Understanding Agency Relationships

Nature of the Relationship

• Principals employ agents to perform tasks on their behalf
• Agency relationships always involve three parties: the principal, the agent, and a third party
• An agent's main role is to form contracts between the principal and a third party
• Real estate agents are an exception; they introduce parties, but lack the authority to legally bind them

Definition of Agency

• An agency is when one entity employs another to act on their behalf
• The actions of an agent, within the scope of their authority, legally bind the principal
• General rules of contract law are applicable to an agency relationship
• Agents act as a conduit, connecting the principal and third party

Agency by Express Agreement

• The relationship between the agent and principal is established by a contract
• Ordinary contract rules govern the relationship
• The Statute of Frauds mandates that the agreement be written if it cannot be completed within one year
• A Power of Attorney is needed for contracts involving sealed or written agreements
• Putting the agreement in writing has the advantages of clear terms and defining how the agent exits the relationship

Duties of the parties

• The principal is required to act in good faith
• The principal is required to pay the agreed or a reasonable fee
• The principal is required to indemnify the agent for reasonable expenses

Agent's Duties

• Agents must obey lawful instructions from the principal.
• Agents must maintain confidentiality.
• Agents must keep in contact with the principal and disclose negotiations
• The principal benefits from the agent's knowledge
• Agents are liable for breaches of standard of skill
• Agents cannot delegate duties without consent
• Agents must manage funds separately, keep proper records, and maintain a trust account
• Agents are required to act with utmost good faith
• Agents must put the principal's interests first
• Agents must seek the best deal, not just the fastest commission
• Agents are not allowed to take third-party commissions without obtaining the principal's permission

Agency by Conduct (Estoppel)

• Agency by conduct occurs when the principal creates the impression of the agent's authority
• The principal cannot deny the agency if a third party relies on there being one
• Known as Apparent Authority and Ostensible Authority
• The principal may still be liable, even if real authority is withheld
• It is crucial to notify third parties to avoid unintended liability should the agent no longer be acting on behalf

Agency by Operation of Law

• Agency by Operation of Law occurs in emergencies where contacting the principal is impossible i.e. Shipmaster preserving ship & cargo
• An agent of necessity requires a pre-existing legal relationship
• An historic example includes a wife pledging her husband's credit

Ratification

• A principal has the option to ratify unauthorized actions taken by an agent
• Corporations cannot ratify contracts that predate their existence, unless statutes permit
• The contract needs to be capable during its making, as well as ratification
• The ratification must occur in a timely fashion, and the principal must possess knowledge of the contract
• Ratification can be expressed or implied
• Failure to repudiate implies acceptance
• Ratification is effective from the original contract's date
• It is unclear as to whether a third-party repudiation acts to block ratification

Third Party Rights & Obligations

Disclosed Agency

• When an agent declares they are acting for a principal
• The contract is binding for both the principal and the third party
• The agent indicates their role by signing "per" (per procurationem)
• The third party is unable to lay claim against the agent
• The agent cannot benefit from the contract

Undisclosed Agency

• It is assumed by the third party that the agent is the principal
• The agent is liable for breach of performance
• The agent can also enforce the contract
• The principal can adopt and enforce the contract if they step forward
• Third parties can only sue one of either the agent or principle
• When acting for unnamed principles the agent is not personally liable
• When there is a simple failure to disclose the agent and principle can be held liable
• A principal can step into the shoes of the agent, like an assignee

Breach of Warranty of Authority

• An agent misrepresents the principals identity or authority
• Should fraud be intentional, the agent is liable for damages
• If the principal comes forward, they can still enforce the contract
• Third parties are only able to sue one of either the agent or the principal

Liability in Tort

• Principles bare the liability for torts committed within the scope of their agency. This includes fraudulent misrepresentation
• If the tort occurs outside of the agent's scope, only the agent is liable
• If the principal as adopted the act, they are liable
• When there is innocent misrepresentation, the contract can become voidable
• If the principal knew falsehood; it is now treated as fraud

Termination of Agency

• Express or implied termination is allowed, as long as it has notice
• Automatically ends after the act (if specific act was agreed)
• Agencies conclude at incapacity or bankruptcy
• An agent contracting after a principal's bankruptcy bares the liability to the third party
• Principals must notify third parties of terminations for ongoing agencies
• Failure to notify results in the liability of the principal
• Agents may also bare a liability to the principal

Key Case: Freeman & Lockyer v Buckhurst Park Properties

• A director hired a plaintiff, but the company refused to pay as he had no authority
• The court ruled for the plaintiff
• Ostensible authority is representation made by the principal
• The principle was estopped from denying the contract
• Third parties cannot access agency contract details

Sole Proprietorship

• It is the simplest form of business ownership
• There is no legal separation between the owner and business
• The owner is personally liable for business debts
• It is easy and low cost to start
• You must register the business name

Partnerships

• A partnership is defined as 2 or more persons carrying on business with a view to profit
• A partnership can exist even without intent, based on behavior
• Prima facie evidence includes sharing profits

Legal Characteristics of a Partnership

• A partnership is a contractual personal relationship
• Unlike joint ownership there is no free transferability
• Each partner is an agent of a firm
• The Partnership Act governs if there is no written agreement

Partnership by Estoppel

• If an individual appears to be a partner, their liability is equivalent to as if they were a partner to a third party

Liability in Partnerships

• In the ordinary course of business the partners can bind the firm
• Only that partner is liable if actions occur outside the normal course of business
• The firm bares the liability for partners committing torts in the normal course of business
• As a partner you are personally liable- with your personal assets at risk
• Unless agreed upon, new partners are not liable for debts from prior
• Retired partners are only liable for debts incurred during the partnership

Partners’ Rights & Duties

• A written agreement should have defined rights and duties
• Any property contributed will become partnership's property
• You are required to act in utmost good faith
• Without prior approval, a partner cannot compete. Profits should go to partnerships
• An assignee only gets profits, as opposed to being a partner
• One cannot expel a partner without dissolving a firm. Unless with agreement

Dissolution of Partnership

• A partnership can dissolve by Agreement or as per the Partnership Act
• Automatically ends upon completion of project or expiration of term, death, unless otherwise agreed), or If business becomes unlawful

Court-Ordered Dissolution

• If there's incapacity, breach, loss-only business, or general “just and equitable" grounds a court-ordered dissolution is possible

Distribution of Assets

• External creditors are paid first.
• Repayment of partner advances is second
• Return of capital contributions third
• The profits or losses are divided last

Notice of Dissolution

• Customers and the public must be made aware (e.g., via Gazette).
• A failure to do so will risk ongoing liability.

Limited Partnership (LP)

• Common in large-scale ventures which include mining and film
• There is at least 1 general partner who bears unlimited liability
• Others may be limited partners whose liability is equal to their capital contribution
• Limited partners are not able to bind the firm or manage/have their name be on the firm
• Should a limited partner be active, they become general partners, and therefore lose their liability protection
• Registration is require, otherwise all become general partners

Limited Liability Partnership (LLP)

• Used for professionals
• It places a border around liability for negligence of other partners
• Liabilities remain in place for negligence you were the contributor of. Additionally, debts of the firm will need to be paid
• Registration is required

Registration of Partnerships

• One must register a general partnership if they use a name other than their own
• LPs and LLPs are required to register
• To avoid liability, dissolutions must be registered for new debts
• Unless required, you cannot sue or be sued without registration

Corporation Law

• A separate legal entity is a nature of a corporation. This includes shareholders/directors/officers
• The rights of a nature person are the same as corporations
• They are created by statute
• The allowed limited liability is for shareholders
• What creditors can take is only corporate assets

Key Case: Salomon v. Salomon & Co. Ltd.

• It was confirmed in this case that the legal identity of corporations is separate.
• Shareholders are clear from personal liability

Corporate Structure

• Shareholder elect Directors who appoint Officers
• Directors: Manage company, Declare dividends and have a Fiduciary duty to act in corp's best interent
• Shareholders: Vote on major changes, have limited liability and are Free to sell shares (in public corps)

Shareholder vs Partner

How to Incorporate

Articles of Incorporation (General Incorporation Statute)

• Filed with the name, business nature, share structure, office address, directors

Forms of Incorporation

• Royal Charter: Historical and rarely used
• Letters Patent: It Grants rights to incorporate
• Special Act: For specific projects (banks, railways)
• General Incorporation Statute: Very common today

Indoor Management Rule

• Parties are able to assume that officers have authority unless made aware otherwise

Securities

• Shares = ownership
• Common shares: voting rights
• Preferred shares: have fixed returns, priority on wind-up
• Debt Securities:
  • Debentures: are secured but have lower priority
  • Mortgage Bonds: are secured by specific assets
  • Floating Charge: general security over assets

Final Notes

• Corporations are governed by statute (provincial/federal).
• Private corporations:
  • Private corporations: Can restrict share transfer plus have fewer reporting obligations
• Public corporations:
  • Share offering to public and Require audits, financial reporting

Nature of the Employment Relationship

• Special due to inequality of bargaining power are Employment contracts
• It is considered a factual determination whether you are an employee or contractor, as opposed to base contract language

Fourfold Test

• To establish whether an individual is an employee or a contractor

1. Control – degree of control over the work
2. Ownership of tools – employees typically do not own tools
3. Chance of profit
4. Risk of loss

Other tests include:

• Organization test: Is the activities integral to the business
• contract for service = independent contractor
• contract of service = Employment

Employment Contract Form

• It is not required to be putting in writing unless contract is > year
• It Can contain
  • Confidentiality clauses
  • Restrictive covenants with the agreement for the contract (non-compete, non-solicit)
• If skills are learned, they cannot be kept held back post-employment

Duties of the Employer

Employment Legislation

• Governing bodies include the Canada Labour code both federally and provincially for Employment Standards Act
• It includes, Minimum wage, hours, holidays and termination, Safety regulations, and Pay equity

Human Rights

• It Prohibits any discrimination(race, sex, disability, etc.)
• Includes, Duty to accommodate to the point of undue hardship and must be for a Discrimination-free environment

Common Law Duties

• Common law duties, pay compensation + expenses , Provide tools (if customary and give enough info to be able to calculate earnings

Duties of the Employee

• Obey reasonable instructions
• Keep info confidential
• Duty of fidelity
• Use time and property appropriately
• Skilled employees must exercise care
• Senior employees may owe fiduciary duties
• Dishonesty = liability (but still entitled to wages)

Termination of Employment

⚖ Notice:

• Statutory minimum with Common law may award more
• "Reasonable notice" must be based on: Length of service, on Position, Age and Industry custom

💥 Wrongful Dismissal:

• No notice or cause warrants an allowance of damages owed
• Cause includes:
• Incompetence, criminal acts, contract breach
• It's duty to mitigate damages while looking for jobe

🏗 Constructive Dismissal:

• Unilateral, major change to job with deeming its dismissal
• E.g., Demotions, drastic role in changing

🧢 Wrongful Hiring:

• Grounds for misleading job info by employer that can include:
• negligent misrepresentation

🔹 Employer Liability

👨‍⚖ Vicarious Liability:

• It's an obligation for the employer to have certain responsibilities for acts that have been committed during employment duties

⚖ Workplace Injury:

• workplace has historically had more problems
• It also had an Act, known as;
  • Workplace Safety and Insurance
• Employees are compensated regardless of fault

🔹 Labour Law

📜 Jurisdiction:

• It is to decide whether Federal: Banking, aviation, or national employers can conduct
• As well as, Provincial: such as those that are mostly Businesses over different property & civil rights

🧑‍🤝‍🧑 Unionization:

• Common law that is removed through the usage of collective bargaining rights
• Board of labour are the ones Governance that oversee (certification, strikes, bargaining)

🧾 Certification Process:

1. By applying to board of labour with Union
2. Board that defines support with the provided unit
3. Certification if there has be majority support being shown

🤝 Negotiations:

• Requirements for a Good faith to bargain
• By getting conciliation and mediation from arbitration

🔹 Strikes & Lockouts

Strike

• Refusal to conduct work
• Lawful is when after CBA expires and bargaining fails

Illegal Strike

• If there has been a Wildcat Strike: It has been during the active agreement
• Under the same rules has a Lockout with that prevents Employer is able to work
• The means must be peaceful or informational to be considered a being in Picket
• Now is a Secondary for Picket with allowed for the reason of having this as a freedom of expression

Arbitration

• The form of Arbitration services
• Those include Essential services that no strike and must arbitrate
• The means in which Voluntary arbitration possible
• Means in which Awards that have to follow a certain and binding

Collective Agreements

• From contracts, they take different means
• That has been involved for a dispute and the mean in which resolution mechanisms of grievance
• A means that has been reluctant to workers and where the arbitrators can

🔹 Union-Member Relationship

• The form of one contract that is member as opposed to one that is an entity in Ontario
• Expulsion only for just cause, and must follow natural justice:
• Right to know the case
• Right to respond
• Impartial hearing

🔹 Duty of Fair Representation

• With which has to be acted in member to all unions
• Means in which grieve be held or for arbitration with a member to be wronged in action

✅ SALE OF GOODS ACT (SGA) 📄Application of the Act

• Applies to contracts involving:
• Promises + transfer of goods
• Sale with Immediate transfer of goods
• With these promises and it's transfer of goods
• Agreement to sell with Transfer in the future and has to apply specifically to means of what it may be (e.g., goods not yet made)
• Applies for goods which are not considered such as cash or cheques

💰 Consideration Must Be Money

• Means In which to Barter or with Consignment that has not been covered
• Payment through monetary means

📝 Writing Requirements

• Means by which to have No special form with a means that is verbal, written, implied, etc
• For which to get with writing when goods is over in the form of $50
• That has a form that is not able less because one of the form that is shown
• For which they made payments that partial means
• Buyer that gives means for anything what is rarely for earnest

🏷 Transfer of Title (Ownership)

• Not meant for ownership or to be Possession
• Seller is the way which bears the burden until they are delivered and that which is not ready
• When in deliverable the title passes
• When in deliverable state
• When a contract that can have specific terms
• intentions to be followed or for the means of otherwise looking for application and their rules

📦 SGA Title Transfer Rules

Follow these certain means to have a clear understanding between them

1. Unconditional by specific type of delivery with title passing at any contract
2. Is for the seller to deliver in any mean from them so that they are able to get approval in notifications that is meant for the buyer
3. With what has to be put on what to have pricing and make these for measurements for which to conduct the action
4. Means of following sales with approval is for Buyer can accepts or has it for long hours The goods that means is not a certain type and is best for the mean for what to have action in agreement