sachs is our banker. Signalling to market place The basic Problem Agents are utility maximisers concerned mainly with their own happiness. Ie. They do not behave exactly as principal wishes they would. “If both parties to the relationship are utility maximisers, there is a good reason to believe that the agent will not always......

Words: 815 - Pages: 4

Agency Problem

...Agency Problems and Dividend Policies Around the World Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny* January 1999 Abstract This paper outlines and tests two agency models of dividends. According to the “outcome” model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the “substitute” model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross-section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends. The authors are from Harvard University, Harvard University, Harvard University and University of Chicago, respectively. They are grateful to Alexander Aganin for excellent research assistance, and to Lucian Bebchuk, Mihir Desai, Edward Glaeser, Denis Gromb, Oliver Hart, James Hines, Kose John, James Poterba, Roberta Romano, Raghu Rajan, Lemma Senbet, René Stulz, Daniel Wolfenzohn, Luigi Zingales, and two anonymous referees for helpful comments. 2 The so-called dividend puzzle (Black 1976) has preoccupied the attention of financial economists at least since Modigliani and Miller’s (1958, 1961) seminal......

Words: 11836 - Pages: 48

Agencies

...Agencies 1 World Wide Regulatory Agencies Amy Lynn Wooldridge HCA375: Continuous Quality Monitoring & Accreditation Instructor: Heather Ables December 4, 2011 Agencies 2 “Clinical Contract Research Organizations (CROs) provide a range of services from consulting to labor- intensive tasks such as data processing”. (Kaluzny & McLaughlin, 2006, p.318) The majority of CRO growth is accounted for by pharmaceutical & biotechnology industries. The contract research organization is contracted by a sponsor or client to perform several functions and duties related to clinical trials. (Kaluzny & McLaughlin, 2006, p. 319) The clinical trials are designed to obtain regulatory approval to market new pharmaceutical or biotechnology products. (Kaluzny & McLaughlin, 2006, p. 319) The services they perform for such clients as pharmaceutical companies include: “consulting and advice related to the design of drug development programs to labor-intensive services that are part of the drug development process; these include clinical monitoring of investigational sites, data management and statistical analysis, and presentations of regulatory submissions for review by regulatory agencies such as the U.S. Food and Drug Administration”. (Kaluzny & McLaughlin, 2006, p. 319) The FDA in the United States clearly mandate practices to protect the public’s health by implementing laws, regulations, and guidelines that provide oversight of the drug......

Words: 611 - Pages: 3

Nature of Agency

...The Nature of Agency Issues Clint Middleton LAW/531 June 10, 2013 Thane J. Messinger, MBA, JD, ALM Abstract This paper will present an analysis of the issues contained in the Nature of Agency video. Quick Takes Video is the defendant in a lawsuit brought on by Non-Linear Pro for breach of contract. Quick Takes Video agreed to a three-month trial of Non-Linear Pro’s editing system that did not meet the expectations of the Quick Takes team or management and did not work how the salesman described it. Hal, the owner of Quick Takes Video returned the system after only one month as it did not perform as guaranteed and therefore did not meet the terms of the lease. Agency “The Restatement (Second) of Agency defines agency as a fiduciary relationship ‘which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act’” (Cheeseman, p. 459, 2010). The common law theory of one person acting on the behalf of another is represented by the Latin phrase qui facit per alium, facit per se, translated as the one who acts through another, acts in his or her own interests. Contract agency can have multiple players, including the primary, or the person with authority relating to the contract, and agents. Agency can be implied or express. Implied agents draw their powers through implied means. This is usually a power provided through position. This......

Words: 1331 - Pages: 6

Agency Law

...Chapter 10: Agency * What is an agent? * The primary function of an agent is to make contracts on behalf of the principal  If the party wishes to sue, they must sue the principal and not the agent: International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) * Indicators of an agency relationship: * Does the 'agent' keep the profits it makes or does it have to pay them across to the principal? * Is the ‘agent’ paid a commission? o Does the ‘agent’ have an obligation to account to the principal for sales? * Potter v Customs and Excise Commissioners [1985] Functions of an agent: * Most common function: to bring about a contractual relationship between the principal and a third party * A person who has no authority to make contracts on behalf of his/her principal may be an agent if he/she has authority to: o receive money on behalf of principal o pay money on behalf of principal * make representations for which principal is responsible o receive representations on behalf of principal o Petersen v Moloney (1951) 25 ALJR 566 (High Court) Common commercial relationships in agency: * Employer/Employee: not all employees are agents because not all employees have the authority to affect their employer’s legal position with respect to 3rd parties. * Independent contractor: may be an agent with wide authority, limited authority or not an agent at all: Perpetual......

Words: 1486 - Pages: 6

Agency

...|Agency Name :  | |PLACEWELL INTERNATIONAL SERVICES CORP. | |POEA License No. : | |POEA-430-LB-022604-R | |Address : | |2nd Floor Suite 214, 217, 220 Aurora Plaza Bldg. Arquiza St. Cor. J. Bocobo St. Ermita Manila Metro Manila | |Tel. No. : | |(632) 5215067; 5264838; 5215067 | |Website : | |http://www.placewellinternational.com (abrasive blaster and painter) (Australia) | | ...

Words: 409 - Pages: 2

Contract of Agency

...CONTRACT OF AGENCY The general law of contracts is embodied in the Contract Act, 1872. The law of agency being a branch of the law of contracts, the same is incorporated in the said Act by giving it a full chapter on the subject. Thus sections 182 to 238 of the Contract Act, 1872 deal with the subject of Agency. Special enactments are also there and where a provision of a special Act is in conflict with the provision of the general Act, the former shall prevail unless the special law itself states otherwise. The wisdom behind this principle is to maintain consistency in law and to oust any ambiguity or confusion concerning any subject. PARTIES TO THE CONTRACT OF AGENCY AGENT AND PRINCIPAL: AGENT: Agent is an individual or firm authorized to act on behalf of another (called the principal), such as by executing a transaction or selling and servicing an insurance policy. The agent does not assume any financial risk in the transaction. The function of the agent is to act on behalf of his principal in bringing about a contract between his principal and a third party. The relationship between principal and agent can arise in many ways, by contract under seal or in writing or verbal, by contract implied from the conduct or situation of the parties and by ratification. An agent such as a director has a lot of duties for the company. He must act in good faith in the interests of the company. As well, he has duty to avoid actual and potential conflicts of interest. If the......

Words: 7591 - Pages: 31

Agency Relationship

...The agency relationship in this problem is important to distinguish the principal-agent relationship from that of employer-employee or employer–independent contractor. Principal can be held liable by Rite Supply, Theo, and Verity Industries depends on the relationship created by Principal in its contracts with Quality Construction, Skye, and Uma. The relationship might be one of principal-agents, the parties agree that the agent will act on behalf of the principal, and any proper contracts made by an agent with a third person are binding on the principal. Contracts made with third parties by employees or independent contractors who are not also agents are not binding and are not enforceable against the employer. Quality Construction is employed as an independent contractor. It is neither an agent for Principal nor an employee because Quality Construction has no authority to make contracts on behalf of Principal, so Quality is not an agent. Also, Principal has no control over the details of Quality’s conduct, so Quality is not an employee. Therefore, only Quality, not Principal, can be liable to Rite Supply for nonperformance of contract. Skye was hired strictly as an employee and has no authority to contract with third persons because Skye has no authorization to hire a consultant on Principal’s behalf. However, Theo must look to Skye, not to Principal, for payment for services. Uma is both an employee and an agent she was hired specifically to solicit orders for Principal’s......

Words: 408 - Pages: 2

Migrating to a Regiment Customer Relationship Management System in a Cloud Computing Atmosphere at Acme Travel Agency

...Abstract: Acme is a travel agency, which specializes in selling cruise holidays. Although the organization started out as a bricks and mortar business, today 60% of the business is obtained online, and with 40% of the trade coming through the traditional routes. The organization has been highly successful, and business is growing, but the company is facing some challenges. Although service levels are high, increasing levels of competition have impacted on the organization, and the repeat purchase rate was reduced from 50% to 19%. Furthermore, the cost of new customer acquisition has increased significantly, to $78 per customer. The organization wishes to increase repeat sales in order to support better profit levels, and reduce the challenges and costs associated with new customer acquisition. The implementation of a customer relationship management program (CRM) has been advocated as a way of covering, analyzing, and facilitating utilizing of information about customers to improve the customer relationships, and marketing knowledge. The expected duration of implementation is approximately four months; and if it is able to increase repeat purchases by only 10%, it would increase the revenues for the company in excess of $4 million in the first year. Brief Company Background; Acme is a local travel agency firm. Established in 1978, the firm started out selling only through the shop, attracting new customers with the use of local advertising, including......

Words: 5025 - Pages: 21

Agency Relationships Paper

...Agency Relationships LAW/575 February 23, 2015 Shannon Allen Agency Relationships The relationship established between two parties for lawful purposes, in which one party, named the principal, requests the other party or agent to represent him is called Agency. Agency relationships create fiduciary duties between the principal and the agent (Kubasek et al., 2012). In this paper, Team B will discuss the different types of Agency and the legal consideration surrounding each of them. Expressed Agency Expressed Agency is known as an agency by agreement; this agreement can be oral or written. Expressed agency is an agency that is commonly used. This particular agency gives the agent ability to contract on behalf of the principal. Power of attorney is a prime example of expressed agency. “A power of attorney establishes an agency by agreement that gives an agent authority to sign legal documents on behalf of the principal” (Kubasek et al., 2012, p.729). There is another form of power of attorney which is durable power of attorney. Durable power of attorney allows the principal to take all decisions until he/she becomes incapacitated and then the agent will step in and act on behalf of the principal. Legal considerations. Expressed agency must have either an oral or written agreement. If there is neither then there is no expressed agency. When it comes to power of attorney “an agency relation exists only if there has been a manifestation by the principal to......

Words: 751 - Pages: 4

Agency Theory

...Agency  Theory     Extract from "Pierre Vernimmen, Corporate Finance: Theory & Practice" John Wiley & Sons. (p 639-641, 992) Agency problems occur in a company when ownership is separated from management. Managers may be tempted to achieve their own objectives instead of the financial objective. We explore these problems in the discussion which follows. Agency theory says that a company is not a single, unified entity. It calls into question the claim that all of the stakeholders in the company (shareholders, managers and creditors) have a single goal – value creation. Agency theory shows how, on the contrary, their interests may differ and some decisions (related to borrowing, for example) or how products (stock options) come out of attempts to achieve convergence between the interests of managers and shareholders to protect creditors. It analyses the consequences of certain financial decisions in terms of risk, profitability and, more generally, the interests of the various parties. Agency theory is the intellectual basis of corporate governance. Agency theory says that a company is not a single, unified entity. It considers a company to be a legal arrangement that is the culmination of a complex process in which the conflicting objectives of individuals, some of whom may represent other organisations, are resolved by means of a set of contractual relationships. On this basis, a company’s behaviour can be compared to that of a market,......

Words: 1102 - Pages: 5

Agency

...Question 1. The first agency risk exists between the food suppliers and the Aegean Isles, Inc. One major reason contributing to Aegean Isles’s success is the high-quality and authentic Greek food, which depends on the quality of the perishable raw material and other non-perishable products served in the restaurant. Once the raw material is not fresh or other products are not high-quality, food served at the restaurants will not taste as good as before and this will definitely harm the restaurants’ reputation. If the new restaurant operates as a company-owned branch, the purchasing unit will be responsible for all the non-perishable inventories and perishable inventories needed. The restaurant managers only have a little authority. Therefore, Aegean Isles can execute better quality control on the products. Also, as Aegean Isles will choose reliable suppliers for long-term cooperation, the likelihood of this agency risk is not that high. However, Aegean Isles has constant suppliers. If one of these suppliers provides stale vegetables or fruits, all the five restaurants controlled by Aegean Isles will be effected negatively. The magnitude of this agency risk is quite high. If the new restaurant operates as a franchise, the franchise will be free to purchase such food as fresh products, domestic beer and wine from a local economy. The franchise may choose second-class products for economic reasons. Aegean Isles can not take much control on the quality of the products. The......

Words: 511 - Pages: 3

Intelligence Agencies

...Why state Intelligence agencies engage in international intelligence liaison?  9/11 terrorist attacks, 7/7 terrorist attacks, Paris attacks are the implementer of what is called international intelligence liaison. These major terrorist attacks have put intelligence agencies in a place where they need liaison to face the problem. 21st century is witnessing the increase in globalization of intelligence. The phenomenon of international intelligence liaison is central to this process, it is an area where intelligence and international relations come in to connect. This article highlights the key themes that are currently developing within international intelligence liaison relationships. International intelligence liaison which may be defined as the the process of communication or cooperation which facilitates a close working relationship between intelligence organizations and law enforcing agencies of many states and countries. Intelligence agencies act as frontline of homeland defense and security. Right now, no any single state or country is facing the challenge of terrorism. These days international intelligence liaison is occupying space in academic research, political discourses and in state matters. As Adam Svendsen says: ‘Liaison today represents the most significant dimension of intelligence.’ It is high time for world to recognize and realize that existentialist issues such as, pandemics, overpopulation, climate change and now terrorism, are of global level. Therefore...

Words: 4006 - Pages: 17

Questions on Agency

...AGENCY RELATIONSHIPS ( Agency: A fiduciary relationship that results when one person (the principal) manifests her consent that another person (the agent) will act on her behalf and subject to her control, and the agent manifests his consent to so act. ( Fiduciary: A person who undertakes to act on behalf of and primarily for the benefit of another. ( Fiduciary Duty: A duty arising from the trust and confidence placed in a fiduciary by those on whose behalf and for whose benefit she acts. EMPLOYER-EMPLOYEE RELATIONSHIPS ( Employee: A person (1) who works for, and receives payment from, an employer, (2) whose working conditions and methods are controlled by the employer, and (3) for whose acts and omissions occurring in the scope of employment the employer is liable. ( Independent Contractor: A person (1) who works for, and receives payment from, an employer, (2) but whose working conditions and methods are not controlled by the employer, and (3) for whose acts and omissions the employer is not liable. DETERMINING EMPLOYEE STATUS ( To determine whether a worker is an employee or an independent contractor, courts consider the following: (1) how much direction and control the employer exercises over the details of the person’s work, (2) whether the person is engaged in an occupation or business distinct from that of the employer, (3) whether the work the person......

Words: 2107 - Pages: 9

Lieqi (25) | The Guardian APK Modded | Bailey Knox: Fucked The DJ Video