Agency and Distribution Law
Core concepts
Agency examines the relationship where an agent acts on behalf of a principal. Key issues include authority (actual, implied, apparent), ratification, and the undisclosed principal doctrine. Agents owe fiduciary duties: loyalty, no conflict, no secret profit, and full disclosure. Principals owe duties of indemnity and good faith. Termination rules govern notice and post-termination restraints. Distribution arrangements (dealerships, franchises, distributors) raise issues of exclusive territories, minimum performance, good faith, and termination compensation in some jurisdictions.
Traps
- Confusing apparent authority with implied actual authority; apparent authority requires a representation by the principal.
- Assuming an agent can bind a principal after termination without notice to third parties.
- Overlooking fiduciary duties that survive termination for confidential information.
- Missing statutory protections for distributors in some jurisdictions (notice, compensation).
- Treating a distributor as an agent; distributors usually buy and resell for their own account.
Worked rule of thumb
Ask W-A-L: Who is the principal, Authority (actual, implied, apparent), and Liability (principal, agent, or both). Then check fiduciary and termination issues.