[Anonymous]

So I can easily just read the question and answers while studying the material and simply move on, but I have this habit where I want to learn more in depth about the topics covered.

I am curious how do principal-agent relationships work in real life? I read the examples, but I am a bit confused on the reality of these laws and how they mechanically work in real life.

FOR EXAMPLE:
“Baxter, Inc., and Globe entered into a contract. After receiving valuable consideration from Clay, Baxter assigned its rights under the contract to Clay. In which of the following circumstances would Baxter not be liable to Clay?

Correct A.
Clay released Globe.

Explanation: Baxter would not be liable to Clay if Clay released Globe. When a contract is assigned, if the party fails to perform, the assignor (party who assigned their rights to another party) would be liable for performance. In this example, Baxter is the assignor and Clay is the assignee. Under common law contract law, the assignee “steps into the legal shoes of the assignor.” If Baxter fails to perform, then Globe may hold Clay liable. If Clay releases Globe, that release also serves to release Baxter from any performance.”

So I can follow this and understand it from a conceptual point of view. However, in real life how does this “assigning of rights” and “release from contract” actually work? Is the release simply another formal document stating “I, Clay, release Globe from the contract”? Can it be an unformal document? An e-mail? A text message? An assumption and implied meeting of minds? Do both parties have to agree to the release? Are there terms and conditions to the release? Does this apply to employment contracts as well or only certain types of contracts?

Or can this assigning/release happen verbally? I understand these questions conceptually, but in real life in the legal environment, I don’t think things are as cut and dry. Often times in contracts there are exceptions and restrictive covenants that override these simplistic concepts and make them useless.

Does anyone else struggle with this thought process while studying for the exam or am I over-thinking? Thank you