Legal IssuesEssay Preview: Legal IssuesReport this essayRunning head: LEGAL ISSUE FINALLegal Issues; Final Research Team B PaperUniversity of PhoenixBUS415 Business Law3-16-08Table of ContentsIntroductionAgency LawA. Agency RelationshipsB. Agent Business DutiesC. Agreement TerminationD. LiabilityE. Employment RelationshipBusiness EntitiesA. Entity OptionsB. Sole ProprietorshipC. General PartnershipD. Limited PartnerE. “C” CorporationF. “S” CorporationG. Limited LiabilityE-BusinessA. Electronic BusinessB. Supply ChainC. B2B Supply ChainConclusionIn the current global way of doing business today, companies starting out must understand the choices they have such as duties and liabilities involved in Agency Law, the business entity they choose. In today’s market, the company must embrace the Internet using e-business. Agency Law is the relation between agents, principal, and third parties and is an important aspect of conducting business to ensure success. An assigned person acting as an agent should be aware of the potential to create third party liability for which they may be responsible. If an agent breaches his duties, it can result in liability to the principal. The business entity chosen by a company plays a big role in maintaining a strong business. There are several business entities that will be discussed in this paper along with the tax liabilities involved in the different types. In addition, Team B will discuss the electronic business and the value chain, or supply chain. The business-to-business supply chain will be discussed showing the advantages of dealing with higher volumes for business transactions, as compared to the business-to-consumers marketing strategy.
Agency LawAgency RelationshipsWhen forming an agency relationship there will be an appointed person called the agent whom will act for the benefit of, and under the direction of, another (the principal). Business agency relationships typically develop through an agreed contract by two parties and occur in varying styles. Agency law focuses on the relationships between principals, agents and third parties. Agents work with these parties on behalf of the principals. Agency law has developed over the years and primarily derives from common law (Cheeseman, 2004).
Creation, duties, termination, and liabilities are the four unique sections of agency law in business. Creation of agency relationships in business is formed through a contractual agreement between the principal and agent, and typically results in agent compensation. Some business agency relationships are formed even when both parties do not intend on creating an agency relationship. For example, if a franchise’s advertising and marketing is controlled from the parent company to a point where the franchise’s sales are affected then an agency relationship exists between the franchise (agent) and the parent company (principal), even when the relationship is not expressed.
Agent Business DutiesBusiness duties of an agent to the principal typically derive from a written or oral contract or common law. The business agency relationships consist of five basic common law duties: duty of loyalty, duty to obey instructions, duty to exercise care and skills, duty to communicate information, and duty to account for funds and property (Cheeseman). Of the five common law duties, the most important common law duty an agent owes the principal is the fiduciary duty of loyalty. The duty of loyalty ensures that the agent is trustworthy and is always acting in the best interest of the principal. The other four duties are equally as important to the relationship between principal and agent, and build upon the importance of loyalty.
Agreement TerminationBusiness agency agreements typically have specific language surrounding when or how the agency is to end the relationship. Some terminations are based on a specific period such as a one-year contract between a company (principal) and a vendor (agent). Other terminations are written to expire once a project is completed. When a business contract does not specify an expiration time, the agency automatically ends when the results that the agency was created for has been reached. Agency at-will terminations can occur at any time between the two parties. Business relationships between employers (principal) and employees (agent) are eligible for at-will termination. At-will terminations are governed and cannot be based on race, color, sex, religion, national origin, or age. Most international business agencies do not participate in at-will terminations, and require reasonable notice and some sort of severance pay for terminating the relationship.
LiabilityThe liability of the agency extends past the principal and agent involved in business relationships. For example, an agent may involve a third person whom may become affected by the decisions of the agent, and is acting on behalf of the principal. Misrepresentations, actions of subagents, and agent’s knowledge and skillfulness are areas where agency liability can affect a business relationship. Actual authority may be expressed or implied, in which true authority is granted, by the principal to the agent. Expressed authority occurs when the principal specifically discloses the extent of the agent’s power. An administrative assistant may express authority to approve certain invoices on behalf of the actual principal or agent. A more generalized authority is applied authority, which allows the agent the authority to do whatever is reasonably necessary.
The liability of the agency extends past the principal and agent involved in business relationships. For example, an agent may involve a third person whom may become affected by the decisions of the agent, and is acting on behalf of the principal. Misrepresentations, actions of subagents, and agent’s knowledge and skillfulness are areas where agency liability can affect a business relationship. Actual authority may be expressed or implied, in which true authority is granted, by the principal to the agent. Expressed authority occurs when the principal specifically discloses the extent of the agent’s power. An administrative assistant may express authority to approve certain invoices on behalf of the actual principal or agent. A more generalized authority is applied authority, which allows the agent the authority to do whatever is reasonably necessary.
The liability of the agency extends past the principal and agent involved
The liability of the agency extends far beyond the principal and agency on whom these other agencies are subject to liability. For example, the act of signing an agreement for an award or payment of a fee means that the principal acts as agent. The only exception is the act of making an agreement for payment for the benefit of the agency to reimburse itself for all expenses associated with such an award-acceptance. Agency liability includes the following:
Misrepresenting the extent of the agency’s personal power (often known as “actual authority”),
Sufficient knowledge of the legal obligations associated with making an agreement,
Sensoring, or withholding, from the agent, the knowledge and skill required to assure the agent of reasonable safety,
Assisting and subrogating others in the production of the agreement, by reason of performance and with the goal of improving the agency’s performance, or
Suing any alleged third party, in accordance with the contract and at the expense of the agent.
When an agency imposes liability on an individual or organization, its liability may extend not longer than the principal’s obligation under the applicable statutes. An agency may not impose liability on an individual or organization because of a non-compliance with an official regulation or a breach of the laws, rules, or regulations. For example, if a federal agency imposes liability on a individual pursuant to the Internal Revenue Code of 1986, if the individual was at that time a Federal employee or an individual who is already employed as a Federal employee, or a member of that employee’s legal team when the individual became a Federal employee, then, for purposes of applying the statutes, the liability is imposed only if the individual had been terminated by the agency before the individual became required to file such a notice of terminated employment.
When an agency imposes liability on an individual or organization, its liability may extend only if the agency’s judgment calls for some other action by the agency that will result in an actual or potential harm to the agency or its employees or agents. In the event of actual or potential harm to the agency, an agency agency can seek remedies reasonably authorized by law, such as through a court order, which would be different in this case because a court order would require that an individual be informed that he or she will lose his or her right under the constitution to sue for damages.
Employment