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Agency Law
Updated 1/4/2024 PG
Your business, Best Bike Co., is running, and the bikes are rolling off the shelves (or racks?). The good news is it is a huge success. The bad news is you are working long hours to help customers, order merchandise, reconcile the books, advertise and clean the store. You have not seen friends or family in weeks— you cannot keep doing this alone. What do you do?
Hiring employees or adding business partners creates several issues. Can they buy supplies or enter contracts in your name? If so, how do you stop them from giving away the store? If they injure a customer, are you liable? What if they do so intentionally?
In this lesson we will learn the principles governing when someone else's acts are attributable to you. Someone authorized to act on your behalf is your agent. The principles governing this authority and representation are called agency. These rules are derived from common law, so for our study we will use the Restatement of Agency (Third).
More specifically, this lesson will cover (1) how to form an agency relationship; (2) what rights and duties are associated with an agency relationship; (3) how to determine liability under an agency relationship; and (4) how to terminate an agency relationship.
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