Agency by Express
Agency by express authority occurs when a principal and agent enter into a legally binding relationship orally of through a written agreement. The principal appoints a competent agent to represent his interest. Conversely, the agent has the responsibility of fulfilling the principal’s needs, and should avoid conflict of interest at all costs ( Koh & Bull,2016) . Example of agency by authority is where McDonalds selects another person that is an agent to make decisions on behalf of the company. Under this relationship, the agent is under the obligation of fulfilling McDonald’s orders and wishes; for example, the company can ask the agent to look for new suppliers. On the other hand, McDonalds will be tied to the decisions made by the agent. Therefore, McDonalds should fulfil all the contracts signed by the agent in its behalf.
Agency by Implied Authority or Ostensible.
Agency by implied authority arises when the nature of a person’s conduct suggests that they he is acting on behalf of another individual. Mostly, implied authority occurs is demonstrated by practicing the usual authority given to a person in an organization. Implied agency relationship is established by investigating the type of association between an agent and a principal. Example of an implied agency is when an employee at McDonalds promises to give a customer a free meal or drink orally. Under the situation, the general assumption is that the employee is acting on behalf of the company, thus the general expectation is that McDonald’s will fulfill the promise. However, McDonalds has the legal right to penalize the employee for entering into the contract, and terminate the relationship depending on its wishes. Automatically, the termination of this relationship would also suspend the agency relationship.
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Agency by Estoppel
The agency relationship is created when an individual gives the impression that another person is representing its interests. The representation is done either by conduct or word to a third party and it influences third parties to enter into contract with the principal ( Koh, & Bull,2016) . For example, if Imposter Company conducts a social marketing campaign claiming that McDonalds is offering free meals, and the company is aware of the claims but does nothing to stop the promotion then agency by estoppel is created. As a result, McDonalds will be expected to offer customers free meals to the customers because of its negligence that misdirected the consumers by making them believe the imposter company was its representative.
Agency by Ratification
Agency by ratification happens when a person or business makes inaccurate claims that it is the agent for another firm or person, and principal accepts and recognizes the existence of the agency relationships. Through the ratification, the principal gives the agent the authority to enter into transactions on his behalf ( Koh, & Bull,2016) . Example of agency by ratification is when McDonalds accepts and pays for a promotional campaign conducted by a company that had not been contracted for the job in the first place. The company may accept the campaign because it increases traffic into the fast food restaurants, but this leads to the establishment of an agency relationship. Legally, McDonalds will be expected to pay for future campaigns created by the same company in future regardless of whether it amounts to the same success.
Agency by Necessity
Agency by necessity results from an emergency situation that makes it essential for an agent to act without being authorized by the principal. The relationship is recognized by courts because an agent acts on behalf of the principal by making critical decisions to prevent injuries irreparable damage to principal and third parties. For example, when the electricity wiring in a McDonald restaurant is interrupted and the neighboring store offers to refrigerate the perishable materials in its refrigerators, an agency of necessity is created. The legal impact of the agency relationship in this case is that the McDonald will be expected to meet the costs of the material storage.
References
Koh, P., & Bull, S. N. H. (2016). Agency and partnership law [2015]. Singapore Academy of Law Annual Review of Singapore Cases , 16 , 87.
