Respond to each classmate 100 words a piece.
The question they had to answer. (Discuss the various duties, responsibilities, and liabilities of the Principal-Agent (employer-employee) relationship as outlined in the text.)
A principle-agent relationship is a contractual agreement between the agent and principle that gives each party certain obligations, regulations, and abilities within a company. This relationship “is characterized by loyalty, trust, care and obedience.” (Jennings, M., 2017, p. 580) Where the agents’ responsibility is to ensure that every action performed is with the principles best interest in mind. Which means that the agent is not able to act or speak for more than one party in the same transaction without consent from the principal. They are also forbidden to utilize any learned information from the party in any other case or to personally gain from the information. Blackmailing the principal for the information given to them in confidence is strictly forbidden, regardless of the situation. In most principle-agent relationships the company will enforce noncompete agreements which ensure the company that the employee will not disclose any information learned while working with the company and that employee will not work for a competing organization during their employment with the company. This contract is binding, and information learned during their time at the company cannot be used after leaving the company, without violating the agreement.
Meanwhile, principle-agent relationships based on loyalty, agents must abide by a couple simple rules including following the doctrine of inevitable disclosures. Which is used “in situations where the departing employing will be working in a situation in which disclosure of the previous employer’s competitive information will necessarily be disclosed.” (Jennings, M., 2017, p. 583) Which prevents an employee from working on the same project that they were at a previous company. Non-solicitation clauses are used by the company if an employee moves to a competing company to prevent the employee from spilling company secrets. While still allowing the employee to preform a job they are familiar with. Acknowledging trade secrets is another characterization that allows employees to be protected from using a two-key system that includes “what the employer is protecting must actually be a trade secret in terms of its value or under state statue, and the employer must have taken steps to protect its secrecy.” (Jennings, M., 2017, p. 584) Such as preforming the first two types of loyalty. Torts and Misappropriation are used to prevent previous employees from working with future competitors or using trade secrets into their own businesses. However, this is a harder type of action to preform and is usually only used in states that do not use the noncompete clause.
The duty of obedience used in principle-agent relationships gives the agent the right to take instruction from the principle. However, they cannot be instructed to break the law, they are able to use logic to dictate which is best for the principle and act in their best interest. Whereas the duty to care ensures that the agent makes decisions that would be logical and acceptable if doing so for themselves. Which ensures that the actions preformed by the agents are done carefully and with effort they would put into their own cases or business opportunities. Whereas, if an agent does not respect the duty of care duties, they would be in violation of principal-agent relationship and could be liable for all damages that occurs under their authority.
In business law, the principal-agent relationship refers to an arrangement where one entity (the principal) appoints another (the agent) to perform a range of duties on its behalf. The terms of a principal-agent relationship is often defined in a contract with the agent expected to have no conflict of interest in performing their duties. The agent’s primary duty is to perform tasks within acceptable levels of skill. The agent has a legal obligation to complete the assigned tasks without any intentional negligence (Jennings, 2017). The principal, on the other hand, may be a sole individual or a corporation. The primary duty of the principal is to act as the agent’s employer. In addition to defining the scope of tasks to be performed by the agent, the principal is legally obliged to compensate the agent under the terms of the contract.
Although the principal-agent relationship is typically in a written contract between the two parties, it may also be implied through actions. Irrespective of how it is expressed, the relationship means that the two parties are effectively involved in a fiduciary relationship. As such, the agent is expected to always prioritize the principal’s interests. To the extent that the instructions provided are reasonable, the agent has a legal obligation to complete all assigned tasks (Jennings, 2017). The terms of the contract may also imply a duty of loyalty on the agent’s part. This duty of loyalty requires that the agent avoids putting himself/herself in a position that pits their personal interests against those of their employer. The agent is also legally obliged to avoid actions that may intentionally harm their employer.