Mgmt 311 Exam 4

Sole Proprietorship

the simplest form of business where the owner is the business, the owner reports income on him/her personal income tax return and is legally responsible for all debts and obligations incurred by the business

partnership

An agreement by two or more persons to carry on, as co-owners, a business for profit.

corporation

A legal entity formed in compliance with statutory requirements that is distinct from its shareholder-owners.

limited partnership

A partnership consisting of one or more general partners and one or more limited partners.

limited liability company

A hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership.

limited liability partnership

A form of partnership that allows professionals to enjoy the tax benefits of a partnership while limiting their personal liability for the malpractice of other partners.

Dean is not Paul's agent, but Paul tells Charlie that Dean has always been a good friend and can "handle any of my business affairs." If Dean were to later enter into a contract with Charlie on Paul's behalf, Dean would be acting under an:

d. apparent authority.

Sarah has to move from the East Coast to the West Coast for her job. Elmo agrees to act as Sarah's agent to sell her New York condo. As her agent, Elmo owes Sarah all of the following duties except:

c. payment.

Yakov hires Melina to be his Vice President for Marketing. The job description is pretty broad but does not include the ability to hire or terminate lower level employees in the Marketing division. If Melina has this power, it is based on her:

d. implied authority.

Selena signs a power of attorney appointing Kim, for the sole purpose of signing paperwork on her behalf that relates to the sale of her house. The power of attorney will automatically terminate based on:

d. the purpose being achieved.

Whitney works at home making unique children's clothes. Liam buys Whitney's clothes to sell in his store. With respect to Whitney's legal relationship to Liam, she is probably:

d. an independent contractor.

Lizzie works for Gary in his dance supply shop and is authorized to sell inventory but not to order new merchandise. Rena, a sales representative for a new line of dancewear, comes into the store and Lizzie places an order with her. When Gary learns the details of Lizzie's purchase, he wants to ratify the contract. The one condition that is NOT necessary for ratification is:

a. Rena must withdraw from the transaction before Gary ratifies it.

Gina buys a piece of pottery from Woodward for her principal, Kelvin. If Woodward knows that Gina is buying the pottery on behalf of someone other than herself but does not know the identity of that person, Kelvin is:

c. a partially disclosed principal.

Charlie tells Jamal that Marisol has agreed to allow him to sell her racing bicycle. Marisol is present at the time, hears the conversation and says nothing. Jamal agrees with Charlie to buy Marisol's bike. Marisol then refuses to sell the bicycle. Marisol claims that she is not bound by the agreement formed by Charlie and Jamal, because Charlie is not her agent. Marisol likely is:

c. bound by the contract under a theory of agency by estoppel.

Jason instructs his agent Miguel to obtain a piece of artwork from Martina by threatening to beat her if she refuses to sell the artwork. Miguel follows Jason's instruction and beats Martina when she refuses to sell the item. In this situation:

b. both Jason and Miguel are liable for Martina's injuries.

Napoleon owns Napoleon's Construction and agrees to renovate Mrs. Cernan's bathroom. She will provide him with the plans, and then he will do the work in the manner that he determines is most cost effective and appropriate. Napoleon is likely to be classified as:

c. an independent contractor.

Ashley is an eighteen-year-old clerk in a store that sells bird seed. She earns minimum wage. Her boss, Trina, often expects her to stay and work as many as three hours longer than her scheduled shift. Trina never pays Ashley for these hours. Ashley is:

a. entitled not only to be paid for the additional time, but also to be paid overtime if she works more than forty hours in a week.

Catherine works for BluCorp, which has an employee handbook stating that employees will be terminated for good cause. Catherine's manager fires her one morning and when asked the reason, states that he does not need a reason since they live in a state that has employment at will. If Catherine wins her lawsuit against BluCorp, it is because of the:

c. contract exception to employment at will.

When Kimberly begins working for Pharmco Industries, the company tells her that at a future date, after so many years of employment with the company, she can receive retirement pay. Her rights on that date to receive pay upon retirement would be considered:

d. vested.

Byron works at Stitch-Rite Clothing Factory. The company is required to maintain safe working conditions under the:

a. Occupational Safety and Health Act.

Adam owns a private company and has significant concerns about employees shopping and accessing pornography while at work, so he buys some filtering software that blocks shopping and pornography websites. Adam:

c. is within his rights to do this.

Erin works for a dry-cleaning company that has a contract with the U.S. government. To save on cleaning fluid, her boss orders her to wash some dry clean-only clothes in a washing machine. When the courier hired to pick up the cleaned garments arrives, Erin tells him about her boss's actions. Erin tells no one else about what is going on and is later fired. Erin:

a. is not protected by the Federal whistleblower statute, because she failed to inform the proper party of the contract violation.

Michael creates a new company and wants to attract quality employees, so he establishes a retirement plan. The law regulating this activity is:

a. ERISA.

Josh works for a federal governmental agency that requires drug testing as a condition of employment. He wants to challenge the constitutionality of the testing in court. For his case, Josh will attempt to rely on:

a. the Fourth Amendment.

When the timber industry in Montana experiences an economic slump, Superior Logging Co. is forced to lay off a number of its employees, including Larry Kurzyniec. Larry, who had been logging for over eighteen years, suffers from heart disease, high blood pressure, and diabetes. His wife is worried that the family's health-insurance coverage, which is through Superior Logging, will be canceled. Larry learns that he has a right to extend his insurance benefits, however, if he pays the premiums under:

a. COBRA.

Choice is the largest employer in the Pacific Northwest. It is covered by numerous federal employment laws. As such, it is required by the Family and Medical Leave Act of 1993 to provide employees with up to

d. twelve weeks of unpaid family or medical leave during any twelve-month period.

Min applies for a job as a receptionist at an accounting firm. If she is denied a job because she is of Asian origin, she may be a victim of:

b. disparate-treatment discrimination.

Eastminster Presbyterian Church has an opening for a new head pastor. Mohammed, who is a Muslim, applies for the job. The church declines to hire him and continues to look for other applicants. If Mohammed files a claim of illegal discrimination against the church, the church:

a. may assert a bona fide occupational qualification (BFOQ) defense.

Julio lives in an area with a high percentage of Hispanic workers. Many of these workers are legal immigrants who have relatively little college training. If, when Julio applies for his job, he is given an examination designed for a college graduate, and if he and most Hispanic applicants fail to pass the test, the employer:

b. might be engaged in disparate-impact discrimination.

Carl tells Jenny that he will give her a raise if she agrees to have a romantic relationship with him. In legal terms, this is known as:

a. quid pro quo harassment.

Norm worked as a sales person for his firm. When he turned fifty, the office had a party for him. His boss made a lot of jokes about Norm getting too old to keep up with the younger staff. Those comments continued past the party for several months. Norm was fired six months later. When he filed a complaint for age discrimination, the boss defended his actions by saying Norm was fired for not meeting sales quotas. Norm had missed his quota for only one month, and he provided evidence that younger employees who had missed up to three months of the quotas were not terminated. Norm is attempting to show that:

d. the employer's defense was a pretext.

Byron runs a business cleaning gutters. Lance, who is in a wheelchair, applies for a job working for Byron as a cleaner. Byron does not hire Lance and is very frank about the reason: Lance's disability. If Lance sues Byron,

b. Byron will win, if he can show that being able to climb a ladder is a requirement of the position.

James was a thirty-eight-year-old man in good health. One of his hands shook slightly for no apparent reason. The doctors could not find a medical cause for it. James's employer worried about the potential for early-onset Parkinson's disease or another neurological disorder, so he fired James. Under the ADA:

b. James can bring a claim as being "regarded" as having a disability.

Rheingold Supply has a seniority system by which employees who have worked the longest are first in line for promotions and last to be laid off. As a result, most of the senior managers at Rheingold Supply are men. If Jane files a claim of illegal discrimination, Rheingold Supply:

a. will have a legitimate defense, because Rheingold Supply has a seniority system in place.

Melanie and Beau both work in comparable jobs at Technology Impact, Inc. Melanie is paid 15 percent less than Beau. Which of the following is not a legitimate defense to this pay inequality?

c. The company pays Melanie less, because she has a husband who is a highly successful businessperson.

Kurt is 52 years old and, until recently, worked for a company covered by the Age Discrimination in Employment Act (ADEA) of 1967. He wants to bring a claim of age discrimination against his employer, because he was replaced by a younger, lower-paid worker. To make out a prima facie case of age discrimination, Kurt does not have to establish that he:

d. was replaced by someone younger than 40 years old.

Entities Defined

-sole proprietorship

-partnership

-corporation

-limited partnership

-limited liability company

-limited liability partnership

Sole Proprietorship

The simplest form of business, in which the owner is the business. The owner reports business income on his or her personal income tax return and is legally responsible for all debts and obligations incurred by the business.

partnership

An agreement by two or more persons to carry on, as co-owners, a business for profit.

corporation

A legal entity formed in compliance with statutory requirements that is distinct from its shareholder-owners.

limited partnership

A partnership consisting of one or more general partners and one or more limited partners

limited partnership

A partnership consisting of one or more general partners and one or more limited partners.

limited liability company

A hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership.

limited liability partnership

A form of partnership that allows professionals to enjoy the tax benefits of a partnership while limiting their personal liability for the malpractice of other partners.

agency law

-definitions

-employee relationships

-independent contractor relationship

-determining employee status

-irs criteria

-works for hire

agency

-agency law

-formation of the agency relationship

-duties, rights, and remedies of agents and principals

-agent's authority

-liability for contracts

-liability for torts

-liability for independence contractor's torts

-liability for agent's crimes

agency law definitions

-agent

-principal

-fiduciary

-fiduciary relationship

agent

a person who agrees to represent or act on behalf of another

principal

the person whom the agent represents or acts on behalf of

fiduciary

a person having a special duty created by his agreeing to an act for the benefit of another

fiduciary relationship

one that includes trust and confidence

employer- employee relationships

employers and employee are both taxed

Employer-Independent Contractor Relationship

taxed alone

Determining Employee Status

1. How much control can employer exercise over details of the work (more control=more likely employee)

2. Is worker engaged in occupation/business distinct from that of employer

3. is work usually done under employer's direction or by specialist without supervision

4. does employer supply tools at place of work

5. for how long is person employed

6. what is method of payment (by time period=employee, by job=contractor)

7. what degree of skill is required of worker

works for hire

employer owns what employee does when copyrightable contractor is hired to create something they are employed to do contractor owns it

formation of the agency relationship

-agency by agreement

-agency by ratification

-agency estoppel

-agency by operation of law

agency by agreement

-may be an expressed agreement

-may be an implied agreement

agency ratification

principal accepts actions of another

agency by estoppel

1. The principal's action creates the appearance of an agency that does not actually exist

2. A third person reasonably believed that the agency existed

agency by operation of law

an agency is needed due to an emergency

agent's authority

- Expressed

- Implied

- Apparent

-emergency powers

- Ratification

express authority

1.can be either oral or written

2.authority is clear, direct and in definite terms

3.equal dignity rule

4.power of attorney

equal dignity rule

in most states if the contract being executed is or must be in writing then the agent's authority must be in writing too

-executive officer in a corporation when acting for the corporation in an ordinary business situation

-when the agent act in the principal's presence

-when agent's act of signing is merely perfunctory

implied authority

is reasonably necessary to carry out express authority; and can be conferred by custom or inferred from the agent's position

apparent authority

1.pattern of conduct

2.apparent authority and estoppel

emergency powers

unforeseen emergency demands action by an agent to protect rights and/or property of the principal; agent is unable to communicate with principal; agent has emergency power

ratification

principal accepts responsibility for agent's unauthorized actions

Liability for Contracts

-definitions

-authorized acts

-unauthorized acts

liability for contracts definitions

-disclosed principal

-partially disclosed principal

-undisclosed principal

disclosed principal

principal's identity is known by the 3rd party at the time the contract is entered into with the agent

partially disclosed princpal

the principal's identity is not known by the 3rd party, but the 3rd party known that the agent is or may be acting on the principal's behalf at the time of the contract

Undisclosed Principal

principal's identity is totally unknown by the 3rd party and the 3rd party has no knowledge that the agent is acting on the principal's behalf at the time of the contract

authorized acts

1.principal is obligated to perform the contract

2.agent's liability depends

agent's liability depends

-disclosed principal

-partially disclosed principal

-undisclosed principal

disclosed principal

agent has no contractual liability for principal's nonperformance

partially disclosed principal

agent is treated as a party to the contract

undisclosed principal

agent is liable but is entitled to indemnification from principal

unauthorized acts

principal is not liable but agent is

liability for torts

-employer's own negligence

-employer is also liable for torts comitted by employees

Employer's Own Negligence

negligent hiring/reaction of employees

employer is also liable for torts committed by employees

-doctrine of respondent superior

-additional basic rules applicable to course and scope

Doctrine of Respondeat Superior

the employer is liable for any harm caused to a third party by an employee committed by the employee within the course and scope of employment

-an employee

-if the harm committed within the course and scope

Additional Basic Rules applicable to Course and Scope

-going and coming rule

-special errand exception

-distinction between detour/frolic

going and coming rule

employee traveling to and from work is not acting in course and scope of employment

special errand exception

if employee is on a special errand for employer at time of accident, employer is liable would be within course and scope

detour

employee is still in the course and scope

frolic

employee is outside the course and scope

Liability for Independent Contractor's Torts

-general rule

-exceptions

general rule for independent contractor's torts

person who hires an independent contractor is not liable if a 3rd party is injured by the acts of the independent contractor in performing the contract

independent contractor's tort exceptions

-right to control

-inherently dangerous activities

right to control

treat worker as employee instead of independent contractor due to control

inherently dangerous activities

doesn't matter the who you are company can not escape liability

liability for agent's crimes

if workers commits crime, they pay fines, do the times

employment relationships

-employment at will

-wage hour laws

-family medical leave act of 1993

-worker health and safety

-employee privacy rights

employment at will

when a person provides services to another for compensation without the duration of the relationship specified

-application of the employment at will doctrine

-exceptions to the employment at will doctrine

-wrongful discharge

application of the employment at will doctrine

the employment relationship may be terminated by either party at any time and for any reason, subject to certain exceptions

exceptions to the employment at will doctrine

-implied contract

-implied covenant of good faith

-public policy

implied contract

guarantees of continued employment can create an implied contract

implied covenant of good faith

some states hold that the employment relationship creates an implied promise to act in good faith. So, if the employer fires an employee for an arbitrary or unjustified reason, it may be considered bad faith

public policy

applies when the employer fires a worker for reasons that violate a fundamental public policy of the state

-firing violates common law rules, including tort laws

-employer fires employee for whistleblowing