International Paper company overview and business operations

Crossing Borders: Agency Law and the Global Economy

The Internet has an effect on almost any aspect of business. It affects marketing, cash flow, and legal issues. The advent of e-business has caused many businesses to re-examine many legal issues regarding international trade, particularly in the area of dispute resolution. The following will briefly examine how e-business and the global economy have changed the way many think about agency law.

Applications of Agency Law in the Business Environment

Agency law represents a specific set of concepts and doctrines that are applicable to a number of situations in which a person's conduct can have ramifications for the legal position of an entity (Demott, 2006). The actions of a single employee can have an impact on agency liability. Agency law defines the circumstances under which a relationship can be classified as an agency relationship, rather than as the actions of individuals. This can arise from the creation of rights and obligations regarding a transaction, the agent's knowledge of the action, and amount of liability that the agency derives from the acts of the individual.

Agency law also determines the rights and duties between the principal and agent (Demott, 2006). As one can see, agency law serves as a means to define legal relationships between an individual and a business entity. The International market was once only the realm of the large corporate entity and had a fairly consistent formal set of rules. The Internet has meant the entrance of many small and medium sized businesses into the International marketplace. The entrance of different types of business entities has resulted in a need to find new definitions for business relationships.

When two entities are similar, then the transaction and relationships are easier to define than if the two entities have different structures and philosophies regarding their employees. Agency law varies from country to country. The advent of e-business has complicated agency law in many ways. For instance, what happens when an employee uses the company email to send out illegal personal messages? How much liability does the company have for consequences of the act? How much liability do employees have for the actions of upper management? The issues surrounding questions such as this are many, and straight answers are few.

Types of Business Entities

There are many different types of business entities, each of which has a drastic effect on the definition of agency law. Many small businesses are sole proprietorships, or partnerships. In these types of businesses the entities themselves often carry the greatest amount of legal liability stemming from the actions of either themselves or their direct employees. Agency law tends to favor personal responsibility in cases involving sole proprietorships or partnerships.

Many states in the United States allow the formation of a Limited Liability Corporation (LLC), which is similar to a corporate structure, but is more suitable for those that still wish to maintain a high degree of control over their business. This is one of the most difficult types of structures as far as agency law is concerned because an LLC can resemble a sole proprietorship or a corporation depending on the structure and daily management. There are many variations in the way an LLC is managed.

There are two basic types of corporate entities, an S corporation and a C corporation. An LLC, S corporation, and a C corporation can act as entities in and of themselves. The differences between the S. And C corporation have to do with tax structures, but in many other aspects they are identical. They have the right to conduct business as if they are separate from the individuals within them. This means that the corporation can also incur legal liability arising from the actions of one of its representatives (Thompson, 2003). These are the basic forms of corporation in the United States. However, there are other differences in other countries around the globe. The ways in which these entities are defined in terms of agency law differ as well.

E-business and the Global Legal Environment