Analysis of issues presented in Nature Agency video

Nature Agency Video

The issue that is presented in this video is pertaining to the authority of the agents in business law. Such issues are very common since not much attention is paid to the rules of law in small businesses. As for this scenario, we see that the "agent" (Janet) signed a document that bound Quick Takes (the company she works for) to pay the partner for some procured equipment. Later on, we find out that the Janet was in fact, not authorized to sign that document, since the owner of Quick Takes did not allow her to sign contracts that bind the company for make payments.

On the other hand, there is also a side issue, which is not that significant; and that is that one of the employees (who is a very competent salesperson) has not been informed of the whole situation. Before we proceed towards making an analysis of this video, we shall define some terms so that there isn't much confusion created.

General Nature of Agency

"This is a maxim of the common, and it is the basis of the law of agency. Subject to the terms of the Contracts (Rights of Third Parties) Act (1999), when a contract is made under normal conditions, when a person makes a contract with another person, the third party is not allowed to obtain any kind of benefit from it, neither is that person under any obligation as a part of that contract." (Principles of Business Law, 292).

Nonetheless, if one of the people who are entering the contract makes some other person do an action that he was supposed to do himself, meaning authorizes another person to do that action, and then that third person becomes the agent of the person who authorizes him (Agency Law -- U.S., 2012). The agent is then responsible for the position of the first person while making transactions, he is then liable for the act and at the same time he can enjoy the benefits of that position, according to the aforementioned maxim.

When considering commercial issues, the association of agency normally emerges as a result of a deal between two people. One of these two people authorizes another person (agent) to work on the contract instead of him. In this case Janet acted like an agent, nonetheless, the controversy lies in the fact that whether or not the owner of Quick Takes had authorized her to make deals with other parties or not.

However, it should be noted that the aforementioned case is not the only way through which a relationship is made between two people. Also, bringing the contract into effect is not the only task that the agent is supposed to perform. One of the fundamental principles is that, when both the parties agree to a contract, it is possible for the agent to influence the legal relations of another person. There is an exception to this rule; "agency of necessity," whose discussion is out of the scope of this analysis, however. It should always be remembered that agency relationship is something that cannot be imposed on someone as well as it cannot take place in the absence of an agreement; both express or implied.

Definitions

Here, we shall look at the definitions of some of the important terms that are involved in this case. After studying these definitions, it will be easy for us to define what kind of agent Janet was and what could be the legal consequences of her actions for Quick Takes.

Principal

The "Principal" is that person who agrees, both expressly as well as by implication that some other person is allowed to do an action for him and on his behalf and therefore that person will be legally bound by that action.

Agent

The word agent in business law is defined as a person who is appointed by the principal to do an act for him or on his behalf and therefore according to law, binds the principal.

Authority

This term needs to be given special attention as for this scenario. Authority of the agent is the action(s) that he or she is allowed to do under the permission and authorization of his principal and the action(s) that will bind the principal in the future. There are many different kinds of authority, some of them are expressive, and meanwhile the others are implied. However, as a general rule the principal will only be bound to the actions of the agent that he or she performed staying within the limits of the authority for which he or she has been authorized. However, there are some undefined exceptions to this rule.

The scope of an agent's authority

Basically, there are two types of authority as mentioned above; namely express and implied. "Express is the authority of the agent that can be expressly determined. If there is an agreement that specifies the responsibilities of the agent, the agent is not allowed to work on the behalf of the principal beyond the limits of that agreement." (LaMance, 2012).

The second kind of authority is the implied one. In this case, the authority of the agent is implied by custom. Custom is something that is determined by the duties that have been expressed by the other agents who are working in a similar position.

Other ways to determine agent's authority

In some instances, there is no solid agreement and authorization of the agent's authority, yet someone has to act as an agent because of the absence of the person who has to be there to carry out a certain action.

The first situation is that of Apparent Authority. When the principal acts in a way that gives an impression that a third party is an agent, even if that third party is not, then in this case the principal will be bound to the actions of the person who acts as an agent. As for the third party, they should be reasonable enough to believe that the person was an agent.

When an emergency situation arises, the agent might have to act beyond the authority that has been bestowed on him or her by the principal. For instance, if an employee gets injured, the agent might use the funds of the company so that he can provide medical attention to the injured employee. Even though, the agent is allowed to do so, he will be excused because the agent acted beyond his authority because there was an emergency situation.

The third situation in which the agent can act beyond his authority is ratification. There are some cases in which the principal will allow the agent to perform actions that are not limited by the authority provided to him or her. The agent has the authority to do any action as long as the principal agrees to ratify the action before time.

As for this case, we know that Janet was allowed to sign some contracts and deals in the absence of the owner; however she was not authorized to sign the one that she did. On the other hand, in the video we do not find any evidence through which we can conclude what was the authority given to Janet and whether or not what she did would bind the owner or not. Moreover, it seems more like Janet was given the implied authority to sign the deals in the absence of the owner.