Case Studies on Agency Law

Case Study 1

 Aker worked as a sales agent for Potter for more than twenty years. During this time Aker worked with 200 customers. Aker was fired, which terminated his agency. The customers were not informed of Akers termination.

 Aker must protect himself from potential liability from both Potter and the customers he worked with. “In business, liability results from a breach of duty or obligation by act or failure to act” (Cornell Law School, n.d.). While employed by Potter, Acker acted as a sales agent which meant he was contractually bound to perform certain duties on behalf of Potter as well as, contractually obligated to perform certain duties on behalf of the clients. However, Potter terminated Aker which means he terminated the employment contract that existed between Potter and Aker.

 “Agency law is concerned with any "principal"-"agent" relationship; a relationship in which one person has legal authority to act for another” (Cornell Law School, n.d.). Potter terminated the employment contract they held with Aker, which terminated Aker’s agency with the company. It would be in Aker’s best interest to inform the customers that he is no longer employed by Potter and to keep a copy of his employment contract, as well as, any official paperwork he was provided during his termination. It would also be beneficial for him to retain any records he has pertaining to the duties he performed while working for Potter.

 Aker was terminated by Potter, which means Aker no longer has any input on sales. The termination also means that he is no longer answerable to the customers he previously served. However, ensuring he has detailed records of his employment, termination, and finally the duties he performed could be beneficial in case of a lawsuit. Potter, upon terminating Aker, took on any and all responsibilities for actions or inactions performed by Aker during his time with the company, especially because while employed by Potter, Aker had agency to act on the company’s behalf.

References

• Cornell Law School. (n.d.). Agency. Retrieved from Cornell Law School: Legal Information Institute: https://www.law.cornell.edu/wex/agency
• Cornell Law School. (n.d.). Liability. Retrieved from Cornell Law School: Legal Information Institute: https://www.law.cornell.edu/wex/liability

Case Study 2

 Pete Principal told his employee, Al Agent, to repossess property in the possession of Ted Turner. Al knew this repossession to be an illegal act, but repossessed the property anyway. Agency law, the rights of third parties, as well as, potential criminal issues can all be a potential outcome of this act. Pete, Al, and Ted all have a unique perspective in this case.

 “Agency law is concerned with any "principal"-"agent" relationship; a relationship in which one person has legal authority to act for another” (Cornell Law School, n.d.). Pete gave Al agency as Al is his employee. In addition, one must examine the unequal power variant in this case. Pete is the boss and Al is his employee. Due to the balance of power being unequal, Al has limited movement in regards to following orders from Pete. Al had agency to act on Pete’s behalf, but not in a manner that would contradict the law.

 One can assume that the property held by Turner was either a. up to date with payments, or b. paid off, which led the act of repossession to be an illegal one.  “A modification of or substitution for an assigned contract is effective against an assignee if made in good faith” (Cornell Law School, n.d.). The act of repossessing Turner’s property is illegal, for reasons not supplied by the case study, which means that his rights as a third party have been violated because if Pete changed the contract without Turners knowledge in order to validate the repossession, the law has been broken. Pete is the principal and Al is the agent who has authority to act, given to him by the principal. However, repossessing property when the act of repossession is illegal, leaves both Pete and Al at the mercy of not only a lawsuit, but criminally as well. Turner has as a Constitutional right to his property, which Pete violated when he ordered his employee to illegal repossession the property.

 If a contract existed between Turner and Pete in regards to the property, Pete may also be in breach of contract. So, there could be a lawsuit regarding breach of contract, illegal repossession of goods, and theft (the degree of which would depend on the monetary value of the property). Depending on the prosecutor, Al and Pete could even face conspiracy charges if it is found that both parties knew the repossession was illegal and they chose to continue on with the repossession. The case states that Al knew the act was illegal.

References

• Cornell Law School. (n.d.). Agency. Retrieved from Cornell Law School: Legal Information Institute: https://www.law.cornell.edu/wex/agency
• Cornell Law School. (n.d.). Rights of Third Parties. Retrieved from Cornell Law School: Legal Information Institute: https://www.law.cornell.edu/ucc/9/part_4