BLAW 3175 Exam 2

Ch. 16, 4 (Case 4.2), 2.2, 2.9, 8.1, 8.5, 16.6b, 18.3c, 17 (Case 17.4), 18 (Case 18.2 & 18.3)

Principal-agent relationship

one party acts on behalf another

Power of attorney

form of agency relationship that grants another person the authority to enter into transactions

Agency

The principal grants authority to an agent. Consensual relationship - both sides agree to it. Fiduciary relationship with duties and responsibilities on both sides.

Principals

those who have others acting on their behalf, such as employers with employees and sports figures who have agents

Agents

Those who do a task on behalf other principal

Master-servant relationship

a principal–agent relationship in which the principal (master) exercises a great degree of control over the agent (servant)

Factors determining whether a master-servant relationship exists

• Level of supervision and control of the agent (most important)

• Nature of the agent’s work

• Regularity of hours and pay

• Length of employment

Independent contractor

those who act on behalf of another to perform a task but are not under the direct control of the other person

Restatement of agency

a compilation of the common law of agency followed by the majority of states, in regard to the agent–principal relationship

Express authority

a written or stated agreement authorizing an agent to act on behalf of another person or business

Express authority

a written or stated agreement authorizing an agent to act on behalf of another person or business

Express contract

a spoken or written agreement that specifies the terms and limitations of an employee or an agent’s authority

The record

an agency relationship is created by agreement, which need not be evidenced by a writing or record, although it’s best for both employer and employee if it is

Capacity

Capacity (Age and mental) to make contracts

Uniform Durable Power of Attorney Act (UDPAA)

enables key individuals to execute a type of power of attorney that comes into existence in the event of disability or incapacity of the principal

Unincorporated association

a group that acts as an entity but has no legal existence as a natural or fictitious person

Implied authority

an extension of express authority by custom

Actual authority

express and implied authority

Apparent authority

an authority that exists by appearance or the perceptions of third parties

Agency by estoppel

a principal–agent relationship that arises not by express or implied contracts but by perceptions of third parties

Ratification

a voluntary recognition of an agent’s authority by the principal, after the said agent without proper authority, enters into a contract

Duty of Loyalty: Noncompete Agreements

Many companies have their employees sign contracts that include covenants not to compete or covenants not to disclose information about their former employers should the employees leave their jobs or be terminated from their employment

Requirements for noncompete agreements

1. Need for protection

2. Reasonableness in Scope

3. Valid formation

Doctrine of inevitable disclosure

theory that provides for post-employment control over employees who would inevitably disclose proprietary information from their previous employer to their new, competing employer; allows for restrictions on work areas when an employee goes to work for a competitor of a former employer

Non solicitation clauses

The employees can leave and work for a competitor, but they promise not to recruit other employees from the firm if they leave

Trade secrets

1. what the employer is protecting must actually be a trade secret in terms of its value or under state statute, and

2. the employer must have taken steps to protect its secrecy

Torts and misappropriation

Some employers have begun to use the tort of tortious interference with contracts or misappropriation of confidential information as a means of preventing former employees from working for competitors or beginning their own competing businesses

Duty of obedience

agents are required to operate according to the principal’s standards and instructions. Failure to do so could mean the agent has gone beyond the authority given and is personally liable for the conduct

Duty of care

Agents must take the time and effort to perform their principals’ assigned tasks

Duty of compensation

can take various forms that range from salary to commission to combinations of both

Gratuitous agency

a principal–agent relationship in which the agent has the authority to act for the principal but will not be compensated

Duty of indemnification

Principals also have an obligation to indemnify agents for expenses the agents incur in carrying out the principal’s orders