Simple English definitions for legal terms
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Agency law is a set of rules that control the relationship between a person who acts on behalf of someone else (an agent) and the person they are acting for (the principal). When an agent is given permission to act for the principal, they have the authority to make agreements that are binding on the principal. There are two types of authority: express authority, which means the agent can do what the principal asks, and implied authority, which means the agent can do what the principal's behavior suggests they should do. If a third party believes the agent has authority to act on behalf of the principal, even if they don't, the principal can still be held responsible for the agent's actions. The principal is always responsible for the agent's actions while they are doing their job, but not for actions outside of their job unless it was a detour (allowed) or a frolic (not allowed).
Agency law is a set of rules that governs the relationship between agents and principals. An agent is someone who acts on behalf of another person, called the principal. The principal-agent relationship is created when the agent is given the authority to act for the principal.
There are two types of authority that an agent can have: express authority and implied authority.
For example, if a principal hires an agent to sell their car, the agent has express authority to negotiate the price and complete the sale. The agent also has implied authority to take actions necessary to complete the sale, such as showing the car to potential buyers and advertising the car.
In addition to actual authority, a principal may be bound by the actions of an agent if apparent authority existed.
For example, if a principal allows an employee to wear a uniform with the company logo and interact with customers, a third party may reasonably infer that the employee has the authority to act on behalf of the company. In this case, the employee has apparent authority to make decisions on behalf of the company.
Additionally, principals can be held liable for the torts of their agents under the doctrine of vicarious liability.
For example, if a delivery driver causes an accident while making a delivery for their employer, the employer is vicariously liable for any damages caused by the accident.
However, if the agent commits a tort outside of their official responsibilities, the liability of the principal depends on whether the agent’s tort occurred during a frolic or a detour.
For example, if a delivery driver causes an accident while running a personal errand during their delivery route, the employer may be liable for the damages caused by the accident because it was a detour from their official responsibilities. However, if the driver causes an accident while joyriding in the delivery truck, the employer may not be liable because it was a frolic outside of their official responsibilities.