Agency law and its significance in business environment

Agency law and its significance in business environment

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An agency has no statutory definition but can however be briefly described as the legal  relationship that arises when a person known as the agent is appointed to act on behalf of another party known as the principals while engaging in a business transaction with a third party known. This means that the contact created is therefore between the principal and the third party, which makes the principal liable to the third party. If the agent acts within his/her authority, the principal is bound by this contact, which makes him liable (Dal, 2008).

In this case, Delilah is the agent acting on behalf of the Company while contracting with Evon, Felipe, and Giorgio. The contact between Delilah and Evon, Delilah revealed to Evon that she was in fact acting on behalf of somebody else. In this case, when the third party is aware of the fact that Delilah is actually an agent and the principal’s identity has been revealed to him. Therefore, Delilah is not liable under the contract. She drops out the minute Evon accepted the contact. According to common business law, if the identity of the principal is disclosed to the third party, then the agent is not liable (Dal, 2008). However, the principal is liable because the agent assumed authority and was acting on his behalf.

In the contract between Delilah and Giorgio, Giorgio w.............