Principals and Agents

Question 1

Who can be a principal?

Answer 1

anyone with LEGAL CAPACITY

NOT: Minors or ppl incapacitated by illness or intoxication

Question 2

Entities that can be principals?

Answer 2

Employer
Corporation (LLC)
Partnership (LLP)

Question 3

Employer control over employee activities

Answer 3

Usually significant control over day-to-day activities, including

giving employee TOOLS
paying employee on structured PAY PERIOD
directing how employees should finish work and perform tasks

Question 4

Type of entity that CANNOT be principal?

Answer 4

UNINCORPORATED ASSOCIATIONS (bc they lack legal capacity)

E.g. birdwatching group or book club

Question 5

Who can be an agent?

Answer 5

Anyone with MINIMAL CAPACITY, including minors

Question 6

Minimal capacity requirements

Answer 6

Must be able to
1) ASSENT to relationship
2) perform tasks required on behalf of principal
3) be subject to principal’s CONTROL

Question 7

Is writing or consideration required to establish agency relationship?

Answer 7

NO, can be oral or gratuitous with no consideration

So long as ABC is present

Question 8

Control over employees vs. independent contractor as agents

Answer 8

Employees: principal has right to control the agent’s PHYSICAL CONDUCT OF WORK

Independent contractor: principal does NOT have right to control agent’s physical conduct of work

Question 9

Who may terminate agency relationship?

Answer 9

EITHER PARTY may terminate UNILATERALLY

Question 9

Independent contractor characteristics

Answer 9

-high level of independence
-free to work for other people
-has their own tools
-paid on fixed fee

Question 9

Relationship between level of control and level of liability of principal?

Answer 9

The more control a principal has, the more liable they are for conduct, and thus the more legally responsible they are