Transcript agency
Section 18.1
Agency Relationships
Section 18.1
Agency Relationships
Section 18.2
Creation and Types of Agents
Understanding Business and Personal Law Creation of an Agency
Section 18.1
Agency Relationships What You’ll Learn
How to explain the nature of an agency relationship (p. 392) How to distinguish between a servant and an independent contractor (p. 394)
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships What You’ll Learn
How to explain the nature of contract liability (p. 396) How to explain the legal doctrine of
respondeat superior
in relation to tort liability (p. 397)
Understanding Business and Personal Law Creation of an Agency
Section 18.1
Agency Relationships Why It’s Important
Identifying the nature of an agency relationship will help you know your rights and duties in such a situation.
Understanding Business and Personal Law Creation of an Agency
Section 18.1
Agency Relationships Why It’s Important
Understanding the doctrine of
respondeat superior
will help you protect yourself against tort liability in a variety of situations.
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships Legal Terms
agency (p. 392) agent (p. 392) principal (p. 392) master (p. 394)
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships Legal Terms
servant (p. 394) independent contractor (p. 394)
respondeat superior
(p. 397)
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
Section Outline
Agency and Similar Relationships
Principal-Agent Relationship Master-Servant Relationship Proprietor-Independent Contractor Relationship
Understanding Business and Personal Law Creation of an Agency
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Section Outline
Why Are These Distinctions Important?
Contractual Liability Tort Liability
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Agency Relationships
Pre-Learning Question
What is an agency relationship?
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Agency and Similar Relationships
An
agency
relationship lets us act through other people to accomplish tasks that might be difficult or impossible to do on our own.
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
Agency and Similar Relationships
The term
agency
describes a relationship in which one person, called an
agent
, represents another person, called a
principal
, in some sort of business transaction with a third party.
Understanding Business and Personal Law Creation of an Agency
Agency Relationships
Principal-Agent Relationship
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
Principal-Agent Relationship
The principal-agent relationship is a true agency relationship.
Legally, we distinguish an agent from other types of representatives by noting that the agent has the power to transact business for the principal.
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Agency Relationships
Master-Servant Relationship
A
master
is a person who has the right to control the conduct of another who is performing a task for the benefit of the master.
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Agency Relationships
Master-Servant Relationship
A
servant
is a person whose conduct in the performance of a task is subject to the control of another.
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Agency Relationships
Proprietor-Independent Contractor
An
independent contractor
works for but is not under the control of a proprietor.
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Agency Relationships
Proprietor-Independent Contractor
The proprietor is a person who chooses to have someone perform a task on his or her behalf but has no control over the way that task is carried out.
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
True or False 1.
An agent is a person who has the right to control the conduct of another who performs a task for the agent’s benefit.
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Agency Relationships
2.
3.
A principal is someone represented by an agent.
An independent contractor works for but is not under the control of a proprietor.
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Agency Relationships
4.
A proprietor is someone who hires a servant.
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Agency Relationships
ANSWER
1.
2.
3.
4.
False True True False
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
Pre-Learning Question
Why is the true nature of the business relationship important?
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Agency Relationships
Why Are These Distinctions Important?
Finding out the true nature of a relationship can be crucial in determining liability.
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Agency Relationships
Contractual Liability
A principal is generally bound to the terms of a contract made by an agent unless the agent has no authority to enter the contract.
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Contractual Liability
Unless a servant is also and agent, he or she has no authority to negotiate contracts for the master.
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Contractual Liability
Likewise, a contractor has no power to bind the proprietor to a contract, unless expressly permitted to do so.
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships
Tort Liability
All people are responsible for their own tortious conduct. Sometimes, however, the person who hired the tortfeasor may also be held liable.
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Tort Liability
This situation is known as vicarious liability, and it is founded on the principle of
respondeat superior
, or let the master respond.
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Tort Liability
Typically,
respondeat superior
, applies to master-servant relationships because the master has the right to control the physical conduct of the servant. In contrast, a proprietor usually doesn’t have that right with an independent contractor.
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Agency Relationships
Respondeat Superior
Was servant acting within scope of authority or course of employment Understanding Business and Personal Law Creation of an Agency
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Tort Liability
The court will ask many questions to determine whether there is a master servant or proprietor-independent contractor a relationship in order to determine tort liability.
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Questions the Court Asks
Does the hiring person supply the tools for the worker?
Does the hiring person set the worker’s hours?
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Questions the Court Asks
Is the worker employed by the person responsible for the hiring?
Is the business of the worker the same as the business of the hiring person?
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Questions the Court Asks
Does the worker lack authority to hire or fire other workers?
Does the worker perform his or her tasks in a highly supervised environment?
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Agency Relationships
Questions the Court Asks
Is very little skill required to perform the worker’s job?
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Questions the Court Asks
The more questions that require “yes” answers, the more likely it is that a master-servant relationship exists, and the master could be liable for the servant’s tortious conduct.
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Tort Liability
A master may escape vicarious liability, if the servant was not acting within the scope of employment.
When the tort was committed, the worker must have been performing the task for which he or she was hired.
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Agency Relationships Section 18.1
Assessment Reviewing What You Learned
1.
What is an agency relationship?
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Assessment Reviewing What You Learned Answer
The term agency describes a relationship in which one person, the agent, represents another person, the principal, in some sort of business transaction with a third party.
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Assessment Reviewing What You Learned
2.
What is the difference between a servant and an independent contractor?
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Assessment Reviewing What You Learned Answer
A master controls or has the right to control the activities of a servant. An independent contractor is not controlled by the proprietor who has hired that independent contractor.
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Agency Relationships Section 18.1
Assessment Reviewing What You Learned
3.
What is the nature of contract liability?
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Assessment Reviewing What You Learned Answer
When a principal appoints an agent to carry out business transactions that agent has the power to create contractual liability between the principal and a third party.
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships Section 18.1
Assessment Reviewing What You Learned
4.
What is the legal doctrine of
respondeat superior
?
Understanding Business and Personal Law Creation of an Agency
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Agency Relationships Section 18.1
Assessment Reviewing What You Learned Answer
The legal doctrine of
respondeat superior
will extend tort liability from the servant (employee) to the master (employer).
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Agency Relationships Section 18.1
Assessment Critical Thinking Activity
Tort Law
Why does the law permit an injured party to bring a tort law case against both an employee and his or her employer?
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Assessment Critical Thinking Activity Answer
Tort Law
Because of the principle of
respondeat superior
. The master may be held liable for the tortious conduct of the servant if the servant was acting within the scope of authority or course of employment.
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Assessment Legal Skills in Action Agency
Your friend, Louis, has just hired Franco as his delivery driver. One afternoon while he is supposed to be making a delivery on the west side of town, Franco decides to take a 15-mile detour to the east side to pick up his dry cleaning.
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Assessment Legal Skills in Action Agency
While entering the parking lot of the dry cleaners, Franco makes an illegal turn and collides with a police car.
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Assessment Legal Skills in Action Agency
Louis fears he will be liable not only for Franco’s traffic ticket but also for all damages to the police cruiser.
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Assessment Legal Skills in Action Agency
Write a letter to Louis in which you explain why you think he won’t be liable for the traffic ticket or the damage to the police cruiser.
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Assessment Legal Skills in Action Answer Agency
Letters will vary but should include that Franco, the driver of the delivery truck, was off on personal business and was, therefore, not operating within the scope of his employment.
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End of Section 18.1
Agency Relationships