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The Relationship Between Principals and Agents in Business


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The Relationship between Principals and Agents in Business
BUS311: Business Law I (BNJ1151A)
Prof. Samantha Hodapp
January 30, 2012
The Relationship between Principals and Agents in Business The relationship between a prinicipal and agent in business can and have been great; benefitting both parties involved while providing the best services or products to the consumer. Many businesses, or prinicipals, use an agent, such as an employee or sales representative, to represent the business when dealing with third-parties, also know as the consumer or client. For the sake of this writing this relationship will be based on the principal (A.O.I.), special agent(s) (sales representatives) and third-parties (clients). A special agent is a person delegated to act only in a particular transaction, under definite instructions, and with specific limits on the scope of his or her authority. (Liuzzo, 2009, pg. 259) An example in this case would be a sales representative who has authority to negotiate the price of a sale to a limit predetermined by the principal. Another example of prinicipal and agent relationships is GNC who argued that the conduct of McCreadies was sufficient to represent they had authority to enter a binding agreement on behalf of O2. McCreadies was hired by O2 to negotiate the terms of the contract and GPN argued that agents are commonly used to negotiate and enter into contracts and that O2 had at no time informed them of any restrictions of McCreadies’ authority. (Geoff, 2005) . When I went into business in the early 1990s there were not a lot of companies offering web design or internet advertising and I seized the opprotunity to be the first person to offer the service in my hometown and state. Before opening my first office I researched every aspect, or so I thought, of the best avenues to take for tax puposes and liability. I chose to

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