Principle of agency - SS2 Commerce Lesson Note

The relationship between an agent and a principal refers to a legal arrangement where the agent acts on behalf of the principal. 

Rights of the Agent:

Compensation: The agent has the right to receive compensation or a fee for their services, as agreed upon with the principal.

Indemnification: The agent has the right to be reimbursed by the principal for any expenses incurred while performing their duties, as long as those expenses were necessary and within the scope of their agency.

Cooperation: The agent has the right to expect the principal's cooperation and support in carrying out their authorized tasks.

Duties of the Agent:

Loyalty: The agent must act in the best interests of the principal, avoiding any conflicts of interest or self-dealing. They should prioritize the principal's needs and goals above their own.

Diligence: The agent must perform their assigned tasks with reasonable care, skill, and competence, applying their best efforts to fulfill their obligations.

Communication: The agent must keep the principal informed about relevant matters, providing regular updates and timely reports as necessary.

Obedience: The agent must follow the lawful instructions and directives given by the principal, as long as those instructions are within the scope of the agency.

Rights of the Principal:

Control: The principal has the right to control and direct the actions of the agent, specifying the tasks they are authorized to perform on their behalf.

Good Faith: The principal has the right to expect that the agent will act in good faith, carrying out their duties honestly and in a trustworthy manner.

Performance: The principal has the right to expect that the agent will fulfill their obligations according to the agreed-upon terms, meeting the required standards of performance.

Duties of the Principal:

Compensation: The principal must provide the agreed-upon compensation or fee to the agent for their services, as long as the agent has fulfilled their duties accordingly.

Reimbursement: The principal must reimburse the agent for any reasonable and necessary expenses incurred while carrying out their authorized tasks.

Cooperation: The principal must cooperate with the agent, providing necessary information, resources, and support to enable the agent to perform their tasks effectively.