worksheet 19.1: agency law and the formation of Agency Relationships

Agency relationships can exist outside an employer-employee relationship, and thus agency law has a broader reach than does employment law. a. True b. False

a. True

Agency

Agency A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal)

With respect to their employers, employees who deal with third parties are generally deemed to be

Agents

Fiduciary

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.

Agency relationships are normally consensual, coming about through voluntary consent and agreement between the parties. T/F

True

In which situations may the courts find an agency relationship in the absence of a formal agreement? Choose two. a. In family relationships b. In commercial transactions c. In emergency situations d. In creation of intellectual property

-In family relationships -in emergency situations

Agency by ________ is created when the _________ causes a third party to reasonably believe that an agency relationship exists.

Agency by estoppel is created when the principal causes a third party to reasonably believe that an agency relationship exists.

Courts will determine independent contractor status by asking several questions. These include the following: How much______ does the employer exercise over the details of the work? Is the worker engaged in a(n)_________or business distinct from that of the employer? Is the work usually done under the employer's direction or by a(n)______ without supervision? Does the employer_______________the tools at the place of work? For how long is the person _________ ? What is the method of __________ by time period or at the completion of the job? What degree of)__________ is required of the worker?

How much control does the employer exercise over the details of the work? Is the worker engaged in an occupation of 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 of the worker?

Independent Contractor

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.

In an agency relationship involving two parties, the agent agrees to represent or act for the principal. T/F

True

Whether a worker is an employee or an independent contractor can affect the employer's _________ for workers' actions. If the Internal Revenue Service decides that an employee is misclassified as an independent contractor, the employer will be ________ for paying Social Security, withholding, and unemployment taxes.

Whether a worker is an employee or an independent contractor can affect the employer's liability for workers' actions. If the Internal Revenue Service decides that an employee is misclassified as an independent contractor, the employer will be responsible for paying Social Security, withholding, and unemployment taxes.

Any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is called a

Work for hire

When a person who is not an agent makes a contract on behalf of a principal, the principal cannot benefit from the contract. a. True b. False

b. False

A familiar example of an agent is a(n): a. janitorial employee who does not deal with third parties. b. gardener hired to maintain the grounds at a large industrial complex. c. corporate officer who serves in a representative capacity for the owners of the corporation.

c. corporate officer who serves in a representative capacity for the owners of the corporation.

Which of the following is NOT one of the four ways in which an agency relationship can arise? a. Agency by agreement b. Agency by ratification c. Agency by federal law d. Agency by estoppel e. Agency by operation of law

c.Agency by federal law

With respect to who can become a principal and who can become an agent: a. any person can become a principal, but an agent has to have the capacity to contract. b. any person can become a principal and any person can become an agent. c. a person must have contractual capacity to be a principal, but any person can be an agent.

c. a person must have contractual capacity to be a principal, but any person can be an agent.

In agency law, ratification occurs when: a. there is no agency relationship, but the words and actions of the principal lead a third party to assume that an agency exists. b. fiduciary obligations are owed by an agent to a principal. c. a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent. d. the obligation of an agent who acted outside the scope of his or her authority is rejected.

c. a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent.