Chapter 30: liability of principals, agents and independent contractors

liability for independent contractors torts

PRINCIPAL NOT LIABLE for torts of contractor

Misrepresentation

a deceit in which an agent makes an untrue statement that he or she knows is not true. BOTH PRINCIPAL AND AGENT ARE LIABLE (Ex: principal tells agent to sell his car, and let people know that the car was in an accident. However, The agent intentionally does not let the buyer know this information)

duty of loyalty

a fiduciary duty owed by an agent not to act adversely to the interests of the principal

liability for independent contractors contracts

a principal can authorize an independent contractor to enter into contracts. they are bound by the authorized contracts of their contractors (ex: if a contractor enters into a contract with a 3rd party on behalf of the principal without express or implied authority, the principal is not liable)

going and coming rule

a rule that says a principal is generally NOT LIABLE for injuries cause by its agents and employees while they are on their way to or from work

respondent superior

a rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of employers authority

frolic and detour

a situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principals. PRINCIPAL LIABLE

dual purpose mission

a situation that occurs when a principal requests an employee or agent to run an errand or do another act for the principal while the agent is on his or own personal busniess. BOTH LIABLE

Work-Related Test

a test that determines whether an agent committed an intentional tort within work-related time or space; if so the PRINCIPAL IS LIABLE

M o t i v a t i o n T e s t

a test that determines whether an agents motivation in committing an intentional tort is to promote the principals business; if so PRINCIPAL IS LIABLE for any injury caused by the tort

usurping an opportunity

agent cannot take advantage of an opportunity that belongs to the principal. Unless the principal rejects it after consideration

misuse of confidential information

agent is under a legal duty not to disclose info either during or after course of agency.

Competing with the principal

agents are prohibit from competing with principals unless the principal agrees

Undisclosed

an agency in which a contracting third party does not know of either the existence of the agency or the principals identity. BOTH LIABLE

Fully disclosed

an agency in which a contracting third party knows 1) the agent is acting for a principal 2) identity of the principal contract between the principal and 3rd party. agent is NOT LIABLE, only liable if agent promises that the principal with perform the contract

Partially disclosed

an agency in which a contracting third party knows that the agent is acting for the principal but doesn't know the identity of the principal. BOTH ARE RELIABLE

self dealing

if there has been undisclosed dealings by an agent, the principal can rescind the purchase and recover the money paid the agent (Ex: a real estate agent cannot secretly sell his own property to the principal. However, it's legal if principal discloses ownership of property)

Agent Exceeding Scope of Authority

implied warranty of authority: a warranty of an agent who enters into a contract on behalf of another party that he/she has the authority to do so. PRINCIPAL NOT LIABLE if outside of scope, but AGENT IS LIABLE

Intentional Torts

includes acts such as assault and battery. PRINCIPAL NOT LIABLE for torts outside of scope of business

vicarious liability

liability without fault. it occurs where a principal is liable for an agents tortious conduct bc employment contract between the principal and agent, not bc the principal was personally at fault

dual agency

occurs when an agent acts for two or more different principals in the same transaction

tort liability of principals and agents to third parties

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

negligence

principals are liable for the negligent conduct of agents acting within scope of their employment

Independent contractors

principals employ outsiders, persons or businesses, that are not employees- to perform certain tasks on their behalf

CONTRACT LIABILITY TO THIRD PARTIES

the principal is always liable for any contract the agent signs. but is the agent liable?