Chapter 30: Liability of Principals, Agents, and Independent Contractors

frolic and detour

a situation in which an agent does something during the course of his employment to further his own interests rather than the principals. negligent actions stemming from this are examined case by case. generally, principals are relieved of liability of the agent's ______ ___ _______ are substantial. if it is minor, the principal is liable.

partially disclosed agency

an agent discloses his or her agency status but not the principal's identity the agent is liable.

agent's implied warranty of authority

an agent has this when he enters into a contract on behalf of another party.

dual-purpose mission

both the principal and agent are liable if injury is caused when the principal requests that the agent runs errands for him while the agent is on personal business.

agency exceeding scope of authority

if an agent exceeds the scope of his authority, the principal is not liable on the contract. however, the agent is liable to the third party for breaching the implied warranty of authority. the third party must show reliance on the agent's representation and ignorance of the agent's lack of status to recover. the principal is only liable if he ratifies the contract

work-related test

if the agent commits the intentional tort within a work related time or space, the principal is liable. motivation is irrelevant.

motivation test

if the agent's motivation for committing an intentional tort is to promote the principal's business, the principal is liable for any injury caused.

dual agency

occurs when an agent acts for two or more different principals in the same transaction. this practice is prohibited unless all parties involved in the transactions agree to it.

contract liability of agents and principals

principals are liable for any contract entered into by their agents. the third party can enforce the contract against the principal and recover damages from the principal. the agent is liable depending on the disclosure level of the agency relationship.

negligence

principals are liable for the negligent conduct of agents acting within the scope of their employment. based on the common law doctrine of respondeat superior (let the master answer) and vicarious liability (liability without fault). ______ rests on the principal that if someone expects to derive benefits from acting through others, that person should also bear the liability for injuries caused to third parties by the _______ conduct of an agent acting within his scope of employment.

intentional tort liability of principals

principals are not liable for intentional torts that agents commit outside the principal's scope of business.

not

principals generally are _____ liable for the torts of its independent contractors. however, principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors. if a principal authorizes an independent contractor to enter into contracts on his behalf, the principals are bound to the contracts.

t

t/f: if an independent contractor enters into a contract with a third party on behalf of the principal without express or implied authority, the principal is not liable for the contract.

degree of control

the ______ ___ _______ the employer/principal has is a crucial factor in determining whether someone is an independent contractor or an employee.

agent's duty of loyalty

the agency relationship is based on trust and confidence. the agent owes the principal a fiduciary duty not to act adversely to the interest of the principal. the most common types of breaches of this duty are: 1. self dealing 2. usurping an opportunity 3. competing with the principal 4. misuse of confidential information 5. dual agency

tort liability of principals and agents

the principal is liable for the tortious conduct of an agent who is acting within the scope of his authority. the agent is liable of rate tortious conduct of the principal only if he directly or indirectly participates in or aids it.

fully disclosed agency

the third party entering the contract knows the agent is acting as an agent for the principal and who the principal is. the contract is between the principal and the agent. the agent is not liable.

undisclosed agency

the third party is unaware of the existence of an agency. the agent is liable. the third party can recover against the agent.

true

true/false: principals are liable for innocent and intentional misrepresentations made by their agents. any injured third party may 1. rescind the contract and recover consdieration paid or 2. affirm the contract and recover damages.

coming and going rule

under the common law, the principal is generally not liable for injuries caused by its agents while they are on their way to and from work. this applies even if the principal supplies the agent's car or other transportation expenses.