Chapter 8

Question 1

Be able to describe the special relationship to which agency refers.

Answer 1

The special relationship that arises when one person - the principal, manifests consent that another person - the agent, should act on the former’s behalf and subject to the former’s control.
(agency may also refer to the office or function of the agent, or to the place where the agent carries on the business)

Question 2

What does the Latin respondeat superior mean?

Answer 2

Let the superior, the boss, be responsible

Question 3

What are the two common contexts in which figuring out who the employer is can be problematic?

Answer 3

The Independent Contractor and The Loaned Employee

Question 4

Be able to describe the general rule for independent contractors.

Answer 4

They are a person hired to accomplish a result; the person hiring him has no direct say in how the result is to be accomplished and is not usually liable for the independent contractor’s torts

Question 5

For purposes of determining liability, how is the employer of a loaned employee identified?

Answer 5

Whoever was exercising control over the employee at the time will be deemed the employer

Question 6

Be able to state the three questions regarding agent/employee conduct or circumstances that are asked by the “zone of risk” test.

Answer 6

Zone of risk test: determines whether the employer is in the zone of risk, not whether the employee is)

1. did the employee commit the tort during the general time frame of their employment
2. did the tort arise in some way from the employment?
3. did it occur in the general area where the employee was expected to be?

Question 7

What is the modern rule regarding principal/employer liability for agent/employee intentional tort or crime?

Answer 7

The employer is liable for any tort, so long as its purpose, however misguided, is to further the employe’s interest
• In other words, so long as the tort is committed within the scope of employment

Question 8

What does principal agent theory concern?

Answer 8

Contract liability

Question 9

What is the general rule regarding contracts entered into by an authorized agent?

Answer 9

It binds the principal but the agent is not liable.

Question 10

What is determined by the application of principal and agent theory?

Answer 10

When the law of agency should impose liability for a breach of contract upon a person who did not directly entre into the contract
• That is, should vicarious liability be imposed

Question 11

For an agent or employee to clearly avoid personal liability for a contract, what must there actually be?

Answer 11

There must actually be a principal.

Question 12

Additionally, what three things must an agent or employee communicate to a third party in order to avoid liability?

Answer 12

1. the agent must have communicated his status as a agent to the other party
2. the agent must have disclosed the identity of the principal
3. the agent must have had the authority to entre into the contract

Question 13

Identify and describe the three ways an agency relationship can be terminated.

Answer 13

Termination by will of parties
• Either the principal or the agent can terminate the contract at will
• The gent may renounce their authority or the principal may revoke their authority
• The parties may mutually agree to terminate the contract, without damages to either side
Termination by Contract Provision
• If the agency contract has a set time period – a term – when the term is up, the contract is done
Termination by Change in Circumstances
• If the either party dies, becomes incompetent or bankrupt, if the purpose of the agency agreement becomes impossible/illegal, the agency terminates