Ch 16. Agency Relationships

how do you know if someone is employee?

The *control* company has over the *details* of work of the person.

Employee Status and "Works for Hire"

Under *Copyright Act of 1976* 👉any copyrighted work created by an employee within the *scope of her/his employment at the request of employe* is *work for hire* 👉employer *owns* the copyright to the work *IN CONTRAST* when hiring *independent contractor* 👉independent contractor(freelance artist, writer, computer programmer) owns the copyright *unless the parties agree in writing that the work is a "work for hire"* and the work fall into(나뉘다) one of 9 specific categories, including audiovisual and other works

Notice of Dangerous Conditions

employer is charged with(기소되다) *knowledge of any dangerous conditions* discovered by an employee and pertinent(적절한) to the employment situation(employee가 말 안해도 employer잘못임)

Determining the scope of employment

how to determine whether a principal may be liable for the torts of an agent under the doctrine of *respondeat superior* 👉whether the torts are committed *within the scope of the agency/employment* <*factors when determining whether a particular act occurred within the course and scope of employment*> 1. Whether the employee's act was authorized by employer 2. The time, place, and purpose of act 3. Whether the act was on commonly(흔히) performed by employees on behalf of their employers 4. The extent to which the *employer's interest* was advanced(진전하다) by the act 5. The extent to which the *private interest of the employee* were involved 6. Whether the employer furnished the means or instrumentality(수단) e.g. struck, machine by which the injury was inflicted(가하다) 7. Whether the employer had reason to know that the employee would do the act in question(문제의) and whether the employee had ever done it before 8. Whether the act involved the commission of a serious crime

Agent's Authority

<*Actual Authority*> 1. *Express Authority* - authority declared in clear, direct, and definite terms - can be given orally/writing - *Equal Dignity Rule*: requires that if the *contract* being executed is or must be in *writing*, then the *agent's authority* MUST also be *in writing* 👉failure to comply with this rule can make a contract *voidable*(무효할 수 있는) *at the option of the principal* - if the principal decides to *accept* the offer, the agent's authority *MUST BE* ratified, affirmed in *writing* - exceptions(1): *executive officer of a corporation*- not required to obtain *written authority* from the corporation to conduct *ordinary business transactions* - exceptions(2): when an agent acts in the presence of a principal/when the agent's act of signing is merely perfunctory(형식적인)(automatic) - oral authorization is sufficient(principal out of town 이면) - *Power of Attorney*: authorization for another to act as one's agent or attorney in either specified circumstances (special) or in all situations (general) 👉 *Express Authority* - normally *written document* - notarized(공증-공적으로 증명하다) when a *notary public*(공증인) signs and dates the documents and imprints it with his or her seal(도장) of authority - *notary public*: a public official authorized to attest to (증명하다) authenticity of signatures - can be special(permitting the agent to do *specified acts only*) - can be general (permitting the agent to transact *all business* for the principal) - terminates on incapacity or death of principal 예외) *durable power of attorney*: continues to be effective despite the principal's incapacity (elderly people grant durable power of attorney to provide for the handling of property and investments) 2. *Implied Authority* - can be implied by custom or inferred from the *position* the agent occupies e.g. express authority - managing supermarket implied authority - hiring employees, buying merchandise and equipment, advertising the products sold in the store <Apparent(누가 봐도 알 수 있는) Authority> - authority that is only *apparent*, *NOT REAL* - it arises when the principal causes a 3r party to believe that the agent has authority, even though she or he does not have express/implied authority - if 3rd party changes position in reliance on the *principal's representation*, the principal may be *estopped* (prevented) from denying that agent had authority - comes from principal's *pattern of conduct* over time 3. *Ratification* - occurs when the principal *affirms* an agent's *unauthorized act* - when it occurs, the principal is *bound to the agent's act* - can be either *express* or *implied* <Requirements for ratification> - the agent must have acted on behalf of an identified principal who subsequently *ratifies* the action - the *principal* MUST know all *material facts* involved in the transaction. If a principal ratifies a contract *without knowing all of the facts*, the principal can rescind (cancel) the contract - the principal must affirm the agent's act in its entirety(전체/전부) - the principal MUST have the *legal capacity* to authorize the transaction at the time the agent engages in the act and at the time the principal ratifies - the 3rd party must also have the *legal capacity* to engage in the transaction - the principal must observe(알다) the same *formalities(형식상의 절차)* when approving the act done by the agent as would have been required to authorize it initially

'exceed authorized access' in CFAA(Computer Fraud and Abuse Act)

= restrictions on access/NOT restriction on use 👉 to prohibit people from hacking into computers without authorization

Using agents provides create:

*liability* for their principals --> small businesses sometimes attempt to retain workers as *independent contractors* or *permalancers*(복리 후생 혜택을 못받는 *장기 계약직 사원*)

Respondeat Superior

- Principal (or employer) is held liable - for the wrongful acts committed by *agents (or employees)* - while they are *acting within the course and scope of their agency (or employment)*

Agents

- all employees who deal with *3rd parties* e.g. sales person in department store = agent store owner = principal 👉 any sale of goods made by salesperson to a customer --> *binding on* principal - Employees, if sign a contract, make *Principal responsible for the promises in the contract* (Exceptions) especially don't expect janitor(문지기) to sign the big contract

*The distinction between a *"Detour" and a "Frolic"*

- if a servant merely *took a DETOUR* from his master's business, *the master is responsible* 👉if the servant was "frolic(장난의) of his own* and not in any way on his master's business, the master *is NOT LIABLE* *Detour* = Master Responsible *Frolic* = Master NOT Responsible - going for lunch (meal) = *outside the scope of employment* - travel(part of persons position/salesperson) = *within the scope of employment)

Principal Liable for *Agent Torts*

-Employee v. independent contractor - Principal liable for *employee's negligence* 👉 Not for employee's *intentional act* 👉 Not if out of "scope of employment" 👉even though it is independent contractor, if principal knew independent contractor was careless --> principal is negligent *scope of employment* : actions of an employee which further the business of the employer and are not personal business, which becomes the test as to *whether an employer is liable for damages due to such actions under the doctrine of respondeat superior* (make the master answer) e.g. Dick Deliver drives a truck delivering groceries for Super-Duper Market. 1) If Dick negligently runs the truck into Victor Victim's VW while making deliveries or on the way back from a delivery 👉 Super-Duper is liable since the accident was in the scope of employment. 2) If Dick goes outside the delivery route to have lunch with his girlfriend and on the way hits Victim 👉 there is a strong inference he was *outside the scope of employment*

Principal's Duties to the Agent

1. *Compensation* - principal has a duty to pay the agent for services rendered(제공된) - need to pay the compensation in a timely manner/must pay the agreed-on value for the agent's services - if no amount has been expressly agreed on👉the principal owes the agent the customary compensation for such services 2. *Reimbursement and Indemnification(배상)* - if an agent disburses (지출하다) funds at the request of the principal or to pay for necessary expenses in the reasonable performance of his or her agency duties, *the principal has the duty to reimburse the agent for these payments* 👉Agent *CANNOT* recover for expenses incurred through their *own misconduct or negligence* - the principal has the duty to *compensate or indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions* e.g. principal fails to perform a contract(formed by *agent-3rd party*) & 3rd party sues agent 👇 the principal *MUST COMPENSATE* the agent for any costs incurred in defending against the lawsuit - the principal must indemnify(pay) the agent for the value of benefits tha the agent *confers on*(수여하다) principal. 👉usually specified in the agency contract 👉 also applies to acts by *gratuitous agents* 3. *Cooperation* - duty to cooperate with the agent and to assist the agent i performing her or his duties e.g. when principal gives an agent an *exclusive territory* --> the principal creates an *exclusive agency* and *CANNOT* compete with the agent or appoint or allow another agent to compete --> 이렇게 하면 principal liable for the agent's lost sales or profits

Liability(법적책임) in Agency Relationships

1. *Liability for Contracts* - depends on how the principal is classified on whether the actions of the agent were *authorized or unauthorized* <*principal 종류*> • *disclosed principal*: principal whose identity is *known by 3rd party* at the time the contract is made by agent • *partially disclosed principal*: A principal whose identity is *unknown* by a 3rd party, but the 3rd party knows that the agent *is or may be acting for a principal* at the time the agent and the 3rd party form a contract e.g. agent makes it clear to potential buyer that the agent *is acting in an agency capacity* • *undisclosed principal*: a principal whose identity is *unknown* by a 3rd party, and that person has *NO knowledge* that the agent is acting for a principal at the time the agent and the 3rd party form a contract *whether the agent may also be held liable under contract depends on the status of the principal* <*Authorized Acts> - *Disclosed or Partially Disclosed Principal* : liable to 3rd party for a contract made by an agent who is *acting within the scope of her/his authority* 👉principal=disclosed --> agent = *X* contractual liability for nonperformance of the nonperformance (불이행) of the principal or the 3rd party 👉principal=partially disclosed --> agent is *ALSO* treated as a party to the contract; 3rd party can hold the agent *liable* for contractual nonperformance - *Undisclosed Principal* : when neither the fact of agency nor the identity of the principal is disclosed, *undisclosed principal* is bound to perform just *as if the principal had been fully disclosed at the time the contract was made* (아니면 liable함) - agent = liable as a party to the contract - principal👉disclosed & agent👉*forced to pay the 3rd party* -----> agent is entitled to be indemnified(compensated) by the principal = undisclosed 👉 disclosed principal: 3rd party generally can elect to hold either the principal or the agent *liable on the contract* 반대로도, the undisclosed principal can require the 3rd party to fulfill the contract, *UNLESS* 1) the undisclosed principal was EXPRESSLY *excluded* as a party in the contract 2) the contract is a *negotiable* instrument signed by the agent with no indication of signing in a representative capacity 3) the performance of the *agent* is *personal* to the contract, allowing the 3rd party to refuse the principal's performance <*Unauthorized Acts*> - if an agent had NO authority but contracts with a 3rd party 👉 the principal *X* liable/agent liable (does not matter whether the principal was disclosed, partially disclosed, undisclosed) --> the agent's liability here is based on the *breach of an implied warranty of authority*, not on breach of contract itself 만약 agent가 uncertainty를 표명했거나 3rd party가 agent가 authority 없는 걸 알았을 경우 agent is not personally liable

Agent's Duties to the Principal

1. *Performance* - to use reasonable diligence and sill in performing the work - when an agent fails entirely to perform his duties, *liability for breach of contract* will result - failure to exercise that *degree of skill* constitutes a *breach of the agent's duty* - *gratuitous agent(돈안받고하는) CANNOT BE liable for breach of contract* but could be subject to *tort liability*(불법행위) 2. *Notification* - agent is required to *notify* the principal of all matters that come to her or his attention concerning the subject matter of the agency 3. *Loyalty* - one of the most fundamental duties in a *fiduciary(남에게 맡기는) relationship* - the 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 3rd party* 👉 an agent *CANNOT* represent 2 principals in the *same transaction* unless both know of the dual capacity(이중 자격) and consent to it - any information/knowledge acquired through the agency relationship is *confidential* 👉정보 공개하면 breach of contract! - must be undivided loyalty(완전한 충실) - 물건 사는 것도 approval 있어야 가능! 4. *Obedience* - an agent has a duty to follow all *lawful and clearly stated instructions* of the principal 👉any deviation(탈선) from such instructions is a violation of this duty - in emergency situations(principal cannot be consulted): agent may deviate from the instruction without violating the duty 5. *Accounting* - an agent has a duty to keep and make available to the principal an account for all property and funds received and paid out on behalf of the principal - including gifts from 3rd parties e.g. gift from customer to a salesperson --> belong to the firm! - agent must not intermingle(섞다) principal & agent accounts

Liability for Torts and Crimes

1. *Principal's Tortious(불법행위의) Conduct* : A principal conducting an activity thorough an agent may be liable for harm resulting from *principal's own negligence(과실)* or recklessness(무모함) e.g. principal liable for giving improper instructions, authorizing the use of improper materials or tools, establishing improper rules that resulted in the agent's committing a tort 2. *Principal's Authorization of Agent's Tortious Conduct* : a principal who authorizes an agent to commit a tort may be liable to persons or property injured thereby(그것때문에) - *tortfeasor*(불법행위자): agent acting at the principal's direction can be liable for committing tortious act even if *the agent was unaware of the wrongfulness of the act* 3. *Liability for Agent's Misrepresentation(허위진술)* : a principal is liable whenever a third person sustains *a loss due to the agent's misrepresentation* 👉depends on whether the agent was actually or apparently authorized to make representations 👉depends on whether the representations were made *within the scope of agency* 4. *Liability for Agent's Negligence* : agent is liable for his/her torts : *principal may also be liable* for harm an agent caused to a 3rd party under the doctrine of *respondeat superior*(상급자책임); *let the master respond*- a doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting whiten the course and scope of their agency or employment - imposes *vicarious liability* on the employer : *vicarious liability - indirect liability imposed on a supervisory party (such as an employer) for the actions of a subordinate (employee) because of the relationship between the two parties *An agent is NOT excused from responsibility for TORTIOUS CONDUCT just because he is working for a principal* 5. *Liability for Agent's Intentional Torts* - mostly not related to agent's employment; employer *X liable& *BUT* under *respondeat superior*, the employer *can be liable* for an employee's intentional tort that are committed *within the course and scope of employment* e.g. security guard들이 자기 일 하는 동시에 assault/battery/false imprisonment 하면 employer liable 함! - if employer knows or should know that an employer has *propensity(경향)* for committing tortious acts is *liable for employee's acts even if they ordinarily would not be considered within the scope of employment* e.g. 보디가드가 사람 때린 경력있는 걸 고용주가 알아도 그냥 놔뒀을때 -an employer may also be liable for permitting an employee to engage in *reckless actions* that can injure others e.g. 불 날 위험이 있는 트럭기사로 흡연자고용 6. *Liability for Independent Contractor's Torts* - when unusually hazardous activities are involved, employers could be liable! e.g. blasting operation(화약 폭파), transportation of highly volatile chemicals(휘발성 화약품), use of poisonous gas --> *Strict Liability* is imposed on the employer-principal 7. *Liability for Agent's Crimes* - agent = liable - principal = *NOT Liable* (unless the principal participated by conspiracy(음모) or other action) /some jurisdiction에 예외는 있음!

How do agency relationships arise?

1. Agency by *agreement of the parties* - most agency relationships are based on an *express or implied agreement* - An agency agreement can take the form of an *express written contract* or be created by an *oral agreement* - agency agreement can also be implied by *conduct* 2. Agency by Ratification(승인) - *ratification*: a party's act of *accepting of giving legal force to a contract or other obligation* entered into by another that previously was not enforceable - principal ratifies after the fact - if the principal *affirms*(단언하다) that contract by word or by action, an agency relationship is created by *ratification* - involves a question of intent 👉intent can be expressed by either *words* or *conduct* 3. Agency by Estoppel(먼저 한 주장에 *반대되는 진술을 뒤에 하는 것을 금지함*) - when a principal causes a 3rd person to believe that another person is his/her agent + the 3rd person deals with the supposed agent, the principal is *estopped to deny* the agency relationship - the principal's actions create the *appearance* of an agency that does not in fact exist. - acts of declarations of a purported(~라고 알려진) *agent* in and of themselves do not create an agency by estoppel - rather, it is deeds(행위) or statements of *the principal* that create an agency by estoppel 4. Agency by Operation of Law - occur in *family setting* e.g. 엄마가 장보구 아빠 카드로 긁었다고 문제되지 않음 --> 아빠는 가족 부양할 의무 있음 - occur in *emergency situations* : when the agent's failure to act outside the scope of his or her authority would cause the principal substantial loss (principal 연락 안되면 court가 emergency power 줌!) e.g. 기차에 치인 사람 비용 대기(엔지니어가)

Determining Employee Status (Criteria)

1. How much control can the employer exercise over the *details* of the work? - considerable control: employee - *most important factor* when determining employee status 2. Is the worker engaged in an occupation or business *distinct* from that of the employer? - Yes: independent contractor status - No: employee 3. Is the work usually done under employer's direction or by a specialist *without supervision*? - if the work is done under the employer's direction: Employee 4. Does the employer supply the tools at the place of work? - YES: employee - NO: independent contractor 5. For how long is the person employed? - Long period: employee - short period: contractor 6. What is the method of payment - by *time period* or at the *completion* of the job? - payment by time period (every two weeks/once a month): employee 7. What degree of skill is required of the worker? - little skill: employee - many skills: independent contractor 8. Does employer have to pay SS taxes/unemployment taxes for the person? - YES: employee - NO: independent contractor

Fiduciary

1. noun: person having a duty created by her or his undertaking to act primarily for *another's benefit* in matters connected with the undertaking 2. adjective: fiduciary relationship 👉 relationship involves *trust and confidence*

Formation of Agencies

1. the agreement *need not be* in writing, an consideration is *NOT* required 2. A person *MUST HAVE* have contractual capacity to be a principal 3. *Any person can be agent* regardless of whether he or she has the capacity to enter a contract (including minors) 4. An agency relationship can be created for *any legal purpose* 👉contrary to public policy is *unenforceable*

Agency Law

Agency Law > Employment Law 👇 based on 👇 common law statutory law

Termination of Agency Relationships

Agency Law: similar to Contract law in that *both agency and contract can be terminated by an act of the parties or by operation of law* 1. *Termination by Act of the Parties* 1. *Lapse of Time* : when an agency agreement specifies the *time period* during which agency relationship exist, the agency ends when that period expires - if no time stated, agency continues for a reasonable time and can be terminated *at will* (마음대로) by either party 2. *Purpose achieved* : an agent is employed to accomplish a particular objective, the agency automatically ends after objective is accomplished - 한 목표달성을 위해 여러명 고용 됨/먼저 한 사람이 끝냈다면 --> automatically terminates the agency relationship for all of the others 3. *Occurence of a specific event* 4. *Mutual agreement* : the parties to an agency can *cancel(rescind)* their contract by *mutually agreeing to terminate the agency relationship*, even if it is for a specific duration 5. *Termination by one party* : either party can terminate the agency relationship - the act of termination done by *principal* 👉*revocation* - the act of termination done by *agent* 👉*renunciation*(포기) - although both parties have the *power* to terminate the agency, they *may not possess the right*

Determining Employee Status by IRS

Internal Revenue Service (IRS) has established its own criteria: - the most important factor: the degree of *control* the business exercises over the worker - if IRS decides that the worker is *employee* 👉 the employer will be responsible for paying any applicable Social Security, withholding(원천세), unemployment taxes

<*Headline News*> Manuel v. City of Juliet

Manuel 이 마약했다고 체포됐는데 알고 보니 마약한 게 아니라서 Manuel이 항소함 👉Too *far out* after his arrest 👉Unlawful detention - constitutional remedy

Independent Contractor

One ho works for, receives payment from, an employer but whose working conditions and methods are not *controlled by employer* 👉*NOT* employee but maybe *agent* - Building contractors/subcontractors e.g. Property owner: does not control the acts of professionals <Truck Drivers> 1) own their equipment, hire themselves out on *per-job basis* : *independent contractors* 2) drive company trucks on a regular basis : *employees*

agency

a relationship between two parties in which one party (*the agent*) agrees to represent or act for the other (*the principal*) - the principal has the right to *control the agents conduct in matters entrusted to(맡겨진) the agent - the agent must exercise his or her powers 'for the benefit of the principal only' - *fiduciary* relation which results from the manifestation(징후) of consent b one person to another that the other *shall act* in his or her behalf and subject to his or her control, and consent by the other so to act 👉the agent will act on behalf and instead of the principal in *negotiating and transacting business with 3rd parties* - Agency relationship exist: 1) employers - employees 2) sometimes in employers - independent contractors *who hired to perform *specific tasks or services*)

Wrongful Termination

can subject the canceling party to a suit for *breach of contract* - principal 이 계약 기간이 끝나기 전 contract terminate할 수 있지만, he can be sued for *breaching of contract* because *he has no right to terminate the agency*

Employment Laws

does not apply to an *independent contractor*

Notice of Termination

it is *principal's duty* to inform *any 3rd parties* who know of the existence of the agency that it has been terminated - agent's *actual authority*: ends when the agency is terminated - agent's *apparent authority*: continues *until the 3rd party received notice (from any source) that such authority has been terminated* - If the principal knows that 3rd party has dealt with the agent, *the principal is expected to notify that person directly* - For 3rd parties who have heard about the agency but have *not yet dealt with the agent*, *constructive notice(신문으로 전해짐) is sufficient*

The relationship between a person or firm and an independent contractor

may or may not involve *agency relationship* - *insurance agent*: independent contractor + agent of insurance company - *insurance broker*: normally is an *agent*of the person obtaining insurance and *not of the insurance company*

Termination by Operation of Law

when an agency terminates *by operation of law*, there is no duty to notify 3rd person. 1. *Death or Insanity*: automatically terminated an ordinary agency relationship - knowledge of death is not required 2. *Impossibility*: when the specific subject matter of an agency is destroyed or lost, the agency terminates. - when it is impossible for the agent to perform the agency lawfully because of *a change in the law*, the agency terminates. 3. *Changed Circumstances*: when an event occurs that has such an unusual effect on the subject matter of the agency that the agent can reasonably infer that the principal will not want the agency to continue, the agency terminates. e.g. principal이 땅 팔래서 팔려구 했는데 땅 밑에 기름있는거 알면 agency terminate됨 4. *Bankruptcy*: if either the principal or the agent petitions for bankruptcy, the agency is usually terminated - in certain circumstances, as when the agent's financial status is irrelevant to the purse of the agency, the agency relationship may continue - *insolvency* does not *necessarily terminate the relationship 5. *War*: when the principal's country and the agent's country are at war with each other, the agency is terminated