United States Law of Agency

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United States Law of AgencyIssue StatementThe issue in the case of Karsten is to establish whether his decision to sell 700 pair of shoes to pro golf is in accordance with the business law and ethics. Karsten was in a contract with the Ling Company to represent theLingCompany, the memorandum of understanding between him and the company was that he should represent the company’s interests. Given that, Ling Company, a manufacturer of golf equipment and accessories, hired Karsten as an outside sales agent. In addition, Karstens’ duties as outside sales agent required him to visit Golf Pro shops at golf courses, other golf equipment and accessory retailers. However, though it was common for an outside sales agent in Karstens position to have the authority to make contracts to sell any item on his employers’ line of products.The American law of agency requires that the sales agent should act as per the agreement with the principal. Karstens agreed to a memorandum of understanding with Ling Company restricting him from contracting to sell any Ling golf shoes without getting consent from Perez. Perez is Ling’s vice president of sales. Ling’s temporary problems in getting shipments of golf shoes from its supplier in China prompted limitation of Karstens authority being. However, neither Ling nor Karsten had informed Pro shops or retailers of the restriction on Karstens authority. Nonetheless, Karsten goes ahead and makes a contract to sell 700 pairs of Ling shoes to Pro Golf Company.Rule StatementAccording to this case, Karstens was a qualified and the legal sales agent of Ling Company. In his position, Karsten had the legal authority and capacity to make the decision of contracting for sales on behalf of Ling Company to its customers, Pro shops and retailers. The fact that they did not inform the pro shops and retailers of their arrangement, it is clear that the Pro Golf Company was acting on apparent authority of Karstens. According to the US law of agency, Karstens actions are taken as they are the actions of the principal. Therefore, Ling Company is bound to the contract with the pro golf company because Karsten was operating at a capacity acknowledge by the business law.The American law on agency victimizes principals on actions executed by agents acting within the limits of their authorization. Therefore, the actions of the agent bind the principal automatically. The principal will be answerable for actions by the agent since they are legally recognized. In this case, Karstens therefore owns Ling Company for any cost or damages it may incur out of the contract with the Pro Golf Company. Ling Company is legally bound to the contract because at the time Karsten was contracting the pro golf company, he was the legal sales agent of Ling Company (Mallor, Barnes Bowsers, 2013).AnalysisAccording to Americanbusiness law,Ling Company was bound to the contract because they had legally hired Karstens. Hiring Karstens as the company’s outside sales agent automatically fits him legally in a position to transact business on behalf of the company. Any business he transacted in the name of Ling Company in this position bounded Ling Company to it. However ethically, Karsten was wrong to go ahead and contract the Pro golf company bearing in mind that they had an agreement with the company that restricted him to seeking permission first before contracting any company.ConclusionLing Company is bound to the contract. Karstens is legally bound to take responsibility for any consequences should Ling Company fail to meet the contract’s requirements. The Pro Golf Company signed the contract without any formal information on the pre arrangement between Ling Company and Karsten. It was therefore acting on Karsten’s apparent authority and therefore it should sue for compensation shouldLing Company fail to meet the contract’s requirements.ReferenceMallor, J. P., Barnes, J.A Bowsers, T. (2013).Business law: The ethical, global, and e-commerce environment. Boston: McGraw-Hill/Irwin.