Chapter 14

Agency Relationship

Consent by both the principal and the agent.

Liability for Contracts

The primary purpose of agency relationships is to help principals expand business activities.

Employee or Independent Contractor

An independent contractor is a person who contracts with another to do something for him but is not controlled by the other subject.

Indemnification

duty to indemnify - to pay for damages or to insure the agent against losses suffered while undertaking authorized transactions.

Employment At Will

In the United States, employees without a written employment contract generally can be fired for good cause, bad cause, or no cause at all; judicial exceptions to the rule seek to prevent wrongful terminations.

Employee Handbooks

Manuals to explain company policies, benefits, and procedures. - can include employment at will.

Tort Liability of Employers and Employees

Unauthorized-If agent or employee commits unauthorized tort outside the scope of employment, the agent or employee is liable to the third party for damages and the principal or employer is usually not liable. Authorized-If the principal or employer is liable for the tort of an agent or employee if the tort was authorized by the principal or, more commonly, if the tort occurred within the scope of employment.

Agent

agrees to act for, or in place of, another person or company.

Types of Authority

1.actual authority( real authority)- given by the principal to the agent. 2.express authority- consists of oral or written instructions given by the principal to an agent. 3.implied authority- goes with express, reasonable to carry out the agency purpose. 4. apparent authority- a principal can be bound by unauthorized acts of an agent who appears to have authority to act. Apparent Authority arises when the principal creates an appearance of authority which concludes that the agent has authority to act for the principal.

An Agents Authority

Is power to change the principals legal obligations.

Principal

who provides the agent with authority, the agent represents the principal.