Chapters 32-33: Agency Flashcards
Fiduciary Definition
Person having a duty to act on behalf of another (the principal)
Questions to determine if one is an employee or independent contractor
1) How much control does the employer have over the details of the work?
2) Is the worker engaged in a job distinct from that of the employer?
3) Is the work done under the employer’s supervision?
4) Does the employer supply the tools?
5) For how long is the person employed?
6) How are they paid? By time period or upon job completion?
7) What degree of skill is required?
Most important question in determining employee status
How much control does the employer have over the details of the work? Primary question for the IRS
Who owns copyrighted work created by an employee? Independent contractor?
1) Copyrighted works created by employees are owned by the employer
2) Independent contractors own the work they create. Art, writing, code.
Rights only available to employees, not independent contractors
1) Minimum wage & Overtime
2) Family/Medical leave
3) Civil rights laws
4) Unemployment insurance
5) Workers compensation
6) Right to unionize
Do governments seek to identify workers as employees or Independent contractors? Why?
Governments look to identify workers as Employees because they get more tax revenue from them opposed to IC’s.
Capacity requirements of agent and principal
Principal must have capacity, but the agent does not have to
4 Ways Agency relationships can be formed:
1) Agreement
2) Ratification
3) Estoppel
4) Operation of Law
Ways an agency relationship can be agreed upon
1) Express or written contract
2) Oral agreement
3) Can be implied by conduct (uniform, nametag, etc.)
How agency relationship can form through ratification
1) When a person who is not an agent acts on behalf of the principal, and the principal approves of the action
2) An existing agent acts outside the scope of their agency, and is ratified after the fact.
How agency is formed via Estoppel
When the principal falsely convinces a 3rd party that another person is their agent, and the 3rd party detrimentally relies on that fact
How agency is formed via Operation of Law
1) Family Relationships: agency is valid when a relative buys necessaries on behalf of the family.
2) Emergency situations: ex: Railroad driver isn’t allowed to enter contracts, but after a crash, the driver calls an ambulance to help people. Driver is not liable for ambulance costs.
Agents duties to the Principal
1) Performance
2) Notification
3) Loyalty
4) Obedience
5) Accounting
Agents duty of performance
Agents should use reasonable skill when performing work. If they fail to perform, could be a breach of contract.
Ex. Abel tells Paul that he has 20 years of real estate experience. Better perform like someone with 20 years experience.
Agents who act gratuitously (without payment) are subject to:
1) Gratuitous agents are subject to tort liability, not breach of contract
2) Must perform in an acceptable manner
3) Subject to the same standards of care and duty to perform as other agents
