Book Opener

In seventeenth centuryEurope, most monarchsappointed a favorite,who acted as an agentin carrying out themonarch’s private andpublic affairs. Thefavorite was often themonarch’s confidant,companion, proxy, andenvoy. One famousexample is CardinalRichelieu (1585–1642),who served as the royalfavorite of King LouisXIII of France.Reimbursement and IndemnificationAgents are entitled to reimbursement , or repayment, when theyspend their own money for the principal’s benefit. In addition, if anagent suffers any loss as a result of the principal’s instructions, he orshe is entitled to indemnification ; that is, he or she is entitled to repaymentof the amount lost.CooperationThe duty of cooperation means working together toward acommon end. The principal, having given the agent the duty to performcertain tasks, must not interfere with the performance of those tasks. Ifthe principal makes the agent’s job difficult or impossible, he or she hasbreached the duty of cooperation.Example 7. Phoebe Parkes told Justin Alvarez that he would haveexclusive rights to sell the Curren-Bartlett line of cosmetics doorto-doorin Willowick, a small town with a population of 5,000.She also told him that to keep his job, he would need to make aquarterly profit of $10,000. Later, Justin learned that Phoebe hadhired four other agents to sell the same cosmetics line in Willowick.This action made it impossible for Justin to make $10,000quarterly because there were not enough customers in the town.Justin could argue successfully that Phoebe had violated her dutyto cooperate.Agent’s Liability to Third PartiesThe agent is a go-between who brings the contracting partiestogether and “stands in the shoes of the principal” in making the contract.Sometimes individuals and businesses may prefer to keep theirconnection to a transaction a secret. Other times principals may wishto disclose the relationship. If the agent represents a disclosed principal,one whose existence and identity are known to the third party, theagent assumes no contractual liability for the resulting contract. Theprincipal alone assumes the responsibility. Agents may be held responsiblefor contracts negotiated for the principal when the agents do notdisclose the identity or the existence of the principal, or when agentswrongfully exceed their authority.When the Principal Is Not DisclosedA partially disclosed principal is one whose identity is neverrevealed, even when the third party knows the agent is acting for someoneelse. If the third party later learns the identity of the principal, then420 Unit 4: Being an Agent and Getting a Job