Chapters 33 & 32 Notes
Chapters 33 & 32 Notes BUS 131 - 010
Kutztown University of Pennsylvania
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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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