Business Law Agency

Courts consider the following to determine whether a worker is an employee or an independent contractor

(1) how much direction and control the employer exercises over the details of the person's work, (2) whether the person is engaged in an occupation or business distinct from that of the employer, (3) whether the work the person performs is usually done under the employer's direction or without employer supervision, (4) who supplies tools used by the person, (5) the duration of the person's employment, (6) how the person is paid for his work, and (7) the degree of skill required of the worker.

Courts look at the following to determine whether a tort is within the scope of the agency

(1) whether the principal authorized the act; (2) the time, place, and purpose of the act (whether agent was acting within the "scope of authority/employment"); (3) whether the act was one commonly performed by agents on behalf of their principals; (4) whether the act advanced the principal's interest; (5) whether the agent's interests were involved; (6) whether the principal furnished the means or instrumentality by which the injury was inflicted; (7) whether the principal had reason to know the agent would act as she did; and (8) whether the act involved a serious crime or an intentional tort.

Fiduciary Duty

A duty arising from the trust and confidence placed in a fiduciary by those on whose behalf and for whose benefit she acts.

Agency

A fiduciary relationship that results when one person (the principal) manifests her consent that another person (the agent) will act on her behalf and subject to her control, and the agent manifests his consent to so act.

Independent Contractor

A person (1) who works for, and receives payment from, an employer, (2) but whose working conditions and methods are not controlled by the employer, and (3) for whose acts and omissions the employer is not liable.

Fiduciary

A person who undertakes to act on behalf of and primarily for the benefit of another.

Respondeat Superior Exception- "Frolics"

A principal is not liable for the acts of an agent who substantially departs from the principal's business. (But is generally responsible for "detours")

Liability for Agent's Torts

A principal may be liable for an agent's tort (1) resulting from the principal's own tortious conduct, (2) authorized by the principal, or (3) committed within the scope of the agency.

Loyalty

An agent must act solely for the benefit of his or her principal, and not in the interest of the agent or a third party. (Agent must put the principal's interests about all other's - including the agent's interests).

Notification/Disclosure

An agent must notify the principal of all matters that come to the agent's attention concerning the subject matter of the agency.

Confidentiality

Any information or knowledge obtained in the course of the agency is confidential.

Respondeat Superior Exception- Crimes

As a general rule, a principal is not liable for an agent's crime - even if committed while otherwise acting in the course and scope of the agency - unless the agent committed the crime at the principal's direction, or with the principal's knowledge and consent.

Liability for an Independent Contractor's Torts

As a general rule, an employer who has no legal power to control the details of the independent contractor's performance is not liable for any torts committed by the independent contractor, even if committed while performing the contract.

Express Authority

Authority declared in clear, direct, and definite terms, orally or in writing.

Apparent Authority

Authority that arises when a principal, by either words or actions, causes a third party to believe that an agent has authority to act, even though the agent has no express or implied authority to act with regard to the particular matter at hand. If the third party changes his or her position in reliance on the principal's representations regarding the agent's authority, the principal may be estopped from denying that the agent had authority to act.Apparent authority may arise due to the principal's conduct over time or the agent's possession and apparent ownership or control of the principal's property.

Implied Authority

Authority that is conferred by custom, inferred from the position the agent occupies, or inferred as being reasonably necessary to carry out express authority.

Power of Attorney

One example of express agency. A written document, usually notarized, authorizing an agent to act for a principal.

Respondeat Superior Exception- Intentional Torts

Principals are liable only for those intentional torts that are committed within the course and scope of the agent's actions on behalf of the principal.

Creating Agency Relationship

To create and agency relationship, there must be: A principal and, an agent, who mutually consent (or agree) that the agent will act on behalf of the principal and, be subject to the principal's control (meaning it is the principal who determines the limits of the delegation of power.) A fiduciary relationship exists.Is compensation required? No

Respondeat Superior

doctrine that an agency is responsible for the actions of their agents

Special Agent/Limited Agent

is authorized to represent the principal in one specific act or business transaction only, under detailed instructions. (e.g. real estate broker or stock broker)

General Agent

may represent the principal in a broad range of matters related to a particular business or activity. (e.g. manager of a company)

Universal Agent

person empowered to do anything the principal could do personally. (e.g. certain powers of attorney, guardianships/conservatorships, etc.)

Vicarious Liability

sometimes called "imputed liability," attachment of responsibility to a person for harm or damages caused by another person in either a negligence lawsuit or criminal prosecution. Thus, an employer of an employee who injures someone through negligence while in the scope of employment (doing work for the employer) is vicariously liable for damages to the injured person. In most states a participant in a crime (like a hold-up) may be vicariously liable for murder if another member of the group shoots and kills a shopkeeper or policeman.

The IRS bases its determination whether a person is an employee using a single factor

the degree of control the business exercises over the worker.

Indemnification

to guarantee against any loss which another might suffer. Example: two parties settle a dispute over a contract, and one of them may agree to pay any claims which may arise from the contract, holding the other harmless.