Bus 201 Chapter 16

two general categories of how termination of an agency can occur

-by act of the parties -operation of law

The following actions may make a principal liable for acting through an agent

-giving improper instructions -authorizing the use of improper materials or tools -establishing improper rules that result in the agent's committing a tort

How the Courts Determine Employee or Independent Contractor Status

1. How much control does the employer exercise over the details of the work? 2. Is the worker engaged in an occupation or business distinct from that of the employer? 3. Is the work usually done under the employer's direction or by a specialist without supervision? 4. does the employer supply the tools at the place of work? 5.for how long is the person employed? 6. What is the method of payment-by time period or at the completion of the job? 7. what degree of skill is required of the worker?

Requirements for Ratification

1. The agent must have acted on behalf of an identified principal who subsequently ratifies the action 2. The principal must know all of the material facts involved in the transaction 3. The principal must affirm the agent's act in its entirety 4. 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 5.The principal's affirmation (ratification) must occur before the third party withdraws from the transaction 6. The principal must observe the same formalities when ratifying the act as would have been required to authorize it initially

typical duties that the principal has to the agent

1. compensation 2. reimbursement and indemnification 3. cooperation

An Agency Relationship May Be Terminated By:

1. lapse of time 2. purpose achieved 3. occurrence of a specific event 4. mutual agreement 5. termination by one party

five duties the agent owes the principal

1. performance 2. notification 3. loyalty 4. obedience 5. accounting

Factors Determining Whether a Particular Act Occurred Within the Course or Scope of Employment

1. whether the employee's act was authorized by the employer 2. the time, place, and purpose of the act 3. whether the act was one commonly performed by the employees on behalf of their employers 4. the extent to which the employer's interest was advanced by the act 5. the extent to which the private interests of the employee were involved 6. whether the employer furnished the means by which an injury was inflicted 7.wether the employer had reason to know that the employee would perform the act in question and whether the employee had done it before 8. wether the act involved the commissions of a serious crime

Termination of an Agency by Operation of Law

1.Death of insanity -automatic on the death or insanity of either the principal or the agent (except when the agency is coupled with an interest) 2. Impossibility- destruction of the specific subject matter -applies any time the agency cannot be performed because of an event beyond the parties' control [no notice required automatic on the happening of the event] 3. Changed circumstances -events so unusual that it would be inequitable to allow the agency to continue to exist 4. Bankruptcy -bankruptcy petition (not mere insolvency0 usually terminates the agency 5. War between principal's country and agent's country -automatically suspends or terminates agency-no way to enforce legal rights

(T/F) The principal-agent relationship is fiduciary and therefore not based on trust, but specific laws.

False

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

(T/F) An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist

True

(T/F) In an agency relationship involving two parties, the agent agrees to represent or act for the principal.

True

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

True

(T/F)Agency relationships are normally consensual, coming about through voluntary consent and agreement between the parties

True

(T/F)an employer may be held liable when an employee commits the torts of assault and battery or false imprisonment while acting within the scope of employment

True

respondeat superior

a doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency or employment

ratification

a party's act of accepting or giving legal force to a contract or other obligation entered into by another that previously was not enforceable

any ordinary power of attorney ends when

a person giving the power dies or becomes incapacitated

disclosed principal

a principal whose identity is known to a 3rd party at the time the agent makes a contract with the 3rd party

disclosed principal

a principal whose identity is known to a third party at the time the agent makes a contract with the third party.

undisclosed principal

a principal whose identity is unknown by a third party, and that person has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract

partially disclosed principal

a principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and third party from a contract

In agency law, ratification occurs when...

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

Notary public

a public official authorized to attest to the authenticity of signatures

notary public

a public official authorized to attest to the authenticity of signatures.

agency

a relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).

Agency

a relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principle)

equal dignity rule

a rule requiring that an agent's authority by in writing if the contract to be made on behalf of the principal must be in writing

power of attorney

a written document, which is usually notarized, authorizing another to act as one's agent; can be special (permitting the agent to do specified acts only) or general (permitting the agent to transact all business for the principal)

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

accounting

Which of the following is not one of the 4 ways an agency relationship can arise?

agency by federal law [created by: 1. agreement between the parties 2. ratification 3. agency by estoppel 4. by operation of the law]

With respect to their employers, employees who deal with third parties are generally deemed to be

agents

the performance of the agent is personal to the contract, thus...

allowing the 3rd party to refuse the principal's performance

Federal statutes governing employment discrimination apply only when...

an employer-employee relationship exists

when a third party reasonably believes a person has authority to act on another's behalf, even if that person does not have such authority, the situation is known as

apparent authority

termination by one party

as a general rule, either party can terminate the agency relationship

fiduciary

as a noun, a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking. An an adjective, a relationship founded on trust and confidence

express authority

authority expressly given by one party to another. in agency law, an agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent had the power (authority) at act in the place of and on behalf of, the principal

implied authority

authority that is created not by an explicit oral or written agreement but by implication. In agency law, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority

apparent authority

authority that is only apparent, not real. An agent's apparent authority arises when the principal causes a third party to believe that the agent has authority, even though she or he does not.

power of attorney

authorization for another to act as one's agent or attorney in either specified circumstances (special) or in all situations (general).

a familiar example of an agent is an

corporate officer who serves in a representative capacity for the owners of the corporation.

an agent's implied authority can be inferred by

custom

the undisclosed principal was expressly included or excluded

excluded as a party in the written contract

(T/F) Generally, agency agreements must be in writing an there must be consideration

false

under the equal dignity rule

if a contract must be in writing to be executed, an agents' authority must also be in writing

purpose achieved

if an agent is employed to accomplish a particular objective, when that objective is satisfied, the agency automatically ends

equal dignity rule

in most states, a rule stating that express authority given to an agent must be in writing if the contract to be in writing if the contract to be made on behalf of the principal is also required to be in writing

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

independent contractor

vicarious liability

indirect liability imposed on a supervisory party (such as an employer for the actions of a subordinate (such as an employee) because of the relationship between the two parties. legal responsibility placed on one person for the acts of another

Elia and Sonia ask Fay to be the administrator of their will and the guardian of their children if they pass away. Fay agrees. Fiduciary relationships such as this one...

involve a high degree of trust and confidence

whether a worker is an employee or an independent contractor can affect the employer's...

liability for the worker's actions

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

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

if the principal is disclosed or partially disclosed, and the agent contracts with a third party without authorization, the agent is...

liable to the third party who relied on the agency status

An agent's authority to act for a principal:

may be actual or apparent

The principal is always directly responsible for an agent's...

misrepresentation made within the scope of the agent's authority

independent contractor

one who works for, and received payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent.

When Armani, an employee of a marketing firm, is going from her home to work, she is normally considering to be acting

outside the scope of employment

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 EXCEPT:

payment

if an agent has no authority but nevertheless contracts with a third party, the...

principal cannot be held liable on the contract

The degree of skill or care required of an agent is usually that expected of a(n)

reasonable person under similar circumstances

the contract is a negotiable instrument signed by the agent with no indication of signing in a

representative capacity

if the internal revenue service decides that an employee is misclassified as an independent contractor, the employer will be...

responsible for paying Social Security, withholding, and employment taxes.

An agent impliedly warrants...

that he or she has the authority to enter a contract on behalf of the principal

apparent authority

the act of accepting and giving legal force to an obligation that previously was not enforceable

If the 3rd party knows at the time that the contract is made that the agent does not have authority...

the agent is not liable

mutual agreement

the parties to an agency can cancel (rescind) their contract by mutually agreeing to terminate the agency relationship, even if it was for a specific (longer) duration

lapse of time

when an agency agreement specifics the time period during which the agency relationship will exist, the agency ends when that time period expires

occurrence of a specific event

when an agency relationship is to terminate to the happening of a certain event, the agency automatically ends when the event occurs

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