Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

BUSINESS LAW
Reading: Introducton to Agency and the Types of Agents
LEARNING OBJECTIVES
1
...

2
...

3
...

4
...

5
...
Why Is Agency Law Important, and What Is an Agent?
An agent is a person who acts in the name of and on behalf of another, having been given and assumed
some degree of authority to do so
...
No corporaton would be possible, even in theory, without such a
concept
...
“The General,” as people say, exists and works through agents
...

Indeed, it is not an exaggeraton to say that agency is the cornerstone of enterprise organizaton
...


The existence of agents does not, however, require a whole new law of torts or contracts
...

What does need to be taken into account, though, is the manner in which an agent acts on behalf of his
principal and toward a third party
...


John Alden
Consider John Alden (1599–1687), one of the most famous agents in American literature
...
His agency task—of interest here—was celebrated

in Henry Wadsworth Longfellow’s “The Courtship of Miles Standish
...

1680), “the loveliest maiden of Plymouth,” on behalf of Captain Miles Standish, a valiant soldier who
was too shy to propose marriage
...
Alden
accepted his captain’s assignment, despite the knowledge that he would thus lose Priscilla for himself,
and sought out the lady
...


Recurring Issues in Agency
Let’s analyze this sequence of events in legal terms—recognizing, of course, that this example is an
analogy and that the law, even today, would not impose consequences on Alden for his failure to carry
out Captain Standish’s wishes
...
He had, however, a confict of interest
...
Eventually, he wound up with the
prize himself
...
Could the pedestrian have sued Standish?
Suppose Alden had injured himself on the journey
...
It therefore deals with three diferent relatonships: between principal and agent, between
principal and third party, and between agent and third party
...
1 “Agency Relatonships”)
...


Principle

Agent
...
1 Agency Relatonships
...
In the next chapter we will turn
to relatonships involving third partes
...


General Agent
The general agent possesses the authority to carry out a broad range of transactons in the name and on
behalf of the principal
...
In either case, the general agent has authority to
alter the principal’s legal relatonships with third partes
...
To restrict the general agent’s authority,
the principal must spell out the limitatons explicitly, and even so the principal may be liable for any of
the agent’s acts in excess of his authority
...
One common form of a personal general agent is
the person who holds another’s power of atorney
...
2
“General Power of Atorney”
...
But a person facing a lengthy
operaton and recuperaton in a hospital might give a general power of atorney to a trusted family
member or friend
...
It reads that a person grants another person "to be my agent and
atorney in fact
...
"
GENERAL POWER OF ATTORNEY

I__________,of(address)_______,hereby appoint _______of(address)______to be my agent
and atorney infact,I Grant full authority and power to act on my behalf to anything I
could do if I were personally present
...
2 General Power of Atorney
...
For example, a real estate broker is usually a special agent
hired to fnd a buyer for the principal’s land
...
Alberta’s commission depends on the selling price, which, Sam states in a leter
to her, “in any event may be no less than $150,000
...
As a special
agent, Alberta had authority only to fnd a buyer; she had no authority to sign the contract
...
A literary or
author’s agent, for example, customarily agrees to sell a literary work to a publisher in return for a
percentage of all monies the author earns from the sale of the work
...
By agreeing with the principal that the

agency is coupled with an interest, the agent can prevent his own rights in a partcular literary work
from being terminated to his detriment
...
These appointments may or
may not be authorized by the principal
...
The agent will necessarily conduct her business
through agents of her own choosing
...
For legal purposes, they are agents of
both the principal and the principal’s general agent, and both are liable for the subagent’s conduct
although normally the general agent agrees to be primarily liable (see Figure 11
...

Principal

Agent

Subagent
Agent of both

Image showing the principal over the agent who is over the subagent and then arrows depictng that a
subagent reports back to both the agent and principal
...
3 Subagent
...
Untl the early nineteenth century, any employee whose work
dutes were subject to an employer’s control was called a servant; we would not use that term so
broadly in modern English
...
”

Independent Contractor

Not every contract for services necessarily creates a master-servant relatonship
...
According to
the Restatement (Second) of Agency, Secton 2, “an independent contractor is a person who contracts
with another to do something for him but who is not controlled by the other nor subject to the other’s
right to control with respect to his physical conduct in the performance of the undertaking
...
A plumber salaried to a building
contractor is an employee and agent of the contractor
...
If you hire a lawyer to setle a dispute, that
person is not your employee or your servant; she is an independent contractor
...
In fact, by defniton, “… an
independent contractor is an agent in the broad sense of the term in undertaking, at the request of
another, to do something for the other
...
”1
...
Crouch, 434 P
...


This distncton between agent and independent contractor has important legal consequences for
taxaton, workers’ compensaton, and liability insurance
...
But payment to an independent contractor,
such as the plumber for hire, does not require such withholding
...
In Robinson v
...
, an injured salesman sought workers’ compensaton benefts, claiming to be an
employee of the New York Commodites Corporaton
...
New York Commodites Corp
...
Y
...
2d 725, App
...
(1977)
...
The claimant sold canned meats, making rounds in his car from his home
...
He reported his taxes on a form for the self-employed and hired an accountant to
prepare it for him
...


The factual situaton in each case determines whether a worker is an employee or an independent
contractor
...
As the
North Dakota Workmen’s Compensaton Bureau put it in a bulletn to real estate brokers, “It has come
to the Bureau’s atenton that many employers are requiring that those who work for them sign
‘independent contractor’ forms so that the employer does not have to pay workmen’s compensaton
premiums for his employees
...
”Vizcaino
v
...
3
...


In additon to determining a worker’s status for tax and compensaton insurance purposes, it is
sometmes critcal for decisions involving personal liability insurance policies, which usually exclude from
coverage accidents involving employees of the insureds
...

Pro Golf AssociatonGeneral Accident Fire & Life Assurance Corp v
...
E
...
App
...
involved such a situaton
...
Gerald Hall, a golf pro employed by the local park department, was
aforded coverage under the policy, which excluded “bodily injury to any employee of the insured
arising out of and in the course of his employment by the insured
...

Bradley Martn, age thirteen, was at the golf course for junior league play
...
” During the course of
the lesson, a golf ball hit by Hall hit young Martn in the eye
...
The trial
court determined he was not an employee
...

Martn was not directed in how to perform (the admitedly simple) task of retrieving golf balls, no
control was exercised over him, and no equipment was required other than a bag to collect the balls:
“We believe the evidence is susceptble of diferent inferences
...
”

Creaton of the Agency Relatonship
The agency relatonship can be created in two ways: by agreement (expressly) or by operaton of law
(constructvely or impliedly)
...
Thus the general rules of contract law covered in Chapter 8
“Contracts” govern the law of agency
...

Therefore, three contract principles are especially important: the frst is the requirement for
consideraton, the second for a writng, and the third concerns contractual capacity
...
It is not uncommon for one
person to act as an agent for another without consideraton
...
Such a gratuitous agency
gives rise to no diferent results than the more common contractual agency
...

In practce, many agency contracts are writen to avoid problems of proof
...


Even when the agency contract is not required to be in writng, contracts that agents make with third
partes ofen must be in writng
...
”

Capacity
A contract is void or voidable when one of the partes lacks capacity to make one
...
But suppose only one or the other lacks capacity
...
If the principal is a minor or otherwise lacks capacity, the
contract can be avoided even if the agent is fully competent
...
Thus a mentally incompetent agent cannot bind a
principal
...


Implied Agency
In areas of social need, courts have declared an agency to exist in the absence of an agreement
...
” Children in most states may
purchase necessary items—food or medical services—on the parent’s account
...
The courts achieve this
result by supposing the dependent to be the family head’s agent, thus allowing creditors to sue the
family head for the debt
...
Such
are the basic facts in Weingart v
...
in Secton 11
...
1 “Creaton of Agency:
Liability of Parent for Contracts Made by “Agent” Child”
...
On November 1, Arthur buys materials at
Lumber Yard—as he has been doing since early spring—and charges them to Paul’s account
...
Will Paul have to
pay? Yes, because the terminaton of the agency was not communicated to Lumber Yard
...
This issue is discussed further in Chapter 12 “Liability of Principal
and Agent; Terminaton of Agency”
...
Many transactons are conducted by agents so actng
...
Agencies may be created expressly,
impliedly, or apparently
...
The fve types of agents include:
general agent, special agent, subagent, agency coupled with an interest, and servant (or employee)
...
But it is not uncommon for an
employer to claim workers are independent contractors when in fact they are employees, and the cases
are ofen hard-fought on the facts
...




---