Introduction to business Law coursework 2250
Discuss critically the liability of agents, directors and promoters, in relation to companies limited by shares.

750 words each
A private company which is limited by shares is a company which is incorporated by the laws of England and Wales, Scotland and other certain commonwealth countries and the Republic of Ireland. It includes shareholders with limited liability and these shares cannot be offered to the general public. Businesses can be limited in order to help raise external finance and become more tax efficient than other business out there. In private companies, the company and personal finances are kept separate which is advantageous. Private companies limited by shares are controlled by the board of directors. The regulator of these types of companies is companies’ house, together with a governing documents called the Memorandum and Articles of Association. And finally, the sources of finance which are available are; loans, equity finance and grants. http://www.companiesmadesimple.com/company-formation-limited-by-shares.html
In business law, a principal is a person, who is legal or natural authorising an agent to act to create one or more legal relationship with a third party. This section of law is called agency and counts on the common law proposition. If the agent acts without rights from any actual authority, the principal will be bound because of the Agent having authority at that apparent time. The agent is also liable to reimburse the principal resulting any loss or damage. If the agent has actually proceeded within the guidelines of the given authority then the principal must compensate the Agent for the payments which have been made during the course of the relationship, whether the expenditure was specifically authorised or merely needed for promoting the Principal’s business. The third person will be liable to the Principal on the terms which have been set out in the agreement made with the Agent unless the Principal was unidentified and there is evidence that either the Agent or the Principal was aware that the Third Party would not have entered into the agreement, if they knew of the Principal’s involvement.
The relationship between the Principal and the Agent is fiduciary which means the Agent needs to be loyal to the principle and there are many duties involved. The Agent cannot accept any new obligations which are out of the agreement of the duties owed to the Principal. Agents are able to portray interests in more than one Principal, disputing or potentially disputing, on the basis of full and timely disclosure or where there are different agencies set up on limited authority to prevent circumstances where the Agent’s loyalty cannot be questioned towards several Principals. And for this reason, express clauses are included within an agreement signed by both each Principal with the Agent, to avoid any breaches of loyalty and therefore make the Principals bound. The Agency cannot make a private profit from the agency relationship; principals usually incorporate power in their contract designed with the Agents which allows them to look into the Agent’s accounts if there are valuable grounds to investigate suspicious behaviour.

The principle had a duty to be honest about all disclosures and all information relevant to the transactions that the Agent is authorised to negotiate and must pay the Agent either commission or an agreed fee, however if no fee was previously agreed than a reasonable fee must be sought.