Business Law Sample: Termination of Agency

In this case about 200 customers of Potter’s business were not notified of the termination of the agency and Aker who had been a sales agent for Potter for twenty years was also fired along with the termination of the company.

Typically when there is a termination of an agency or a agency relationship the agent no longer represents the principal (Potter). However, if an agency is terminated the principal is under a duty of notification of the termination of the agency to the third parties (200 customers). The termination of an agency extinguishes an agent’s actual authority to act on the principals behalf specifically in this case due to the fact Potter fired Aker, then terminated the agency. If the principal fails to give the proper notice of termination to the third parties, the agent still has the apparent authority to bind the principal to the contracts. If this were to happen, the contracts would be enforceable against the principal.

There are several reasons for termination of an agency by operation of law we are unaware why Potter terminated the company in this case by means of lack of additional information . However, given the situation, the principal (Potter) is obligated to notify the clients that the agency has terminated. This would usually be done in writing. Thus it would be prudent to send each customer a written notice via certified mail that the principal/agency has been terminated. Failure to provide notice could leave the principal liable for unauthorized acts of the agent (Aker) even though the agent has been terminated.

Case 2:

In this case you have Pete Principal who owns a company who instructs his employee Al Agent to repossess some property owned by Ted Turner. Peter and Al both know that the repossession is illegal, but Al performs the repossession per Peter’s request.

This case comes under Law of Agency. Agency law is concerned with any principal, agent and third party relationship. A relationship in which one person has legal authority to act for another. An agency consists or involves three parties: principal (Peter Principal) agent (Al Agent) and the third party (Ted Turner). An agent is one who has authority to act for his principal in some particular transaction.

Even if an act done by an Al is directly contrary to the instructions of Pete, then Pete will be liable unless the third person with whom the agent dealt with knew that the agent was exceeding his/her authority or violating his/her instructions. Although the agent has a duty to the principal in this case the agent cannot usurp an opportunity that belongs to the principal. The agent cannot appropriate the opportunity for himself or herself unless the principal rejects it after due consideration. Opportunities to purchase products or materials, and other property are subject to the usurping opportunity rule.

A principal and an agent are each personally liable for their own tortious conduct. Potter is liable for the tortious conduct of Al who is acting within the scope of Potters authority. Additionally, Al is liable for the tortious conduct of Potter only if Al directly or indirectly participates in or aids and abets Potter’s conduct. Although the information provided in this case does not disclose whether anyone was injured during the repossession, or if wages were lost, pain and suffering or emotional stress had in fact occurred. However, under the doctrine of negligence Potter rested on the principal and expected to derive a benefit from acting through Al, and if there was any injury that occurred thought the repossession then Potter (principal) would bear the liability caused to any third party if there was negligent conduct of Al (agent) who was acting within the scope of his employment.