Business Law: Chapter 30

Work-related Test

Determines whether an agent committed an intentional tort within a work-related time or space.

Motivation Test

Determines whether an agent's motivation in committing an intentional tort is to promote the principal's business.

Respondeat Superior

Employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer's authority.

Duty of Loyalty

Fiduciary duty owed by an agent, not to act adversely to the interests of the principal.

Agent exceeding scope of authority.

Implied warranty of authority. Ratification of a contract. Agent is liable for breaching the implied warranty of authority. Principal is liable, only if he or she ratifies.

Tortious

Intentional or unintentional wrong.

Negligence

Liability for negligence is based on: -Respondeat superior -Vicarious liability

Tests to determine whether an agent's intentional torts were committed within the scope of employment:

Motivation test and Work-related test.

Independent Contractor

Person who contracts with another to do something for him who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking. Principal is not liable for the torts of its independent contractors.

Liability for independent contractor's contracts

Principal can authorize independent contractor to enter into contracts. Principal is not liable on the contract, if the independent contractor enters a contract without the principal's authority.

Coming and Going Rule

Principal is generally not liable for injuries cause by its agents and employees while they are on their way to or from work.

Vicarious Liability

Principal is liable for an agent's tortious conduct because of the employment contract between the principal and agent.

Misrepresentation

Principal is liable for any misrepresentations made by agent within scope of employment.

Liability for an independent contractor's torts

Principal is not liable for the torts of its independent contractors. Independent contractors are personally liable for their own torts. Principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors.

Ratification of a contract

Situation in which a principal accepts an agent's unauthorized contract.

Frolic and Detour

Situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's.

Dual-purpose Mission

Situation that occurs when a principal requests an employee or agent to run an errand or do another act for the principal while the agent is on his or her own personal business.

Fully Disclosed Agency

*Agency in which a contracting third party knows: -Agent is acting for principal. -Identity of the principal. *Principal is liable on the contract. *Agent's signature must indicate that he or she is acting as an agent for a specifically identified principal.

Contract liability of principals and agents to third parties:

-Agency law imposes contract liability on principals and agents. -Principal who authorizes agent to enter into a contract with third party is liable on the contract. -Third party can enforce and recover damages from principal. -Agent can also be held liable in certain circumstances.

Liability for Intentional Torts

-Includes assault, battery, false imprisonment, and other intentional conduct that causes injury to another person. -Principal not liable for intentional torts of agents and employees that are committed outside the principal's scope of business.

Sources of tort liability for principals and agents:

-Negligence -Intentional torts -Misrepresentation

Tort Liability of Principals and Agents to Third Parties

-Principal is liable for tortious conduct of agent acting within the scope of authority. -Agent is liable for tortious conduct of principal only if agent directly or indirectly, aids and abets the principal's conduct.

Common types of breaches of loyalty:

-Self-dealing -Usurping an opportunity -Competing with principal -Misuse of confidential info. -Dual agency

Factors for determining independent contractor status

-Whether the worker is engaged in a distinct occupation or an independently established business. -Length of time the agent has been employed by the principal. -Amount of time that the agent works for the principal. -Whether the principal supplies the tools and equipment used in the work. -Method of payment (by time or job). -Degree skill necessary to complete task. -Whether worker hires employees to assist him or her. -Whether the employer has the right to control the manner and means of accomplishing the desired result.

Undisclosed Agency

Agency in which a contracting third party does not know either the existence of the agency or the principal's identity. Both principal and agent are liable to the third party if the principal fails to perform the contract.

Partially Disclosed Agency

Agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal. Both principal and agent are liable to the third party if principal fails to perform the contract.

Principals and agents owe certain duties to each other and are liable to each other for breaching these duties.

Agency law establishes the liability of principals, agents, and independent contractors for such conduct.

Intentional misrepresentation

Agent makes statements that he or she knows are untrue.

Innocent misrepresentation

Agent negligently makes misrepresentation to a third party.

Implied Warranty of Authority

Agent who enters into a contract on behalf of another party warrants that he or she has the authority to do so.