General

Question 1

What is an Agency Relationship?

Answer 1

A voluntary fiduciary relationship between two parties: a principal and an agent where the principal has authorized the agent to act on the principal’s behalf.

Question 2

Sources of Agency Relationships

Answer 2

Can come from K or some other source.

Question 3

Types of Agency Relationships

Answer 3

Include:

• Gratuitous Agency
• K Agency (employer-employee & employer-independent contractor)

Question 4

Gratuitous Agency

Answer 4

Principal does not compensate the agent for the work the agent does on the principal’s behalf.

Question 5

Employer-Employee Agency

Answer 5

Employer has the right to control what the employee does and how the employee does it.

Question 6

Employer-Independent Contractor Agency

Answer 6

Employer has the right to control only what the independent K controls the means of accomplishing the end.

Question 7

Distinguishing Employees from Independent Ks (Factors to Determine the Employer’s Right to Control)

Answer 7

Include:

• whether the work is typically performed by specialists without supervision
• who supplies the agent with tools and place to perform work (agent or principal?)
• length and exclusivity of the employment relationship
• whether the agent was paid by the job (more likely an independent K) or at regular intervals (more likely an employee); and
• whether the agent’s work is part of the employer’s regular business.

Question 8

Borrowed Employee

Answer 8

When an employer sends an employee to a third party but continues to pay their wages. The right to control is the key test (an employer who loaned the employee does not continue to exercise control over the employee will not be liable)

Question 9

Important Factors in Determining Whether Control Has Been Completely Transferred to the New Employer

Answer 9

Include:

• the manner of hiring
• the mode of payment
• the right to discharge; and
• the manner of direction of services

Question 10

Agency as an Equitable Doctrine

Answer 10

Includes “agency by estoppel” and “apparent authority” theories. When no actual agency has been created but parties are treated as if an agency had existed.

Question 11

Actual or Apparent Authority Ks

Answer 11

Creates a K between the principal and the third party, but not between the agent and the third party unless they otherwise agree

Question 12

Do Agency Relationships Have to Be With Individuals?

Answer 12

No. Along with individuals, an agency relationship can be formed by, with, or between:

• an organization or association with the capacity to possess rights and incur obligations; or
• a gov., political subdivision, or entity created by the gov.; or
• any other entity that has the legal capacity to possess rights and incur obligations