Question 1: Agency Relationship
Agency relationships are prevalent in business settings as corporations and partnerships take actions only through an agent. According to Kelley (2012), an agency relationship is a contractual agreement between an individual or business (the principal) and another individual (the agent) under which the principle permits the agent to act for it. Since agency relationships are contractual, the contract between the agent and the principal specifies the nature and the scope of the actions that the agent executes on behalf of the principle.
Use your promo and get a custom paper on
"Debtor Relations, Agency and Employment".
There are three common types of agency relationships. These relationships are buyer’s agency, seller’s agency and dual agency (USLegal, 2016). The kind of agency relationship that Peter currently has with my brother can be termed as a dual agency since he represents both my brother’s interests as well as the other kids in the neighborhood with lemon trees in their yards. According to USLegal (2016), in dual, agency, the agent, who is Peter in my brother’s case, presents both the buyer and seller in a single transaction and carries fiduciary accountabilities to both principals. In particular, Peter, the agent, works for my brother, the principal. However, the fact that Peter also negotiates with other kids in the neighborhood with lemon trees in their yards (the principle) makes him serve two principles in a single transaction. As a result, Peter has a dual agency relationship with my brother.
The main inadequacy of dual agency is that a mistake by an agent becomes a mutual mistake for both principles. In this respect, it makes one party or principal bear the costs of the mistakes caused by the other party. Therefore, I would recommend a buyer’s agency relationship. In this kind of agency relationship, Peter will exclusively represent my brother’s interests in all of the transactions that he executes. Besides, I would recommend my brother to make Peter a special (limited) agent. A special or limited agent will only perform the actions specified in his job description. This move will make Peter concentrate on his primary role as the Chief Operating Officer, as well as enable my brother to employ a specialist to oversee the negotiation process with other kids in the neighborhood with lemon trees in their yards.
Question 2: Employment Law Perspective
To secure an increased supply of lemons, I would prefer my brother to consider purchasing lemons directly from a local farmer, even though these lemons will be a little more expensive and not as fresh. Although this move may appear disadvantageous from a business perspective, it is highly effective and safe when viewed from an employment law perspective. By purchasing the lemons directly from the local farmer, my brother will not have to comply with the numerous rules imposed on employers by their state or federal government since the farmer will operate as an independent contractor. On the word of DuBoff (2004), the fact that an individual works for a business as an independent contractor implies that the business owner is not responsible for his or her social security taxes or even liable for injuries to a third party emanating from the independent contractor ’s negligence or wrongful acts.
Specifically, the only relationship that will exist between my brother and the farmer is the obligation of the farmer to supply the lemons, and my brother’s duty to pay for the deliveries as agreed. In this respect, my brother will not cover any other costs apart from paying for the delivered lemons. From an employment law perspective, adding more employees means adding more responsibilities on the employer’s side.
Therefore, adopting Peter’s suggestion of adding more employees to pick the lemons will increase the cost on my brother’s side since he will be compelled to comply with the myriad state and federal rules imposed on employees. DuBoff (2004) points out that dealing with an independent contractor is different from dealing with an employee. Dealing with an employee makes the employer liable for negligence and, sometimes, even the intentional wrongdoing of the employee when the employee is acting on their behalf. Although getting supply from the local farmer might be disadvantageous businesswise, it is highly effective from an employment law perspective.
Question 3: Business Loan
Obtaining investment loans from financial institutions such as banks is one of the vital strategies of financing business expansion. However, securing these loans is not an easy task since the person requesting the loan must convince the lending agency that they have the ability to service the loan appropriately (Kamoroff, 2008). Providing detailed financial statements is one of the fundamental ways of convincing the lending institutions to grant an investor a business loan. However, my brother has not been successful in securing a business loan using his company’s financial statement.
In spite of this disappointment, there are other alternatives that he can utilize to convince the banks to grant him a business loan. Firstly, he can provide the banks with a detailed business plan for his company together with the financial statements. According to Kamoroff (2008), lenders are highly interested in knowing how a person intends to spend the borrowed money. As a result, providing a detailed business plan can convince the banks to grant my brother the loan he requires.
Besides, my brother can offer the bank security or collateral such as a piece of property to secure the loan. In keeping with Roche (2004), the use of such securities provides the banks with alternative sources of recovering the borrowed money if an individual defaults the loan. Using a security will illustrate that my brother is committed to repaying the loan once granted. Finally, my brother needs to carefully scrutinize the requirements stipulated by various lenders before applying for the loan. With this comprehensive understanding, he will be knowledgeable of the various requirements that one must fulfill before being granted a loan.
- DuBoff, L. D. (2004). Law in Plain English for Small Business. Illinois: Sphinx Publishing, an Imprint of Sourcebooks, Inc.,
- Kamoroff, B. (2008). Small Business Operator: How to Start Your Own Business, Keep Your Books, Pay Your Taxes and Stay Out of Trouble! Willits: Bell Springs Publishing.
- Kelley, G. S. (2012). Construction Law: An Introduction for Engineers, Architects, and Contractors. Hoboken: John Wiley & Sons.
- Roche, B. (2004). Law 101: Know Your Rights, Understand Your Responsibilities And Avoid Legal Pitfalls. Illinois: Sphinx Publishing, an Imprint of Sourcebooks, Inc.,
- USLegal. (2016). Types Of Agency Relationships. Retrieved from USLegal: https://agency.uslegal.com/types-of-agency-relationships/
