When and how does the agency relationship terminate?The establishment, duration, and termination of the agency relationship are generally governed by the agreement between the principal and agent. In the absence of an express agreement, several default rules apply regarding the point at which the agency relationship terminates. Below are common rules for terminating the agency relationship: Withdrawal by a Party, Termination by the Principal, Renunciation by Agent, Death or Incapacity of Agent, Death or Incapacity or Bankruptcy of the Principal. Show
Back to: AGENCY LAW Next Chapter: BUSINESS ENTITIES The above situations resulting in the termination of the agency relationship are default rules. The parties may reserve any rights or restrictions on terminating the agency relationship within their agreement. What is Withdrawal by Either Principal or Agent?A principal or agent may withdraw from the relationship at any time. This legal authority is separate from the contractual right to withdraw.
What is Withdrawal by a Principal or Agent?The parties can terminate the agency relationship upon mutual consent. Termination by the PrincipalEither party may terminate the agency relationship, even if it violates a contractual agreement between the parties. A principal will be subject to a breach of contract action for terminating the agency relationship if the agent's status is part of an agreement that is supported by consideration and terminating the agency relationship will harm the agent's rights.
Renunciation by the AgentThe agent can renounce the business of the principal and terminate her agency status and authority. This may, however, violate a contractual relationship between the parties.
When are the Duties of Agent Complete?If the purpose of the agency ceases to exist, the agency relationship terminates. This often arises when the agent discharges all of her agency obligations. Further, it could arise when the subject matter of the agency no longer exists.
Agency Interrupted by Death or IncapacityThe agency relationship terminates upon the death or incapacity of either party. Agency Interrupted by Bankruptcy of the PrincipalThe agency relationship terminates upon the liquidation or reorganization of either party. Discussion QuestionHow do you feel about either party's right to terminate the agency relationship? What should the remedy be if termination of the agency relationship by a party violates a contract between the parties? Should a party have additional rights if she is harmed by the termination of the agency and the other party's rights are not? Why or why not? Practice QuestionEarl runs a showroom for baby products. Gayle, the inventor of a new product, consigns a large number of goods with Earl. Earl agrees to display the goods and represent them to potential retailers. Earl earns a percentage of all future sales to the retailer as compensation for his services. Can Gayle cancel the agency relationship?
Academic ResearchWhat are the ways to terminate the agency relationship?Below are common rules for terminating the agency relationship: Withdrawal by a Party, Termination by the Principal, Renunciation by Agent, Death or Incapacity of Agent, Death or Incapacity or Bankruptcy of the Principal.
What is not considered a way to end an agency relationship quizlet?An agency relationship can be terminated in all of the following ways except: Estoppel [If the property is destroyed, so is the agency agreement. If the parties become incapacitated, the relationship ends by law. We can create relationships by estoppel, but they cannot terminate in this way.]
What are ways in which an agency relationship can be terminated quizlet?How an agency relationship can be terminated? An agency relationship can be terminated by either party orally, in writing or impliedly. What would happen if the termination by either party breaches the existing agency contract? Then the breaching party is liable for breach of contract damages.
Who can terminate an agency relationship quizlet?Termination by one party. As a general rule, either party can terminate the agency relationship (the act of termination is called revocation if done by the principal and renunciation if done by the agent). Although both parties have the power to terminate the agency, they may not possess the right.
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