Law: #16 Flashcards
Employers worry about employee mistakes because an old rule of law known as “respondent superior”. What is this rule in English, and why does it worry them?
It translates to “let the superior speak”. The rule provides that a master is responsible/liable for the conduct of his servants.
How do you know when an agency relationship exists
When one person (principle) directs another person (agent) to perform various tasks for her, and the agent agrees. Agent acts in principles behalf, and is subject to their control.
What key difference is there between the relationship between a principle and an agent to a principle and an independent contractor?
The key difference is control. With an agent the principle has control of the agents conduct, whereas a principle does not have control of the conduct of an independent contract, only the results agreed upon.
What may a principle control in a relationship with an independent contractor?
The principle may control the result, but not the method.
What difference is there in the amount of liability owed in the relationship of principle to agent vs to independent contractor.
The principle is liable for actions of an agent, but not of an independent contractor.
What are some of the factors that a court uses to test for a principle-agent relationship?
Skills required, source of instrumentality and tools, the location of the work, duration of the relationship, if hiring party has the right to assign additional projects to the hired party, method of payment, employee benefits, tax treatments, etc.
What is an express agency?
This is when an agency relationship is formed by an explicit agreement (as opposed to implicit/implied) agreement.
If there is an agency relationship that is not an “express agency” then what is it?
implied.
Is a written contract required for an agency relationship to exist?
No. However, consent is.
What are some limitations by court mentioned in relation to agent-principle relationships?
They will not enforce a contract if one party is incompetent, or if the agent is being told to perform an illegal act.
Assume that Andrea intends to operate a summer fruit stand in addition to her flower store and that the message to Robert includes the following: “As we discussed on the telephone, I will also operate a summer fruit stand, and it will be your obligation to visit local farmers and buy apples and peaches which I will sell at my fruit stand. I will not sell tropical fruit like bananas because they deteriorate too quickly.” Robert agrees.
However, in the weeks that follow, Andrea tells her business friends—contrary to the understanding above—that Robert will be working for her and buying and selling “all kinds of fruit.” If Robert thereafter buys some
bananas from one of Andrea’s business friends (contrary to his agree-
ment with Andrea) is she bound by the banana contract?
The answer is yes because she has created the appearance of authorization and it is thus reasonable that she should be responsible for an understanding she created. (Thus the phrase “apparent authority” is sometimes used with respect to agency relationships.)
Whose conduct is “apparent authority” based on?
It is based on the conduct of the principle only. So if an agent acts under apparent authority, contradicting the direction of the principle then the principle is not liable.
pg 417
a principal is liable for understandings that he, the principal,has created. An innocent principal is not responsible for the misrepresentations of a would-be agent.
What does “agency by ratification” mean?
This is a uncommon principle-agent relationship in which a principal later expresses her intent to be bound to a contract that she did not authorize when it was formed.
For example:
Michael is a friend of Milly and he becomes aware of a very good deal on potted petunias at a wholesale house in Idaho. He buys three hundred petunias in the name of Milly, even though he does not work for Milly, and he is not authorized to buy the flowers. Obviously, Milly is not responsible to pay for the flowers because (1) Michael is not her agent, and (2) she has not created the appearance that Michael is her agent. Nevertheless, further suppose that Michael contacts Milly and tells her what he has done. Milly agrees to the deal even though it was not authorized. Consistent with that, Milly contacts the wholesale house and tells them to send her the bill. This act of expressing her intent to be bound to the agreement is called ratification and this arrangement is thus called agency by ratification.
What are the three general duties of a principal?
1) Compensation: pay agent for services
2) Reimbursement and indemnification: must reimburse for authorized expenses or losses due to principles misconduct
3) Cooperation: Provide info, safe working conditions, etc. Cant work to thwart work of agent.
What are the four general duties of the agent?
1) Fiduciary: obligation of trust and confidence
2) Performance: perform as a reasonable person would
3) Notification: of important info
4) Accountability: keep records and account for use of money and property
Which of the agents duties encompasses the concept that an agent must give first place to the interests of the principal and second place to their own interests?
This falls under the duty of being a fiduciary
What type of fiduciary responsibility does a principal have to its agent?
The principal is not the fiduciary of the agent, this means that the principal is not “entrusted to act for the benefit of or in the interest of another”.
To avoid liability for various claims, a business enterprise will often claim that a person working for it is an independent contractor and not an agent. Summarize the factors (they are discussed in both of the preceding cases) that are considered by courts to decide whether a particular person is an independent contractor or an agent. (13)
This list is from the Eisenberg decision: (1) the hiring party’s right to control the manner and means by which the product is accomplished; (2) the skill required; (3) the source of the instrumentalities and tools; (4) the location of the work; (5) the duration of the relationship between the parties; (6) whether the hiring party has the right to assign additional projects to the hired party; (7) the extent of the hired party’s discretion over when and how to long to work; (8) the method of payment; (9) the hired party’s role in hiring and paying assistants; (10) whether the work is part of the regular business of the hiring party; (11) whether the hiring party is in business; (12) the provision of employee benefits; and (13) the tax treatment of the hired party.
Explain how the facts in Ginn must change for a court to conclude that there was an agency relationship between the unknown patron and the nightclub.
Note the definition of agency earlier in this chapter. It requires “assent” (agreement) on the part of the principal (the manager) and the patron (agent) that the agent will act for the principal. There are no magic words, but the following would suffice: the manager says, “John, help me get this drunk out of here,” and the patron responds, “Okay.”
What is the difference between implied authority and apparent authority? (This is a difficult question and if you understand the subtle distinction between the two, you are starting to understand the matters discussed in this chapter.)
Implied authority is real authority, but apparent authority is not. With apparent authority the court is simply enforcing a false representation by the principal to avoid harm to the victim of the false representation.
In the Alberty-Velez v. Corporacion de Puerto Rico case, the court obviously found it significant that Ms. Alberty-Velez (1) provided her own tools, (2) received a lump sum for each performance, and (3) did not receive benefits. The important question is why the court considered these items (among other items) important in deciding whether she was an independent contractor.
Normally, an employee (for example, an employee in a bakery) is (1) provided all necessary tools and products, (2) paid by the hour, and (3) Internal Tax, Social Security, and benefits withholding is provided. These items demonstrate dependence, not independence. The fact that these items were not applied to Ms. Alberty-Velez suggests her independence.
Explain (1) what is meant by a fiduciary duty, and (2) who owes the duty: principal or agent?
A fiduciary duty is a duty in which a person owes a responsibility of trust and confidence to another and must put that other person’s interests before his own. This duty is owed by an agent to a principal.
As we will learn later in more detail, many people resist being described as a principal. Why is this so? As described above, why does a “principal” often resist that description?
A principal often tries to avoid being described as a principal because in an agency relationship the principal is liable for the wrongdoing of his or her agent.
Respondeat superior applies to which of the following?
A principal and agent relationship created by express agreement.
A principal and agent relationship based on implied agency.
A principal and agent relationship based on apparent authority.
All of these are correct.
d
Respondeat wsuperior is an old rule of law that provides that a master is responsible for the conduct of his agents. This rule applies no matter how the agency relationship is created.
