Exam 4 Flashcards
What is a principal?
person from whom agent has received
instruction and authorization and to whose benefit agent is expected to perform and make decisions pursuant to agency relationship.
What is an agent?
one who agrees to act and is authorized to
act on behalf of another, a principal, to legally bind principal in particular business transactions with third parties pursuant to agency relationship.
What are the three broad categories of agents?
employee agents, independant contractors, gratuitous agents.
What is an employee agent?
Individual employees who are authorized to transact business on behalf of
employer/principal.
What is an employee nonagent?
Employee nonagent does not have authority to act on behalf of principal.
What is a gratuitous agent?
Agents who act on behalf of a principal without receiving any compensation.
What must a principal do to create an agency relationship?
To create agency relationship, principal must manifest some offer to form agency.
What standard do courts use to determine whether a principal manifested an offer to form an agency relationship and whether an agent consented?
Consent occurs when agent agrees to act for principal.
What type of agent is a professional service provider with multiple clients likely to be classified as?
Independent contractor
What role do direction and control have in determining whether an agent is classified as an independent contractor or an employee agent?
36
What are the potential liabilities from the Internal Revenue Service (IRS) for
misclassification of an employee as an independent contractor?
back employee taxes, penalty for wrongful classification, interest owed to government
In general, what are the two primary ways in which an agency relationship can be
terminated?
express act, operation of law
How did the Massachusetts Superior Court rule in Bosse v. Brinker Restaurant
Corporation d/b/a Chili’s Grill and Bar?
ruled in favor of Chili’s, granting summary judgment. The court found that the restaurant could not be held liable under the theory of respondeat superior for the actions of a patron who pursued two teenagers who had left the restaurant without paying their bill.
What are the differences between fully disclosed agency, partially disclosed agency, and undisclosed agency?
Fully: Occurs when third party entering into contract is aware of principal’s identity and
knows agent is acting on behalf of principal in transaction.
Partially: Occurs when third party knows that agent is representing principal but does not know actual identity of principal.
Undisclosed: Occurs when third party is completely unaware of agency relationship and believes that agent is acting on agent’s own behalf when contracting.
What is the difference between a frolic and a detour?
Frolic: when employee does something purely for employee’s own reasons that
are unrelated to employment, which releases employer from respondeat
superior liability.
Detour: when employee engages in minor deviation from employment, which is
still within ambit of respondeat superior.
What are the differences between actual authority (including express authority and
implied authority), apparent authority, and ratification?
Actual: when employee engages in minor deviation from employment, which is
still within ambit of respondeat superior.
Apparent: Sometimes agent acts in unauthorized manner (without express or implied authority) but still binds principal in contract.
Ratification: Occurs when principal affirms previously unauthorized act.
What is respondeat superior?
Under respondeat superior, employers are liable for negligent acts of employee agents.
Under what circumstance can an employer be liable for an employee agent’s intentional tort?
Generally, intentional torts by agent (e.g., assault and battery in the workplace)
are thought to be outside scope of employment, and employers are not liable for such conduct unless tort has close connection to serving principal.