Principal and Agent legal relationship

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Principaland Agent legal relationship

Principaland agent legal relationship

Carland Benjamin share liabilities to Steven since Benjamin who is thespecial agent fails to disclose the identity of the principle toSteven, who is the third party. The contracts entered by Benjamin onbehalf of his principal Carl is not less binding after the negationsmade with Steven. The manner, with which Benjamin acts on behalf ofhis principal to Steven, is however an important aspect that needs tobe taken into consideration (Munday, 2010). Benjamin in this regardis a special agent since he has the authority to only act inspecified instructions from his principal Carl.

Inaddition, under the shared liability clause, the principal shouldindemnify any transactions or expenditure incurred by the agentduring the scope of transaction. Therefore all these factors engulfthe expenses as a result of the accident incurred to the pedestrianin the course of business activity. The type of principle that isapplicable in this relationship between Carl and Benjamin is found inthe special agent liability principle. This rule entails Benjaminacting only under that scope of instructions from Carl to transact aspecified transaction with Steven within a specified period of time.He is specifically instructed to enter into a contract of purchasingthe farm on an amount not exceeding $2,000,000. The relationship thatexists between Carl and Benjamin is purely business and it is clearthat there is no written consent that is entered between the two men.In this regard it is important to note that this type of relationshipis not contractual. Benjamin is a gratuitous agent who is notdifferent from a more commonly known contractual agent (Munday,2010).

Carlconsents to Benjamin’s actions and Steven the third party may fullyrely on Benjamin’s capacity of closing the deal. There exists ageneral rule however of an agent having incidental or impliedauthority to perform certain acts like purchasing the farm land inthe case of Benjamin (Munday, 2010). Benjamin’s actions in thecourse of dealings with Steven will definitely have impacts on thelegal rights of Carl, the principal. Benjamin in this regard bindsCarl legally whether he had implied or express authority. Steven’signorance to the true identity of the buyer is not a ground forvoiding the deal that had already taken place (Munday, 2010). It ishowever important to note that Benjamin had no authority to performcertain act such as driving through for a cup of coffee (Munday,2010).


Munday,Roderick. (2010).Agency: Law and Principles.New York. Oxford University Press.

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