Week 4 Discussions

Week 4 Discussions: Business Law and Ethics

W4:D1 Apparent/Ostensible Authority

The apparent authority, also known as an ostensible authority, entails the agent's power to represent or act on behalf of the principles, even under circumstances where such power is not granted expressly or impliedly. The aim is to primarily protect third parties against losses if they acted in a way thinking the agent was representing the principle. If observers establish such apparent authority, the principle could be liable to the third party for the agent's actions. The principle, in this case, has little to do with avoiding such legal consequences since some of the agent's actions may not be in the contractual agreement. However, suppose the agent no longer represents specific interests. In that case, it is essential to provide public legal notice to indicate that such an individual is not acting in the capacity of the principle on particular transactions. In this case, if a client suffered losses through an agent who no longer represented the principle, such a public notice could help protect the principle from liability. Besides, the nature of the agent and principal relationship could also be in a contractual agreement to specify that an agent cannot act on some issues on behalf of the principal. This is made public to potential clients to avoid being indicated in case. Besides, framing the legal agreement of an agent and principle can help ensure that there could be a liability if an agent acts outside the agreement conditions. A good example can be the salesperson at an electronic shop. A client can visit the shop, meet the salesperson, and make a deal with a discount. However, when making the purchase, the deal becomes invalid as the salesperson who might have been wearing the company's clothes was not actually a salesperson but a cleaner covering for another individual. Therefore, the third party, the client, could have reasonably assumed the salesperson was acting with apparent authority on behalf of the company’s owner.

W4:D2 Partnership Duties

The essential duty owed by partners in a partnership to each other includes the fiduciary duty of good faith and fair dealing. In this case, the partners should develop trust and act honestly and fairly regarding the partnership. The partners should always have good intentions for each other and act in the best interest of the others and the partnership, which shows fairness and good faith. In this case, it is vital that in the formation, daily operations, and closure of the partnership, all the partners remain fair and open to each other to enhance accountability and transparency. While this might not be expressed in the laws, it is crucial to show the responsibility of being open because it enhances trust and the ability to share information and make decisions to impact the partnership positively. An example of good faith and fair dealing could involve two people in a business partnership. Then one partner gets an opportunity that could increase the company’s success. Instead of cheating the other partner to gain personally, the other partner shares all the information truthfully and they both venture in the best interest of each other.

W4:D3 Death and Partnership Dissolution

In the event a partner dies, the partnership dissolves immediately based on the law and conditions of the partnership agreement regarding an eventuality of death. However, this applies more to partnerships involving two people or entities. In that event, the beneficiaries of the dead partner get a share of the business by either continuing with the partnership or getting the shares spread over some years. The ethical aspect is that the wishes of the dead partner are fulfilled and that the nature of the partnership agreement is implemented with goodwill and honesty in that eventuality. In the partnerships involving corporate entities, the beneficiaries listed by the company either take over and continue the partnerships or the shares are given to the beneficiary over some time. One of the main drawbacks is the ability of the business to survive in the vent a partner dies. Some businesses may be progressing well, and if a partnership dissolves, it can lead to significant restructuring and losses to a business. Although most partners aim to achieve a beneficiary by continuing the business and partnership, such threats that could even lead to the company's closing may force other partners to prefer payment of the shares over time than liquidating assets.

A good example is a partnership involving two people. Each of the partners has listed the next of kin and indicated in the case of death, the next of kin take over the partnership and continues receiving the benefits on behalf of the family. If the beneficiary does not want to continue, the shares will be paid ten years after the death. In this case, if, unfortunately, the partner dies, the other partner honestly communicates the terms of the partnership ad dissolution and leaves the beneficiary, who is the next of kin, to decide based on the dissolution terms.