legal environment of business Ch. 16

power of attorney

an agency relationship that grants a person authority to enter into transactions, on behalf of another

agency

involves a consensual relationship and is fiduciary relationship with duties and responsibilities on both sides (can be used to refer to many different types of relationships

principals

those who have others acting on their behalf (ex: employers with employees and sports figures who have agents)

agents

those who do a task on behalf of the principal

the corporation because it was done with proper authority (without proper authority the president would’ve been responsible)

when the president negotiates a contract with proper authority, who is bound to perform the contract? The President or the corporation?

master-servant relationship

a relationship where the principal (master) exercises a great deal of control over the agent (servant)

independent contractor

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

restatement of agency

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

area deals with the creation of the agency relationship, area involves the relationship between principals and agents, and area examines the relationship of the agents and principals to third parties

studying agency law examines three different areas

express authority

written or stated agreement authorizing an agent to act on behalf of another person or business (limited to what is spoken or is evidenced by a record)

express contract

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

capacity

the capacity (age and mental capacity) to make contracts

Uniform Durable Power of Attorney Act (UDPAA)

Uniform Power of Attorney Act 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

unicorporated association

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

implied authority

extension of express authority by custom (can be limited by agreement between the parties if they don’t want custom and practice to control their relationship)

actual authority

express and implied authority (agent determines the liability of the principal to third parties for contracts and torts)

apparent authority or agency by estoppel

authority that exists by appearance or the perceptions of third parties

ratification

voluntary recognition of an agent’s authority by the principal, after the said agent without proper authority, enters into a contract (principal reviews a contract and voluntarily decides that, even though the agent didn’t have proper authority, the contract will be honored as if the agent had full authority)

false (can only represent the principal unless each knows about and consents to the agent’s representation of the other)

agent can represent both parties in a transaction

true or false

need for protection, reasonableness in scope, and valid formation

requirements for noncompete agreements

doctrine of inevitable disclosure

theory that provides for post-employment control over employee 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

what the employer is protecting must actually be a trade secret, and employer must have taken steps to protect its secrecy

two key employer protections of trade secrets

gratuitous agency

principal-agent relationship where the agent has the authority to act for the principal but will not be compensated

the principal is responsible (regardless of whether the agent has express, implied, or apparent authority)

in a situation where a third party is aware a principal is involved and knows the principal, is the principal or the agent responsible (whether the agent has express, implied, or apparent authority)

either one can be held responsible

a situation where the third party knows that the agent is acting for someone else, but the identity of the principal is not disclosed. Who is responsible the agent or the principal?

agent is responsible (unless third party discovers identity of the principal, then both can be held liable)

a situation where the agents acts without disclosing either the existence of a principal or the principal’s identity. Is the principal responsible or the agent responsible

respondeat superior

legal doctrine that holds an employer liable for the negligent or wrongful actions of an employee acting within the scope of employment

scope of employment

time period during which the agent is doing work for the principal

negligent failure to supervise

failure on the part of an employer to investigate or supervise the violent tendencies of an employee

negligent hiring

act of principal or employer, hiring agents or employees, whose backgrounds made them a liability risk for their positions

inherently dangerous activities

activities where the principal is liable, even if activities are performed by an independent contractor

parties can have definite duration for agency relationship, agent quits or principal fires agent, and principal dies or is incapacitated

agency relationship ends

lingering apparent authority

authority that exists with a terminated agent because other parties are not aware of the termination

constructive notice or actual notice

types of notice required in order to prevent or end liability

employment at will

right of an employer to hire or terminate noncontract employees at any time, with or without cause

whistle-blowers

employees who report illegal conduct

peer review

formal grievance procedure for non-union employees in which they have the opportunity to present their cases to a panel of fellow employees and managers