According to Horsey (2017), a committed agent has many duties and responsibilities to his or her principal in every business. First, it remains the responsibility of the agent to avoid any form of conflict of interest between him and his principal. Secondly, the agent is expected not to carry out different tasks for his or her gains or the benefit of a third party without any form of permission from his principal. Thirdly, this agent is restricted from accepting any bribe or recognition from a third party secretly without the knowledge of the principle (Miller & Gold, 2016). Nevertheless, agents have the duty to remain accountable to their principles and avoid delegating any form of authority granted to them.
Horsey (2017) adds that proper execution of these duties by the agent establishes and enhances a harmonious relationship between him and his principal and increases the probability of a business achieving its goals and objectives. On the other hand, the idea of vicarious liability is a common practice in modern business contracts and holds different individuals responsible for the torts committed by their counterparts despite the fact that these particular people did not execute that action (Ward, 2010). This paper discusses different aspects of business interim in two distinct parts. The first section uses different case scenarios in law to offer a critical examination of the various fiduciary responsibilities of an agent to his or her principal. Contrary, the second section uses a variety of case scenarios and examples to offer a detailed discussion on the idea of vicarious liability in the field of tort law.
Section A: Fiduciary Duties of Agents to their Principals
The Duty of Avoiding Conflict of Interest
Ward (2010) argues that the conflict of interest accounts for the significant differences that may arise between agents and their principals. This difference commonly comes because of the agent being greedier and looking for more principals to increase his or her earnings. As such, this duty was set aside to ensure that each agent will be appointed and act on behalf of the principal who nominated him or her (Baskind, 2017). However, the law allows such agents to serve two different principals with different interests. In this case, the agent must fully reveal to each principal his interests under the two different appointments to obtain each principals agent to the dual contract (Haupt & Dorsey, 2015). Consequently, any estate broker representing both the buyer and the seller in a property transaction activity must reveal this fact to the two parties to obtain their consent for his engagement.
According to Horsey (2017), the responsibility of the agent in avoiding conflict of interest is also applicable to a scenario whereby his interests and that of his colleagues, as well as closest relatives, conflicts with his roles to the principle. However, the agent may continue acting for the principal if he discloses all these interests to him and is granted the principal's consent. Failing to reveal these benefits to the principal amounts to the breach of his fiduciary duty and has to account for any profits gained from such transactions (Miller & Gold, 2016). Lastly, the law prohibits renting or purchasing of property between the agent and his principal unless there is full disclosure of all the facts of the property to the two.
The Duty of An Agent Not Acting For His Gains or the Benefit of a Third Party without the Principals Informed Consent
Miller and Gold (2016) ascertain that the common business law prohibits an agent from making any profit or obtaining any gains without the approval and knowledge of his appointed principal. Such benefits are often referred to as secret profits and range from money other valuables such as a loan without interest and obtaining a free membership to a club. The law requires agents who accept hidden benefits to account to their principles the sources and reasons for such benefits in collaboration with other remedies that agitated him to breach the contract. Numerous scenarios can serve as the best examples of agents aims to achieve personal benefits (Watts, Reynolds & Bowstead, 2012). For instance, an agent within the real estate industry who lets the property of a principal to a third person without his informed consent and keeps the rent while the principal is away for his benefits breaches his duty of not obtaining undisclosed benefits. Another example could be that of an agent who uses his position to the principal to get monetary benefits from a supplier by placing purchase orders (Baskind, 2017; Adamson, 2008).
Similarly, a company director is prohibited from entering a contract directly with the third party for personal gains when negotiating on behalf of the enterprise (Haupt & Dorsey, 2015). Agents should not also use knowledge or information acquired on behalf of their principals for personal gains. A good example is whereby an estate broker realises that there is a property being sold below the market price and decides to purchase and sell it at a profit without the informed consent of his principal (Baskind, 2013). Such agents are liable for breaching their duty for not acting on behalf of their benefits. However, the agent may be discharged this obligation if he decided to disclose all the facts pertaining any form of engagement with the third party (Horsey, 2017).
The Duty of Not Accepting Bribe from Third Parties Secret to the Principal
According to Ward (2010), all agents are expected to carry out their duties in the best interest of their principals by the common business law. As such, agents have a duty of not accepting any illegal benefits in the form of a bribe, inducement, enticement and commissions. In most cases, these benefits are usually suggested to the agents by third parties to a contract without the informed consent of their principals. A good example would be a situation whereby a principal sends his agent to negotiate the price of a given property, but the agent goes on negotiating the property on behalf of a different party (Baskind, 2013). In this case, the undisclosed party will end up paying the agent a given amount for helping him acquire the property as opposed to his initial principal. Such agents must account for their actions of not negotiating to the best interest of their principals.
The Duty of Accounting
According to Hauptand Dorsey (2015), this task requires agents to account and show the highest degree of responsibility to any property received on the behalf of their principals. Consequently, the law calls for the agent to act as a trustee to that property and keep it separately from his. Such agents have a responsibility in maintaining updated accounts of the received goods and to avail this account to his principal upon request. It should be, however, understood that the agent has to remain accountable to the principle even after the termination of their contract (Miller & Gold, 2016). As such, the agent has to return all the documents provided and those written on behalf of the principal.
The Duty of Not Delegating
Ward (2010) adds that the law requires agents not to charge all or a subsection of their principal assigned duties to any third person without the consent of the principal. The agent should understand that the principal delegates his duties to him as a stipulation in the law owing to his accountability, skills, knowledge, trustworthiness and experience, which may not be possessed by the third party (Baskind, 2017; Adamson, 2008). Therefore, agents have not authority to delegate duties to his self-appointed sub-agents or deputies. All agents who delegate tasks without full disclosure to their principals remain liable and accountable for any form of loss incurred by the organisation (Watts, Reynolds & Bowstead, 2012).
Section B: Application of the Concept of Vicarious liability in the Field of Tort Law
According to Ward (2010), tort law refers to the constitutional rules and regulations used to govern essential civil roles and duties that individuals have to their counterparts as opposed to the duties stipulated in their relationship contracts. This law offers legal remedies, which are usually in form monetary payments to individuals injured by the failure of their colleagues in meeting their assigned duties. These laws, however, differ from one country to another and are distinct from criminal laws where courts have the authority in restricting individual's freedom. The law of tort covers multiple areas including negligence with every tort having a distinguishable amount of needs to be met (Heiderhoff & Zmij, 2009). A good example is whereby a passenger injured by a reckless car driver has the responsibility of suing him for not being cautious of other road users.
Similarly, the principle of vicarious liability stipulates that every individual is legally liable, responsible and accountable for any tort committed by another person (Morissette, 2009; Roach, 2016). This law is commonly used in an employment scenario whereby all employers are vicariously liable and responsible for any acts of omissions or negligence executed by his employees provided that they occur within his job contract. Additionally, employers remain responsible for their self-authorized acts as well as acts performed in unauthorised and a wrongful way. Employers must also be held accountable for all unlawful acts carried out by their employees for either their gains or for the benefits of their employees.
According to Heiderhoff and Zmij (2009), the central principle behind this practice is founded on the belief that one's employer has to be accountable for all acts executed by his employees despite him being unworthy for suing. Therefore, the law assumes that employers who are often large corporations with large financial muscles have stronger financial muscles to cater for third party injuries committed by their employees. Consequently, this law benefits the complainant because he stands a better chance of being compensated in the form of money or medical attention as opposed to a condition whereby the case is left to the individual employee who committed the tort (Watts, Reynolds & Bowstead, 2012). This action, legally taken by the employer to compensate third parties and protect the image of their organisation in the long-run shows attributes of social convenience as the company may bear little or no complaints about the incurred compensations (Morissette, 2009; Roach, 2016).
However, research shows that employers can obtain a convenient solution by directly purchasing a liability insurance cover to cater for the costs incurred when paying potential claims that may result from various actions such as torts (Baskind, 2017; Adamson, 2008). Consequently, the organisation can cover up the costs incurred when compensating these torts through price increments on goods. This practice enables the organisation to strike a possible balance between the organisational social interests while paying for the torts without causing undue economic constraints on businesses (Watts, Reynolds & Bowstead, 2012).
According to Baskind (2017), the law also calls for moral considerations to this principle putting in mind that every employer gains supernormal benefits from his business venture and needs to be ready to bear any form of loss occurring because of his business activities. Nevertheless, employers are expected to express increasing interest in responsible hiring, training, employing and supervising their employees as part of the solution to potential claims that may arise in their employment contracts. This assertion appears to provide the most believable logic in the idea...
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