Chapter 32 Flashcards
Agent
a person who agrees to represent or act on behalf of another
Principal
the person whom the agent represents or acts on behalf of
Fiduciary
(often call the agent a fiduciary) a person having a special duty created by his agreeing to act for the benefit of another
Fiduciary Relationship
A relationship that involves trust & confidence
Employer-employee relationships
Agent based relationships
Are all agents employees?
No, NOT all agents are employees
Are all employees agents?
No, not every employee works with third parties (have outside connections to third parties)
Are all workers employees?
No
Employees
traditionally paid by hour/salary, taxes withheld.
Liability standpoint: principal (as the hiring company) are responsible for the agent (employee)
Liability insurance is purchased
Employer-independent contractor relationship
Agency based relationships
Example of an employer-independent contractor relationship
construction - general contractor (the builder), subcontractors (carpenter, roofer, electrician, plumber)
Subcontractors can decide whether or not they want to work on the project with the general contractor
Paid by the job typically, no tax withholding by the builder, subs pay their own self-employment taxes (benefit to the company)
As a company (treatment for employer-independent contractor relationship)
- Minimal exposure risk
- Tax benefits
- Sometimes… workers are mislabeled (contractors that are actually employees)
Questions used in determining employee status:
- How much control can 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 completion of the job?
- What degree of skill is required of the worker?
What is the more important question when determining employee status?
How much control can the employer exercise over the details of the work?
Coker v. Pershad: Five Star Auto Service was the contract provider of towing services for AAA North Jersey, Inc. A Five Star employee, Pershad responded to the call for towing services of Coker and Pershad assaults Coker with a knife. Coker sues AAA, Five Star Auto and Pershad. (There is no question about Pershad being an employee of Five Star.) The question is whether Five Star is an employee of AAA or is Five Star an independent contractor to AAA?
The court rules that Five Star is an independent contractor of AAA. Responsibility is left with Pershad and Five Star.
Employee Status and “Works for Hire”
If a person creates a copyrighted work, the general rule is the work is owned by the creator. If someone else created it, someone else owns it. Intellectual properties.
What is the exception to the employee owning his/her own work?
In an employment relationship, the general rule is that if you create it you own it. This doesn’t apply if the work is created under a “work for hire”. The employer would then own the intellectual property.
Employee Status and “Works for Hire” Rules
- So, “work for hire” generally means Employer owns the work.
- If an employer has an employee create a sculpture or any other copyrightable work, then it is viewed as a “work for hire”.
- If an employer hires an independent contractor to create a sculpture or other copyrightable work, then the independent contractor owns the work, unless there is a written agreement that says it’s a “work for hire.”
Formation of the Agency Relationship
Most agency relationships are consensual. (not always in writing)
Agency by Agreement
- May be an expressed agreement
- May be an implied agreement
Example of a expressed agency by agreement
Hailey gives her daughter Rebecca her credit card and sends her to HEB. Rebecca was given instruction.
Example of a implied agency by agreement
Rebecca keeps Hailey’s credit card in her wallet, it is implied that she can use it
When an agreement is not present between principal and agent, sometimes another form of agency relationship is present or recognized in the law…
Agency by Estoppel and Agency by Operation of Law
Agency by Estoppel
- The principal’s action creates the appearance of an agency that does not actually exist.
- A third person reasonably believed that the agency existed.
Forces someone to be responsible for their actions when third parties have clearly relied upon those actions.
Estoppel
The principle that precludes a person from asserting something contrary to what is implied by a previous action or statement of that person
As a doctrine provides an equitable solution to a scenario. (IT MUST BE THE PRINCIPAL’S ACTIONS NOT THE AGENTS)
Azur v. Chase Bank
For 65 months Azur’s secretary was taking cash advances. The bank had reason to believe that Vanek had authority. Azur gave the bank the impression that she had permission. Azur is forced to accept the actions of his secretary, because HE gave the impression, if it was just HER it would have been a different situation.
Agency by Operation of Law
Not common. An agent is needed due to an emergency. Usually in the event of a medical emergency.
