Book Opener

l How to recognize thecreation of an agencyrelationship byagreementl How to recognize thecreation of an agencyrelationship byoperation of lawl How to distinguishbetween a generalagent and a specialagentl How to distinguishamong a subagent, acoagent, and anagent’s agentKnowing when an agencyrelationship has beencreated will help youmake sound judgments inbusiness activities.l general agentl special agentl agency by estoppell ratificationCreation and Typesof AgentsTypes of AgentsLike most relationships in the law, there are several ways to createan agency relationship. Similarly, there are several types of agents. Thetype of agent with whom a third party deals depends on the agent’sauthority and his or her relationship with other similarly situated agents.We can distinguish between types of agents in two ways. We examine(1) the extent of the agents’ authority, and (2) how the agents relate toone another.Extent of AuthorityThe two types of agents are distinguished on the basis of extent ofauthority. General agents have more authority than special agents.General Agent A person who has been given authority to performany act within the scope of a business is a general agent . The managerof a department store, for instance, would be a general agent. Generalagents are sometimes called discretionary agents because they havethe right to use their judgment or discretion in all matters pertaining tothe agency. General agents may decide to hire or fire employeesaccording to the needs of the business.Example 9. Allen Ambrose was the managing editor of the TiroTelegraph. When the Gulf War began, he hired several newprinters so the newspaper could put out an extra edition. Whenone of the presses broke down, Ambrose called a mechanic torepair the damage. As managing editor of the paper, he had theauthority to make decisions such as these and to bind hisemployer Paul Winfield, the publisher, to the contracts thatresulted from those decisions.Special Agent A person who is employed to accomplish a specificpurpose or to do a particular job is a special agent . Sales representativesare special agents. They can sell and pass title to specific goodssold, but that is the extent of their authority. They can’t make purchasesin the principal’s name, and they usually aren’t authorized to collectpayment unless they actually deliver the goods to the buyer. Other402 Unit 4: Being an Agent and Getting a Job