C241 Ch 8

reimbursement.

Bailey is an agent for Culinary Delites Company. In the course of Bailey's performance for Culinary Delites, she pays Drivers' Repair Service for certain vehicle maintenance and repair work. Bailey's right to obtain the amount of the payments from Culinary Delites arises under the principal's duty of

the duty of performance.

Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires Bernard to order exotic flowers for its arrangements. Bernard does not examine the quality of the flowers he orders on behalf of Custom Floral. Bernard has breached

an agent.

California Produce Company hires Drew to work on California Produce's shipping dock, checking outgoing loads and dispatching the company's drivers. With respect to California Produce, Drew is most likely

an employee.

Donato is Equipment Repair Service Company's chief executive officer. On Equipment Repair's behalf, Donato solicits business, hires and fires workers, and handles finances. Equipment Repair pays Donato varying amounts, depending on his "needs." Donato is most likely

Elaine.

Elaine owns the Fabric & Yarn store. Goldie is a salesperson in the store. When Goldie makes a sale to Heather, the sale is binding on

agent

A person who agrees to represent or act for another, called the principal.

Differentiate between an agency by agreement, by ratification, by estoppel, and by operation of law.

Agency by agreement: based on an express or implied agreement that the agent will act for the principal and that the principal agrees to have the agent so act. An agency by agreement can take the form of an express written contract, be created by an oral agreement, or implied by conduct. Agency by Ratification: occurs when a person who is in fact not an agent or acting out of the scope of his authority and makes a contract on behalf of the principal. If the principal affirms that contract by word or by action, an agency by ratification is created. Ratification involves a question of intent, and intent can be expressed either by words or conduct. Agency by Estoppel: occurs 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 detriment in reasonable reliance on that belief. When this occurs, the principal is "estopped to deny" (prevented from denying) the agency relationship. An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist. Agency by Operation of Law: occurs despite the absence of a formal agreement in some situations. This may occur in cases of emergency or in family relationships.

How is an agency relationship formed?

Agency relationships are normally consensual - that is, they come about by voluntary consent and agreement between the parties. Generally, the agreement need not be in writing, and consideration is not required. An agency can be created in four ways: by agreement of the parties, by ratification, by estoppel, and by operation of law.

Describe and differentiate between the rights and remedies of agents and principals.

Agent Rights: compensation, reimbursement and indemnification, safe working conditions, and the right to perform duties without interference by the principal. Agent Remedies: Demand for accounting in the instance of dispute and No right to specific performance. Principal Rights: the right to fiduciary duties performed by the agent including performance, notification, loyalty, obedience, and accounting. Principal Remedies: Contract remedies include constructive trust, avoidance, and indemnification. Tort remedies are also available for misrepresentation, negligence, deceit, libel, slander, or trespass.

exclusive agency

An agency in which a principal grants an agent an exclusive territory and does not allow another agent to compete in that territory.

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. As an adjective, a relationship founded on trust and confidence.

cooperation.

Global Games Corporation employs Hyacinth as an agent. Global Games gives her an exclusive territory in which to sell its products. Global Games cannot compete with her in that territory under the duty of

the duty of loyalty.

Home Enterprises employs Itzak to buy property for a possible residential development. Itzak secretly buys some of the property and sells it to Home Enterprises at a profit. Itzak has breached

Explain what an agent-principal relationship is.

In a principal-agent relationship, the parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties.

How can you distinguish whether a person is an employee or independent contractor?

In deciding whether a worker is categorized as an employee or an independent contractor, courts often consider the following questions: - How much control does the employer exercise over the details of the work? - Is the worker engaged in an occupation or business distinct from that of the employer? - Is the work usually done under the employer's direction or by a specialist without supervision? - Does the employer supply the tools at the place of work? - For how long is the person employed? - What is the method of payment - by time period or at the completion of the job? - What degree of skill is required by the worker?

Describe the employer-independent contract relationship?

Independent contractors work for an employer but are not considered employees because those who hire them have no control over the details of their work performance. The relationship between a principal and an independent contractor may or may not involve an agency relationship.

an agency by agreement.

Ingmar asks Jessie to contract with Jessie's high school classmates to babysit Ingmar's new baby. Jessie orally agrees to do so. This is

avoidance.

Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales's right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of

breached the agent's fiduciary duties to the principal.

Investment Holdings Corporation hires Jerilyn, a business appraiser, to locate investment possibilities for Investment Holdings. Jerilyn learns of a salsa and hot sauce manufacturing company available for a reasonable price, but neglects to tell Investment Holdings. Most likely, Jerilyn

a principal.

Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf. In this relationship, Jewelry & Coin is

the duty of obedience.

Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a contract on her behalf on Tuesday. Largo has breached

use reasonable diligence and skill in selling.

Lorena is appointed as an agent for Milled Grains, Inc. The agency agreement is silent as to the level of sales that Lorena is expected to achieve. She must

an agency by operation of law.

Lucille is married to Marcus. Lucille buys food for their children's lunches and charges the cost to Marcus's account. This is

Neon's employee and agent.

Margo works as an administrator and receptionist in Neon's Garage Door Store. Neon withholds federal taxes from Margo's pay, and controls the methods and details of the performance of her work. Margo is not au¬thorized to modify the prices or other terms of a sale at the store. Omar installs Neon's Garage Door products at the buyers' locations. Refer to Fact Pattern 8-1B. At the shop, Margo is

Neon's employee and agent.

Margo works as an administrator and receptionist in Neon's Garage Door Store. Neon withholds federal taxes from Margo's pay, and controls the methods and details of the performance of her work. Margo is not au¬thorized to modify the prices or other terms of a sale at the store. Omar installs Neon's Garage Door products at the buyers' locations. Refer to Fact Pattern 8-1B. Neon authorizes Omar to sell garage door upgrades and accessories at the buyers' lo¬cations at prices that Omar negotiates with those buyers. With respect to sales at those locations, Omar is

an independent contractor.

Margo works as an administrator and receptionist in Neon's Garage Door Store. Neon withholds federal taxes from Margo's pay, and controls the methods and details of the performance of her work. Margo is not au¬thorized to modify the prices or other terms of a sale at the store. Omar installs Neon's Garage Door products at the buyers' locations. Refer to Fact Pattern 8-1B. Neon hires Professional Janitorial Company to clean the store. Neon gives Professional Janitorial instructions as to what needs to be cleaned and when. Professional Janitorial is

How are employer-employee relationships the same as agent-principal relationships?

Normally, all employees who deal with third parties are deemed to be agents. Because employees who deal with third parties are generally deemed to be agents of their employers, agency law and employment law overlap considerably.

independent contractor

One who works for, and receives 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.

a person having those skills.

Rondi holds herself out as possessing special accounting skills. As an agent, she must exercise the degree of skill or care expected of

an independent contractor.

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to hosts of banquets, corporate meetings, concerts, weddings, and other events. In this capacity, Rosario is

an agent.

Sybil agrees with Tyrone and other professional athletes to sign contracts with promoters and others on the athletes' behalf. Sybil is

Describe an agent's duties to the principal.

The agent's duties to the principal include: - Performance (use of reasonable diligence and skill in performing the work) - Notification (off all matters that come to his or her attention concerning the subject matter of the agency) - Loyalty (to act solely for the benefit of his or her principal and not in the interest of the agent or a third party_ - Obedience (follow all lawful and clearly stated instructions of the principal) - Accounting (unless otherwise agreed, the agent must keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf)

Describe a principal's duties to an agent.

The principal's duties to the agent include the following: - Compensation (the principal has a duty to pay the agent in a timely manner for services rendered) - Reimbursement and Indemnification (the principal must reimburse the agent for any funds disbursed at the principal's request or for any necessary expenses. The principal must also indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions.) - Cooperation (cooperate with the agent and to assist the agent in performing his duties and must do nothing to prevent that performance) - Safe Working Conditions (provide a safe working premises, equipment, and conditions for all agents and employees.)