|
Contracts
By Kent Hanszen
Hanszen P Laporte Law Firm
As a newcomer to ASSIST, I would like to take this opportunity to introduce myself and my firm. My name is Kent Hanszen, and I am a partner in the Houston law firm of Hanszen P Laporte. I am board certified in civil trial law by the Texas Board of Legal Specialization and I enjoy an AV rating by Martindale-Hubbell. My firm�s practice focuses on business issues and disputes, contract formation, commercial litigation, insurance disputes, and trade secret and non-compete issues.
As with many businesses, many of you likely rely on on-the-ground employees and managers to assist you in day-to-day operations. While such reliance may be necessary for a business� operation, the actions of those trusted employees or managers, surprisingly, may give rise to liability for the company.
Business is often conducted by agents (e.g. employees or managers) who act on behalf of the principal (e.g. the company). Legally binding agency relationships may exist between employees and employers or officers/directors and their company. An agent�s duties to the principal generally include obedience, loyalty, and care. An agent must act within the scope of the agency, as defined in the agent�s agreement (whether written or oral) with the principal. The agent also must be loyal to the purposes of the agency and must not engage in self-dealing that is not disclosed and agreed to by the principal. Finally, the agent must not be negligent in dealing with third parties because such negligence may be imputed to the principal. In return for an agent�s performance of duties, the principal provides compensation to the agent.
An agent may have actual or apparent authority in his or her dealings on behalf of the principal. Actual authority is created in one of two ways: 1. the authority may be expressly set out by the agency agreement, or 2. the authority may be implied from the relationship of the parties (the authority is obviously necessary for the agent to reasonably carry out his duties for the principal). Actual authority is viewed from the perspective of a reasonable agent; that is, would a reasonable agent believe that he or she had the authority to perform the act, make the agreement, etc.?
Apparent authority arises from acts of the agent that would lead a third party to rely on the existence of an agency. In contrast to actual authority, apparent authority is viewed from the perspective of a reasonable third person; that is, would a reasonable third party believe that the agent has the authority to bind the principal? Apparent authority may create liability for the principal to third parties who rely on the agent�s actions, even if the agent does not actually have the authority to act on behalf of the company. And, even if the agent�s actions are outside of his or her authority, the principal (company) subsequently may ratify the agent�s actions. Apparent authority can be ratified by a principal who learns of circumstances suggesting an agency, but then fails to deny the existence of the agency.
To contact Kent Hanzen, call (713) 522-9444 or email him at [email protected].
|
