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Chapters 33 & 32 Notes

by: Whitney Davis

Chapters 33 & 32 Notes BUS 131 - 010

Whitney Davis
Kutztown University of Pennsylvania

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Outline of chapters 32 & 33
Business Law I
Dr. Slamon
Class Notes
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This 6 page Class Notes was uploaded by Whitney Davis on Friday April 8, 2016. The Class Notes belongs to BUS 131 - 010 at Kutztown University of Pennsylvania taught by Dr. Slamon in Spring 2016. Since its upload, it has received 10 views. For similar materials see Business Law I in Business at Kutztown University of Pennsylvania.

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Date Created: 04/08/16
Chapter 32: Agency and Duties Agency  A relationship between 2 parties  One party (agent) agrees to represent/act for the other (principal) Agency Relationships  Fiduciary o A person having a duty to act for another’s benefit in matters connecting with an undertaking o Relationship  Relationship involving trust and confidence  Employer-Employee Relationships o Ex. A salesperson is an agent of store’s owner and acts on owner’s behalf o Laws that apply to employers and employees:  Statutes governing Social Security, withholding taxes, workers’ compensation, unemployment compensation, workplace safety  Prohibition of employment discrimination  Employer-Independent Contractor Relationships o Independent contractor  Not an employee  Person who contracts with another to do something for him/her  Not controlled or subject to another and other’s right to control  He/she may not be an agent o Property owner does not control details of work performance o Relationship between principal and independent contractor may or may not involve agency relationship o Ex. Homeowner selling a house through real estate broker  Independent contractor (broker)  Agency relationship (specific purpose of selling property)  Determination of Employee Status o Disputes involving employment law  Employee status – for tax purposes and protection under certain employment laws o Disputes involving tort liability o IRS  If IRS decides employee is misclassified, employer is responsible for paying any applicable Social Security, withholding, and unemployment taxes o Work for Hire  Any copyrighted work created by employee within scope of her/his employment at request of employer  When employer hires independent contractor, independent contractor owns copyright  Exception is made if both parties agree (in writing) the work is “work for hire” Formation if Agency Relationship  Normally consensual (voluntary consent and agreement between parties) o Agreement need not be in writing o No consideration required  Person must have contractual capacity to be a principal o Any person can be an agent  Can arise in four ways: o Agreement of the parties o Ratification o Estoppel o Operation of law  Agency by Agreement o Express or implied agreement  Express written or oral agreement  Implied by conduct  Agency by Ratification o Non-agent may make a contract on behalf of another (principal) o Principal approves/affirms contract by word or action o Involves:  Question of intent  Intent can be expressed by word or conduct  Agency by Estoppel rd o Principal causes 3 person to believe that another person is principal’s agent o 3 person acts to his/her detriment in reasonable reliance upon belief o 3 party’s reliance must be reasonable o Created by principal’s conduct  Agency by Operation of Law o May occur in family relationships  Spouse purchases certain basic necessaries charges to other spouse’s account  Spouse is liable for payment of necessaries o May occur in emergency situations  If agent can’t contact principal or causes principal substantial loss, agent may take steps beyond scope of his/her authority Duties of agents and Principals  Principal-agent is based on trust (fudiciary)  Agent’s Duties to the Principal o Performance  Standard of care  Gratuitous agents o Notification o Loyalty  Maintain confidentiality  Actions must benefit principal o Obedience o Accounting  Principal’s Duties to the Agent o Compensation o Reimbursement and indemnification o Cooperation o Safe working conditions Right and Remedies of Agents and Principals  Agent’s rights and remedies against principal o Tort and contract remedies o Demand for an accounting  Agent can withhold further performance and demand that principal give an accounting o No right to specific performance  Principal’s rights and remedies against agent o Constructive trust o Avoidance o Indemnification Chapter 33: Agency Liability to Third Parties and Termination Scope of Agent’s Authority  Principal is liable for Agent’s acts when Agent has either actual or apparent authority o Actual Authority: express or implied o Apparent authority: estoppel, emergency, and ratification  Express Authority o Can be oral or written o Equal Dignity of Rule  If law requires written contract, agent’s authority must be in writing, or contract is voidable o Exceptions  Executive Officer acting for Corporation  Agent acts in Principal’s presence o Power of Attorney  POA is written document and usually notarized  Special: specific acts only  General: all business for principal  Terminates on principal’s death or incapacity  Implied Authority o What is reasonably necessary to carry out express authority  Inferred or conferred by custom, or agent’s position  Did agent reasonably believe she had authority to do the act?  Apparent Authority o Arises based on what principal causes 3 party (not agent) to believe o Pattern of Conduct  Apparent authority usually comes into existence over time o Apparent Authority and Estoppel  Emergency Powers o Arises when  Agent should protect principal  Agent cannot communicate with Principal  Ratification o Occurs when principals accepts responsibility for an agent’s unauthorized act Liability for Contracts  Principals are classified as: o Disclosed  Identity known to 3 party o Partially disclosed  3 party knows he is dealing with an agent, but doesn’t know principal’s identity o Undisclosed  3 party does not know he is dealing with an agent, principal’s identity is unknown  Authorized Acts o Disclosed or partially disclosed principal  Liable to 3 party if agent acts within scope of authority  Agent has no liability to 3 party for disclosed principal’s non- performance  Unauthorized Acts o Outside the agent’s express, implied, or apparent authority o If agent has no authority, principal is not liable, but agent is personally liable  Actions by E-agents o An E-Agent is a semi-autonomous computer program capable of executing specific tasks on behalf of a principal o E-commerce uses e-agent to create contacts everyday Liability for Torts and Crimes rd  Agent id liable to 3 party for his/her own torts  Principal may be liable for agent’s torts if they result from: o Principal’s Tortious Conduct o Principal’s Authorization of Agent’s Tortious Conduct o Liability for Agent’s Misrepresentation  Apparent implied authority  Innocent misrepresentation  Liability for Agent’s Negligence o Doctrine of Respondeat Superior  Employer is vicariously liable for employee’s negligent torts committed within agent’s “course and scope of employment” o Distinction between a “Detour” and a “Frolic”  Detour = liable  Frolic = not liable o Employee Travel Time  To or from meals is outside scope of employment o Notice of Dangerous Conditions o Liability for Agent’s Intentional Torts  Principal is liable for intentional torts committed within scope of employment  No relation to employment relationship  Employer is also liable for employee’s acts  Liability for Agent’s Crimes o Agent s liable for his/her own crimes o Principal is not liable for agent’s crime unless:  Principal participated in crime  Liability for Independent Contractor’ Torts o General Rule  Employer is not liable for acts of independent contractors because employer has no right to control o Exceptions  Strict liability for unusually hazardous activities


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