Sunday, July 1, 2018

Agency vs Employment vs Marriage Part 2 of 2

Q.
Should you decide what to say? Or your boss decides for you?

A.
Agency can be quite confusing when it is masked with employment or even marriage. The simplest thing to understand agency is two parties (can be individual or company) come to an agreement to do something with the authority of the principal entrusted to his agent in dealing with a third party. The third party is taken as directly contracted with the principal as he deals with this agent.

So, when a salesperson is promoting the product of his company, he is entrusted to sell this product as if the company sells directly to the customer. His delivery of the information is taken as if it is from the company. However, he cannot contract the company to buy stock or even a tin of milk for cafeteria as supply for all staff. Even when he is a financial controller of the company, he still cannot sign a contract of sale and purchase of a plot of land. That is the authority of the board or Chief Executive Director of the company.

Husband and wife, in the context agency really does not mean much. Husband who is the owner of the company, might not be the true principal. Rather, the wife who is running the business would have ostensible or apparent authority no matter what.

The question of who listen to who is rather subjective in such context. An employee cannot be acting without authority from the employer. A wife can act irrespective of whether her husband in fact, had authorized her. So, in the most strict sense, estate agency stays in between these two extremes. You have more authority to the employee but less than a wife.

Take for example, developer's staff will say things like this to customer:

During road show, company promoting Condo with special bonus! Below is a conversation:

Customer: Wow, so good la! Why give so much? Must be unable to sell la!

Employee: No la! We give special cash bonus in promoting our special launch, not because we have unsold units.

Customer: Must be cannot sell only give so much rebate and bonus la! I read in Star Newspaper so much condo unsold, 34,000 units completed cannot sell! MUST be too expensive la!

Employee: Where got expensive! We give rebate and bonus! Not expensive la!

The employee have to follow the instruction of the company to say the company's sales pitch. Whereas, as an agent, the agent can say what is best for his professional knowledge. For example:

Customer: Wow, so good la! Why give so much? Must be unable to sell la!

Agent: Sir, you are quite right. Actually, the whole property market is seeing a glut. So, developers are giving special prices to survive this difficult time! Our company do have unsold units and we are doing special promotion now, to echo your point, sir!

Customer: Must be cannot sell only give so much rebate and bonus la! I read in Star Newspaper so much condo unsold, 34,000 units completed cannot sell! MUST be too expensive la!

Agent: Sir, you do follow the market closely, so you really know the situation well! However, you should take this opportunity to enjoy all the rebate and cash bonus, right? After all, the market will recover soon, and you will make good investment!

The distinction between an employee and an agent in such circumstances is quite blur. The employee can be given the training to say what the agent said. However, it would have to be approved by the management. Whereas, the independent contractor - Agent is entrusted to sell the condo as in agency appointment. He being a professional, would have to deliver his value under the standard of code of conduct and ethics regulated by the profession itself.

If he thinks it is unacceptable to his profession, he can reject the sales pitch. He could modify to his expectation of the standard or refuse to abide by the request of the principal who appoints him. In case of necessity in emergency, he can even decide on his own what is best for the principal without having to get approval!

*However, such is the case, in today's situation of connectivity, one must call up the principal and get an instruction before deviating away from the original instruction. Or else, the principal might decide not to ratify the contract (s.149 Contracts Act, 1950).

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