Is the law beneficial or harmful?
The law of agency is a very important component of business and must be observed at all levels. Almost all businesses operate under the agency laws that govern them. Adherence to these laws is a signaling matter to the success of the individual businesses. Different laws and levels of applicability function to determine the manner in which different kinds of businesses are operated depending on the size and areal cover in terms of business. From small-scale sole proprietorships to large business agencies, the law applies to controls different aspects of the business. This paper discusses the role played by agency law in controlling the manner in which agency and sole proprietorship types of business are conducted across the world. The paper analyzes the benefits and demerits of agency law’s applicability to business to come up with an opinion on the importance or demerits of the law in business
Agency businesses are particularly common in today’s business market. The term agency stems from the word agent. An agent is a person working and carrying out negotiations on behalf of a business or organization. The agent is a third party in the business while the business owners are the principals. As Christine, Colin and Nicola (55) records, agency businesses are carried out by a second party (the agent) carry out the negotiations with the third party (the customer). The law of agency exists to control the manner in which business is conducted between the various parties involved in such businesses.
For instance, since the principal and the agent both agree to work together through a signed consent, the business torts made by the agent is borne by the principal, as the principals’ liability within the scope of the signed consent. However, the agency laws guide the extent of liability for the principals and define the point at which the agent or the third party can be liable for certain torts. To this extent therefore, agency laws divides the liabilities incurred in the business equitably between the three parties involved in the business transactions so that there is no form of extortion of abuse of responsibility to the disadvantage of the other parties.
By ensuring equitable distribution of business liabilities between three parties, the agency laws help businesspersons to minimize risks during transactions thus the chances of progress remains high Scott (37). Besides distributing the risks between the agent, the principal, and the third party, agency laws also give authority to the agent without binding them to the torts. This is done within the limits of the consent form signed and the contractual definitions. In this manner, the law prompts each engaged party to work diligently and competently within the limits of their authorities to prevent the occurrence of many torts while enhancing business growth.
Sole proprietorship is business types that are owned and run by a single person or family. All management responsibilities are borne by the same family thus making the business owner liable of all business torts. However, sometimes, sole proprietorship businesses my have employees, especially where the business is grown and expanded. In such cases, like agency businesses, sole proprietorships can entrust certain responsibilities on certain individuals. In most cases, these placements are done formally through agreements between the business owner and the agent. In such cases, the business liabilities increase since the negotiations can be done with the third party (customer) by the agent. Agency laws play an important role in promoting the safety of sole proprietor businesses under such circumstances by distributing liability to risks between the three parties. According to Scott (102), risks borne by an individual tend to be higher than when the risk is distributed among various individuals. This is what agency law ensures for sole proprietor businesses when business negotiations are done through agents.
According to Christine, Colin and Nicola (97), the sole agency laws in sole proprietor businesses ensure that all business operations are safe and geared towards profit making. For instance, the relationship between the employer and the employee is purely business oriented. The success of the business is governed by the kind of coordination and conducts of the employee and employees. Agency laws come into play here to determine the extent of liabilities the business owner can incur from the torts made by the employee. Besides, based on the extent of agreements signed between the employer and the employee, the agency laws prevent the business owners from risks emanating from either the agent or the third party individuals.
To conclude, agency laws exist to help business owners transact their businesses in a safe and business-friendly environment without being exposed to various kinds of risks. By defining the extent of liability and authority within which the agent and the principals can act, agency laws work to prevent business owners from incurring losses stemming from mistakes made by the agent or third parties deliberately.
Christine, Parker, et al. Regulating Law. London: Oxford University Press, 2004.
Scott, Veitch., Law, and Irresponsibility, On the legitimation of human suffering. Oxon: Routledge-Cavendish, 2007.