Exam 4 Contents Flashcards
Agency
What is defined as the “fiduciary relations that results from the manifestation of consent by one person to another that the other shall act in his/her behalf and subject to his/her control and consent by the other so to act”
Fiduciary (when used as an adjective it is a fiduciary relationship)
What involves the trust between the principal and the agent; is at the heart of agency law; can be a noun or an adjective
What are the 2 types of agency relationships in business?
Employer-Employee Relationship
Employee Independent Contractor Relationship
Employer- Employee Relationship
typically all employees who deal with 3rd parties
are deemed to be agents of the business/owner(s).
– Salesperson in department store- making sales binding on owner
– Overlap between Employment and Agency Law (based upon common law)
Employment laws do not apply to who?
Independent Contractors
Independent Contractor
a person who contracts with another to do something for them but who is not controlled by the other party; may or may not be an agent;
ex.) homeowner hires a real estate agent to sell their home; hire a plumber to fix a leaky toilet; contractors and subcontractors are this
- Employer-Independent Contractor relationship:
– Independent contractor is a person who contracts with another to do something for them but who is not controlled by
the other party. The IC may or may not be an agent.
The criteria considered when determining whether a person is employee or contractor
is:
– How much control does the employer exercise over the details of the work?
* More control and detail= employee
– Is the worker engaged in an occupation/business distinct from that of the employer?
* If so, indicates IC
– Is the work usually done under the employer’s direction or by a specialist w/out supervisor?
* If done under employer discretion- employee
– Does the employer supply the tools at the workplace?
* If so-employee
– For how long is the person employed?
* Long period of time-employee
– What is the method of payment- time period or at the completion of job?
* Payment by time- every 2 weeks or monthly-employee
– What degree of skill is required?
* Great deal of skill-IC
IRS
states that the most important factor between an employee and IC is the degree of control the business exercises on the worker; they closely scrutinize firm’s classifications b/c of tax liabilities involved with employees
What may the IRS force the employer to do if cause misclassifying workers?
Pay all applicable taxes
“work for hire”
a person who creates a copyright work is the owner of the copyright unless what;
under copyright law, any copyright work created by an employee within the scope of his/her employment at the request of the employer is this
Who owns the copyright when an employer hires an IC unless the parties agree that the work is a “work for hire”?
The IC
What are formed by voluntary consent and agreement between parties; are normally consensual and do not need to be in writing & consideration not required?
Agency Relationships
An individual needs what in order to be a principal in an agency relationship; the rationale behind this is that if you can’t legally enter a K, you should not be able to do so indirectly through an agent?
Contractual Capacity
An agency relationship created for an illegal purpose is what?
Unenforceable
What are most agency relationships based on where the agent will act for the principal and the principal agrees to have the agent so act; these can be formed through expressed written or oral K’s?
Expressed or Implied Contracts
What is it called if a person who is not agent (or acting outside the scope of his/her authority) makes a K on behalf of another (principal) and the principal affirms (by actions/words) the K; this requires intent and intent can be expressed by words/actions?
Agency by Ratification
What is when a principal allows/causes a 3rd party to believe that an agent is acting on behalf of the principal and causes the 3rd party to act on that belief in his detriment; the 3rd party must prove that he reasonably believed an agency relationship existed (using reasonable person standard) and that the principal’s conduct / statements was the cause of the belief (not the agents)?
Agency by Estoppel
What is it called when courts may find agency relationships absent formal agreements; this can occur through family relationships (actions of one spouse may impose liability upon the other; parent and child as well) and emergency situations?
Agency by Law
What is it called when courts may find agency relationships absent formal agreements; this can occur through family relationships (actions of one spouse may impose liability upon the other; parent and child as well) and emergency situations?
Agency by Law
Once the principal-agent relationship has been established, what does each party owe the other?
The duty to act with the utmost good faith
What are the 5 duties that agents generally owe principals?
- Performance
- Notification
- Loyalty
- Obedience
- Accounting
“principal employer”
the main company or individual who ultimately controls and supervises a workforce, even if they don’t directly employ the workers themselves, typically utilizing a contractor/agent to provide the labor
Which of the duties owed by the agent to the principal is an implied condition that the agent will use reasonable diligence and skills performing the work; failing to do so may result in a breach of contract; this is judged by the reasonable person standard (ordinary care for level of skill advertised)?
Performance