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Summary Mini Case FIN534.docx FIN534 Mini Case Strayer University FIN534 Mini Case An agency relationship describes an arrangement where one party or entity legally appoints another party or entity to act on its behalf. Agents can denote individuals such$7.49
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Summary Mini Case FIN534.docx FIN534 Mini Case Strayer University FIN534 Mini Case An agency relationship describes an arrangement where one party or entity legally appoints another party or entity to act on its behalf. Agents can denote individuals such
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Mini Case FIN FIN534 Mini Case Strayer University FIN534 Mini Case An agency relationship describes an arrangement where one party or entity legally appoints another party or entity to act on its behalf. Agents can denote individuals such as business partners or employees or different enti...
mini case fin534docx fin534 mini case strayer university fin534 mini case an agency relationship describes an arrangement where one party or entity legally appoints another party or entity t
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FIN534
Mini Case
Strayer University
FIN534
Mini Case
An agency relationship describes an arrangement where one party or entity legally
appoints another party or entity to act on its behalf. Agents can denote individuals such as
business partners or employees or different entities, including an outsourcing firm or
accountancy company (Chohan, 2018). The fundamental component of the described
relationship is that the selected agent must be legally permitted or authorized before acting on the
other entity's behalf. The authorization is documented as a contract that details the agent's
responsibilities (Chohan, 2018). An agency relationship is viewed as a fiduciary relationship,
which implies that the principal places substantial confidence and trust in the agent to serve the
principal's primary interests. There are our ways to create an agency relationship; express agency,
implied agency, agency by ratification, and apparent agency.
Besides, an agency conflict would not exist in a circumstance where only one employee
exists. The only money invested in the business comes from this employee because of the
fiduciary nature associated with agency relationships. The tension would not exist because the
relationship requires two individuals where one is obligated to act in the principal's best interests
(Chohan, 2018). An agent and principal are requisite parties in this relationship to lead to any
conflict because the former's actions usually contribute to massive legal obligations for the latter.
Moreover, most conflicts arise from information asymmetry, which may not exist where one
individual runs a business. Asymmetric information primarily occurs when one individual has
more knowledge than the other, which leads to conflicts.
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