BUSINESS
LAW
What is agency law?
 Legal relationship where one party has legal
permission to act for another party
 Two primary parties are “agent” and “principal”
 Agency – person who acts on behalf of another
 Principal –person who gives authority for another to act
on their behalf
Types of Agency
 Special Agents
 Very limited authority, can only conduct actions for one specific
purpose directly stated in agent-principal agreement
 General Agents
 More authority than special agents, but less authority than
universal agents
 Authority to conduct ordinary business
 Universal Agents
 Unlimited authority, can conduct almost all business for the
principal (rare occurrence)
 Usually appointed by the power of attorney
Agent Type Examples
 Special Agent
 A real estate agent who normally sells houses, is
appointed to sell furniture within a house but not the
actual house
 General Agent
 Traveling salesman, who has authority to conduct normal
business transactions on behalf of a business
 Universal Agent
 While principal is traveling overseas, agent can have
authority to sell/manage property
Types of Principals
 Disclosed
 Agent acts on behalf of principal and person that the
agent is conducting business with knows the agent is
acting for another and knows who the agent is acting for
 Partially Disclosed
 Agent acts on behalf of the principal but never informs
others of the identity of the principal
 Undisclosed
 Agents acts on behalf of the principal but never
acknowledges the fact that they are acting for another or
the identity of whom thy are acting for
Duties an Agent Owes to
Principal
 Act of behalf of principal
 Act with care and diligence
 Avoid conflict between personal interests
 Act ethically with third party connection
 Act only within their authority
 Act reasonable and avoid any conduct likely to damage
principal & their enterprise
Duties Principal Owes to an
Agent
 Pay agent as agreed upon
 Protect agent against claims, liabilities, and expenses
incurred by agent requests
Liability to 3rd Parties
 Agent may be liable to third parties if they misrepresent
their authority
 Principals are liable to third parties for:
 Contracts made by the agent
 Contractual nonperformance
Power of Attorney
 Legal document that you, the principal, create to give
another person, the agent, the legal authority to act for
you
 Often used to for handling finances, medical decisions,
parental rights
 Power of Attorney may not represent you in court or
change/create certain documents such as your will
Employer Hiring
Responsibilities
 Employers are required to verify a new hires identity
and also verify their eligibility to work
 To verify a I-9 for is completed an kept on file by the
employer
 The I-9 is an employment eligibility verification form
 Employers are responsible to ensure that I-9 form is
filled out completely and in a timely manner for all new
hires
 I-9 Form: http://www.uscis.gov/files/form/i-9.pdf
National Labor
Relations Board
 Agency with the purpose of protecting employees’
rights to organize and have unions to bargain with
employers
 Prevents unfair labor practices and tries to solves any
unfair labor practice that occurs
Employee Contract Clauses
 Non-competition clause
 Agreement between employer and new employee when employee


begins to work for employer
Takes effect after the employer/employee relationship has ended
Employee cannot be involved within industry after they leave company
and employee often gains something in return
Possible purpose of protecting trade secrets
Often does not hold up in court as it limits employees earning potential
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 Confidentiality Agreement
 Protects valuable information that businesses do not want other
companies/people to know of
 Common uses are for sales plan, customer lists, formulas for products,
design of products (common for manufacturing, and high-tech field)
 Gives company legal grounds to pursue lawsuit if agreement is broken