Chapter 9: "Agency Limited to Third Parties and Termination" Flashcards
Agency relationships can exist outside an employer-employee relationship, and thus agency law has a broader reach than employment law does.
a. True
b. False
a. True
In deciding whether a worker is categorized as an employee or an independent contractor, courts often consider the following 7 questions:
How much control does the employer exercise over the details of the work? If the employer exercises considerable control over the details of the work and the day-to-day activities of the worker, this indicates employee status. This is perhaps the most important factor weighed by the courts in determining employee status.
Is the worker engaged in an occupation or business distinct from that of the employer? If so, this points to independent-contractor, not employee, status.
Is the work usually done under the employer’s direction or by a specialist without supervision? If the work is usually done under the employer’s direction, this indicates employee status.
Does the employer supply the tools at the place of work? If so, this indicates employee status.
For how long is the person employed? If the person is employed for a long period of time, this indicates employee status.
What is the method of payment—by time period or at the completion of the job? Payment by time period, such as once every two weeks or once a month, indicates employee status.
What degree of skill is required of the worker? If a great degree of skill is required, this may indicate that the person is an independent contractor hired for a specialized job and not an employee.
Under the Copyright Act, any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is a _____
“work for hire.”
The employer owns the copyright to the work. In contrast, when an employer hires an independent contractor—a freelance artist, writer, or computer programmer, for example—the independent contractor normally owns the copyright.
Jamel hires independent contractor Stevenson to create users’ manuals for Jamel’s small appliances. How can Jamel be certain to own the copyright for these owners’ manuals?
a. He can create an agreement in writing that designates Stevenson's work as work for hire. b. He can ask for a ruling from the Internal Revenue Service. c. He cannot, because independent contractors own the copyright of the results of what they do.
a. He can create an agreement in writing that designates Stevenson’s work as work for hire.
Agency relationships are normally consensual, coming about through voluntary consent and agreement between the parties.
True
Generally, agency agreements must be in writing and there must be consideration.
False
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. a person must have contractual capacity to be a principal, but any person can be an agent. c. any person can become a principal and any person can become an agent.
b. a person must have contractual capacity to be a principal, but any person can be an agent.
An agency agreement must be in writing.
a. True
b. False
b. False
You walk into a restaurant and check your coat to a person behind a counter. You see a sign that says “I work for tips.” What can you assume the relationship is between the owner of the restaurant and the person who took your coat?
a. There is no relationship, because there is no salary given. b. The coat check person is an independent contractor. c. There is an implied agreement that the coat check person is an agent of the restaurant.
c. There is an implied agreement that the coat check person is an agent of the restaurant.
When a person who is not an agent makes a contract on behalf of a principal, the principal cannot benefit from the contract.
T/F
False
if the principal approves or affirms that contract by words or by actions, the agency relationship is created by ratification. Ratification always involves a question of intent, and intent can be expressed by words or by conduct.
In agency law, ratification occurs when:
a. a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent. b. there is no agency relationship, but the words and actions of the principal lead a third party to assume that an agency exists. c. the obligation of an agent who acted outside the scope of his or her authority is rejected. d. fiduciary obligations are owed by an agent to a principal.
a. a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent.
Perry tells Jaime that Selena has agreed to allow him to sell her high-end trial bike. Selena is present at the time, hears the conversation, and says nothing. Jaime wants to buy a bike like Selena’s so he agrees with Perry to buy her bike. Selena then refuses to sell it. She claims she is not bound by the agreement formed by Perry and Jaime because Perry is not her agent. Selena is:
a. bound by the contract under a theory of agency by estoppel. b. not bound by the contract because she did not have an agency agreement with Perry. c. bound by the contract under a theory of agency by operation of law.
a. bound by the contract under a theory of agency by estoppel.
Selena did nothing to prevent Jaime from believing that Perry was her agent. She created the appearance of an agency relationship on which Jaime reasonably relied to his detriment. She is bound by the contract under a theory of agency by estoppel.
Clarence buys $221 worth of groceries using his wife’s credit card. Under agency law, his wife will probably be deemed:
a. liable for the purchase, based on the creation of an agency by operation of law. b. not liable for the purchases based on Clarence's lack of power of attorney. c. liable for the purchase, based on the doctrine of respondeat superior.
a. liable for the purchase, based on the creation of an agency by operation of law.
The principal-agent relationship is fiduciary and therefore not based on trust, but specific laws.
a. True
b. False
b. False
Generally, the agent owes the principal five duties—performance, notification, loyalty, obedience, and accounting.
Performance
An implied condition in every agency contract is the agent’s agreement to use reasonable diligence and skill in performing the work. When an agent fails to perform his or her duties, liability for breach of contract may result.
Notification
An agent is required to notify the principal of all matters that come to her or his attention concerning the subject matter of the agency. This is the duty of notification, or the duty to inform.
Notification
An agent is required to notify the principal of all matters that come to her or his attention concerning the subject matter of the agency. This is the duty of notification, or the duty to inform.
Obedience
When acting on behalf of the principal, an agent has a duty to follow all lawful and clearly stated instructions of the principal. Any deviation from such instructions is a violation of this duty.
During emergency situations, however, when the principal cannot be consulted, the agent may deviate from the instructions without violating this duty. Whenever instructions are not clearly stated, the agent can fulfill the duty of obedience by acting in good faith and in a manner reasonable under the circumstances.
Accounting
Unless the agent and principal agree otherwise, the agent must keep and make available to the principal an account of all property and funds received and paid out on the principal’s behalf. This includes gifts from third parties in connection with the agency. For instance, a gift from a customer to a salesperson for prompt deliveries made by the salesperson’s firm, in the absence of a company policy to the contrary, belongs to the firm.
The four typical duties that the principal has to the agent.
Compensation
Reimbursement and Indemnification
Cooperation
Safe Working Conditions
