32: Agency

Which of the following remedies may an agent seek when the principal breaches a duty owed to the agent?

Withholding further performance and demanding an accounting.

James goes shopping and, using his wife Maria's credit card, he buys $220 worth of groceries. Is Maria liable for the purchase?

Yes, based on the creation of an agency by operation of law.

Agency is defined as

a fiduciary relationship between two parties, in which one party agrees to represent or act for the other.

With respect to who can become a principal and who can become an agent,

a person must have contractual capacity to be a principal, but any person can be an agent.

A person must have contractual capacity to be:

a principal

In agency law, the term "ratification" refers to:

a principal's approval or affirmation of a contract that was formed by someone who was not an agent or by an agent who was not authorized to form the contract.

In agency law, ratification occurs when:

a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent.

When determining whether a worker is an employee or an independent contractor, the key element to consider is:

the extent to which the employer controls the actions of the worker.

When the principal-agent relationship is not contractual, the agent has no right to specific performance.

T

Under the Copyright Act of 1976, any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is a "work for hire" and the:

employer owns the copyright to the work.

When the principal grants an agent an exclusive territory, we say that the principal has created a(n)

exclusive agency

In these kinds of relationships, the courts may find an agency relationship in the absence of a formal agreement:

family relationships

Indemnification means that:

if a third party sues the principal for damages caused by the agent's negligence or unauthorized actions, the principal may sue the agent to recover an equal amount of damages.

Assume that Dr. Early is an independent contractor for Pharzime, and Dr. Early sells the hospital 1,000 Gensol tablets. Pharzime does not deliver on time, and the hospital sues Dr. Early for the breach of the contract. Dr. Early is found liable for $10,000 worth of damages. Dr. Early will probably be able to recover the $10,000 from Pharzime, because of the concept of:

indemnification

In certain situations, when a principal is sued by a third party for an agent's negligent conduct, the principal can sue the agent for an equal amount of damages. In that case, the agent seeks:

indemnification

When a principal is sued by a third party for an agent's negligent conduct, the principal can usually sue the agent for

indemnification

Brittany works at home making unique children's clothing. Liam buys Brittany's clothing to sell in his store. With respect to Brittany's legal relationship to Liam, she is probably an

independent contractor

Kip owns Kip's Construction. He agrees to renovate Simha's bathroom. Kip is likely to be classified as a(n)

independent contractor

Joe, who owns Joe's Construction and Renovation Company, agrees to renovate Khandi's bathroom. How would the Internal Revenue Service be likely to classify Joe?

As an independent contractor.

When an employer hires an independent contractor—a freelance artist, writer, or computer programmer—the:

independent contractor normally owns the copyright.

A fiduciary relationship is one that:

involves a high degree trust and confidence.

Robert attempts to avoid paying Andrew a commission check on the sale of his house to a buyer procured by Andrew by waiting until after the listing agreement has expired. Andrew finds out about this after Robert sells his house. Andrew can

sue Robert for breach of contract

Principal duties to agent.

1. compensation 2. reimbursement and indemnification 3. cooperation 4. safe working environment

When a person who is not an agent makes a contract on behalf of a principal, the principal cannot benefit from the contract.

F The principal can approve the contract through an Agency by Ratification

Jamel hires independent contractor Stevenson to create users' manuals for Jamel's small appliances. How can Jamel be certain to own the copyright for these owners' manuals?

He can create an agreement in writing that designates Stevenson's work as work for hire.

2. If a court were to find that Dr. Early is an independent contractor for Pharzime, which of the following is true?

Pharzime would be liable for contracts written by Dr. Early between Pharzime and the hospital, but not liable for torts committed by Dr Early at the hospital while calling on the customers there.

It is the deeds or statements of the ___________ that create an agency by estoppel.

Principal

A gratuitous agent cannot be held liable for breach of contract because there is no contract.

T

Agency agreements must not be in writing and need no consideration

T

Agency relationships can exist outside an employer-employee relationship, and thus agency law has a broader reach than employment law does.

T

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

T

The principal has a duty to indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions.

T

1. Assume that Dr. Early is a sales representative for Pharzime and for other pharmaceutical companies as well. What would be the main factor that would determine whether he was an employee or an independent contractor for Pharzime?

The degree in which Pharzime controls the details of Dr. Early's work.

Assume that Dr. Early is an independent contractor for Pharzime and was calling on a doctor at the hospital and the hospital wanted to order some Gensol. Dr. Early sells some pills that he was given as samples to the hospital and keeps the money for himself. What duty has Dr. Early violated?

The duty of loyalty.

You walk into a restaurant and check your coat to a person behind a counter. You see a sign that says "I work for tips." What can you assume the relationship is between the owner of the restaurant and the person who took your coat?

There is an implied agreement that the coat check person is an agent of the restaurant.

If the agent engages in misrepresentation, negligence, deceit, liable, slander, or trespass, what type of remedies does the principal have?

Tort

Rights and remedies of agents and principals include:

a. monetary damages. b. termination of the agency relationship. c. an injunction.

Dara gives her agent, Marla, money to purchase a new commercial oven. Marla takes the money and deposits it into her personal checking account. Marla then accidentally spends some of Dara's money. Marla has violated her duty of

accounting

Delia gives her agent, Mike, money to purchase a commercial oven. Mike takes the cash and deposits it into her personal checking account and then accidentally spends some of it. Mike has violated his duty of

accounting

The agent owes the principal certain duties. These include:

accounting, notification, loyalty

Agency relationships can arise by:

agreement, estoppel, operation of law or ratification

Federal statutes governing employment discrimination

apply only when an employer-employee relationship exists.

Perry tells Jaime that Selena has agreed to allow him to sell her high-end trial bike. Selena is present at the time, hears the conversation, and says nothing. Jaime wants to buy a bike like Selena's so he agrees with Perry to buy her bike. Selena then refuses to sell it. She claims she is not bound by the agreement formed by Perry and Jaime because Perry is not her agent. Selena is:

bound by the contract under a theory of agency by estoppel.

Charlie tells Jamal that Marisol has agreed to allow him to sell her racing bicycle. Marisol is present at the time, hears the conversation, and says nothing. Jamal wants to buy a bicycle like Marisol's, so he agrees with Charlie to buy Marisol's bike. Marisol then refuses to sell the bicycle. Marisol claims that she is not bound by the agreement formed by Charlie and Jamal because Charlie is not her agent. Marisol is

bound by the contract, under a theory of agency by estoppel

Safe working premises, equipment, and conditions for all agents and employees is required by:

common law

What are the duties of a principal?

compensation, reimbursement and indemnification, cooperation (exclusive agency) and safe-workign environment

Clarence buys $221 worth of groceries using his wife's credit card. Under agency law, his wife will probably be deemed:

liable for the purchase, based on the creation of an agency by operation of law.

An agent has the duty to act solely for the benefit of his or her principal and not in the interest of the agent or a third party. This is referred to as the duty of:

loyalty

Louisa is moving from New York to Los Angeles. Grover agrees to act as her agent to sell her New York apartment. As her agent, Grover owes Louisa all of the following duties:

loyalty, performance, and notification

Independent contractors are not employees because, by definition, those who hire them have:

no control over the details of their work performance

When the principal-agent relationship is not contractual, the agent has:

no right to specific performance.

An implied condition in every agency contract is the agent's agreement to use reasonable diligence and skill in performing the work. This is the agent's duty of:

performance

What are the duties of an agent?

performance, notification, loyalty, obedience and accounting

When a principal causes a third person to believe that another person is the principal's agent, and the third person acts to his or her detriment in reasonable reliance on that belief, the principal is estopped to deny the agency relationship. Estopped to deny is:

prevented from denying.

When an agent breaches the agency agreement or agency duties under a contract the:

principal has a right to avoid any contract entered into with the agent.

Whenever an agent disburses funds to fulfill the request of the principal or to pay for necessary expenses in the course of a reasonable performance of her or his duties, the:

principal has the duty to reimburse the agent for these payments.

On occasion, a person who is in fact not an agent may make a contract on behalf of another (a principal). If the principal approves or affirms that contract by word or by action, an agency relationship is created by:

ratification

One reason the status of a worker as either employee or independent contractor is important is because:

some employment laws apply to employees, but not to independent contractors.

When the term, fiduciary is used as an adjective, as in the phrase "fiduciary relationship," it means that the relationship involves:

trust and confidence.

Agency relationships normally are consensual, which means that they come about by:

voluntary consent and agreement between the parties.

When the principal breaches a duty owed to the agent, an agent may:

withhold further performance and demand an accounting

An agent has the right to perform agency duties:

without interference by the principal.

Any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is called a

work for hire