Chapter 28-30

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Chapter28

Recognize the difference between an independent contractor and a servant (an employee)
Servant (employee) – is one who works physically for the hiring party which is the employer
Employer- has potential liability under respondent superior, provides the tools/machines to do the work, provides the workplace, must withhold income taxes and pay, pay Soc Sec and Medicare, provides benefits such as paid holidays, sick leave, health insurance, retirement plans. The worker is entitled to unemployment compensation & minimum wage and overtime under federal or state statues.

Independent contractor – is hired to complete a task for someone else.

Understand why the distinction between an independent contractor and a servant (an employee) is significant
Responsibility for independent contractors- Contract Liability- Principals who engage independent contractors as agents will be liable on contract if contract was authorized. Tort liability- independent contractor who is injured while working generally can’t recover from the hiring party. Employees of independent contractor have been permitted to recover from independent contractor.

Explain what an agent is
Agency is the fiduciary relationship that arises when one person (a principal) infests assent to another person (an agent) that the agent shall act on the principals behalf and subject to the principals control, and the agent manifests asset or otherwise consents to the act.

Recognize when a person owes fiduciary duties to someone else
The creation of an agency relationship creates a fiduciary duty owed by the agent to the principal. People other than agents can owe a fiduciary duty. Fiduciary duties are the duties to act with the utmost good faith, candor, confidence and trust.

Explain when a hiring party will be liable for damage caused by his or her independent contractor
Employer is not liable for physical acts of independent contractors unless he: reserves to right to supervise/control work. Directs indep. contractor to do something wrong/illegal. Knew about activity and did not stop it. Does not supervise indeed. contractor. Careless in selecting independent contractor. Indep. contractor hired to commit crime and engage in ultra hazardous activities.

Explain how gratuitous servants (volunteers) are similar to and different from other servants (employees)
Gratuitous agency are that one person volunteered to help another and the second person accepted this “free” assistance. The primary difference is that a gratuitous agent can freely terminate his or her duty by giving notice to the principal that he or she will not continue.

List the events that terminate agency relationships
Agreement of the parties- contract between principal and agent states when it will end.

Agency at will- Terminable at any time by either party after notice, Wrongful discharge, Bad-faith discharge

Fullfillment of the Agency Purpose- completion of work terminates agency

Revocation- Principals revoke authority of agents to act on their behalf.

Renunciation- Agent notifies principal they quit

Operation of Law, Termination occurs automatically: Upon death of agent or principal, either party becomes insane, principal becomes bankrupt, agent becomes bankrupts, if bankruptcy affects the agency. If agency cannot be performed, if unforeseen events destroy the agency relationship, if a change in law makes agency illegal

Importance of Notice- Early termination by either party, except by operation of law, requires notice.
Actual or constructive notice may be acceptable.

Chapter 29

Explain what a principal-agent relationship is and give one example
The agent is the representative of the principal. Legally the agents actions are treated as if done by the principal.

Differentiate disclosed, unidentified, and undisclosed principal situations
Disclosed principal- when an agent clearly discloses that he or she is representing a principal.

Undisclosed principal- one whose existence and identity are unknown the the third party.

Unidentified princial- is one whose existence is known to the third party but whose identity is not.

Explain when a principal and a third party will be liable on a contract when the principal is undisclosed
Principal- liable for breach if third party later discovers identity of principal if agent authorized to make agreement. Third party must elect to sue agent or principal. If third party sues agent and loses before discovery of principal, third party not considered to gave man an election and permitted to sue principal.

Third party- If TP breaches contract TP can be sued by Agent and undisclosed Principal. Principal can sue if contract is assignable. Principal can arrange for Agent to sue in Agents name if contract not assignable or Principal wishes to keep identity a secret.

Explain when a principal and a third party will be liable on a contract when the principal is unidentified
The principal may be sued if the contract is breached, and the suit will be successful if the principal authorized the actions of the agent. A general rule is that when an agent is working for an unidentified principal, the agent will be personally liable for the contract.

Illustrate two ways an agent for a disclosed principal can sign a contract to show the agency relationship

State when an agent for a disclosed principal can successfully hold the third party liable
Lawsuit by the principal- When Principal is disclosed, principal can sue third party. Third party will be liable if there is express, implied, incidental, emergency, apparent, or ratification authority. However TP not liable if there is only estoppel authority.

Lawsuit by the agent- agent may sue TP if it can be shown that agent had interest in contract. Agent can also sue if agent intends to be bound.

Describe when an agent for a disclosed principal will be liable on a contract entered into on the principal’s behalf
Liability of the agent- Agent fails to represent agents capacity, Agent bound if agent intends to be bound. Third party may sue either agent or principal if agent fails to disclose. Modern approach allows third party to sue both principal and agent together. Either defendant can requite third party to make an election before judgement.

List the implied warranties of authority
Implied warranties of authority-
Disclosed principal exists and is competent. Agent is agent of the principal. Agent authorized to enter into contract for principal.

Describe and recognize the types of authority: express, ratification, implied, incidental, emergency, apparent, and estoppel
Express- occurs when the prinicpal informs that the agent has author to engage in a specific act or perform a particular task.

Ratification- Agent does something unauthorized and principal later approaches either by expressed statement or implied conduct.

Implied- Based on agents position or past dealings with third party. Given a title or position.

Incidental- Agent has authority to do acts reasonable and necessary to complete task.

Emergency- Allows agent to response to emergencies if principal cannnot be reached.

Apparent- Principal creates appearance agency exists or third party reasonably believes agent has broader powers than actually exist.

Estoppel- Prevents principal who misled third party from denying agents authority.

List the requirements for emergency authority
An emergency or unexpected situation occurs that requires prompt action. The principal cannot be reached in sufficient time for a response or advice. The action taken by the agent is reasonable in the situation and it is expected to benefit the principal.

Explain what happens when an agent is a minor or a mentally incompetent person

Describe when a contract between an agent and a principal has to be evidenced by a writing
Statue of Frauds may requite certain agency contracts to be evidenced by a writing. Equal dignities rule requires some agency agreements to be in writing.

Chapter 30

Recognize the distinction between an employee (a servant) and an independent contractor

Explain the policies underlying respondeat superior
Respondeat superior is vicarious liability for an employer to pay for the injuries caused by its employee as long as conduct falls within the course and scope of employment.

Recall that respondeat superior does not excuse an employee who commits a tort

Identify what a third party must prove to collect under respondeat superior
Must prove that when the tort was committed the employee was under the scope of the employment.

Explain how a court decides whether or not to apply respondeat superior. For example, what factors will it use to determine if the employee was in the course and scope of the employment
Conduct falls within the course and scope of employment if: It is of the kind of work a person is employed to perform. It occurs within authorized time and space limits. It is actuated by purpose to serve master. If force used, not unforseeable by master. Time and place of occurrence.

Explain why an employer who pays based on respondeat superior will be entitled to indemnification from the employee
Employer pays third person for injuries caused by employee’s unauthorized acts. Employer has a right to seek reimbursement from the employee.

Explain when an employer will be held directly liable to the third party
Employer is directly responsible for wrongs committed by its agents, even if agents are not employees. Employer is liable if: Instructed agent to commit wrong, did not supervise agent properly, ratified approved agents tort, negligent in the selection of the agent.
Criminal applies to employer depending on when agent commits a crime. Master criminally liable if: based on employer’s fault, employer directs/encourages agent to engage in criminal activity.

Explain when an employee who commits a tort will be entitled to indemnification from his or her employer
Agent has right to idemnification from principal if agent pays third person injured by agent’s tort. Agent can obtain indemnification from principal if principal directed act and agent believes it was not tortious.

Explain the common law concept of the fellow servant (employee) doctrine and how it effects recovery by an injured employee

Recognize how the common law concepts of assumption of the risk, contributory negligence, and comparative negligence effect recovery by an injured employee
Assumption of the risk- plaintiff voluntarily assumed a known risk

Contributory negligence- stops recovery, contributed to the negligence.

Comparative negligence- tries to compare to what degree the plaintiff contributed to his or her own injury.

Explain how worker’s compensation works in most states
Allows employee to recover benefits for work-related injuries. Some cover only major industrial occupations, some exclude small shops with few employees, some exclude injuries caused intentionally by employer or other workers.

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