FIN 3054 Final Exam

In order to create an agency you need:

1) the agent and principal Assent to the relationship (both agree to the relationship)

2) the agent is acting for the Benefit of the principal (agent has to agree to put the principals interest above their own)

3) the agent is subject to the principal's Control (principal will be held liable for their actions of their employees)

Employer - Employee

Common law, employer liable for the actions of employee

Ongoing, full time/part time

Principal - Independent Contractor

Ex. Web page design, Doctor, Lawyer

Principal not liable for contractor

Implied duties a principal owes to an agent include:

1) Duty to compensate an agent.

2) Duty to reimburse an agent for authorized expenses (bella is the birthday party chair at sorority, have to get cake and balloons, spends 150, here are my recipents, give money, has to give her money, bc bella is agent of sorority

3) Duty to indemnify an agent who acts within the scope of their agency, pay whatever they need like legal fees

The principal is bound by the acts of an agent if:

the agent has authority, or

the principal, for reasons of fairness, is estopped from denying that the agent had authority, or

A principal may not claim that it was not his agent if he knew that others thought the agent was acting on the principal's behalf but failed to correct their belief.

the principal ratifies the acts of the agent.

Principal accepts the benefit of the unauthorized transaction or fails to repudiate it

There are 3 types of authority

Actual authority (Express and Implied).

Apparent authority

Agency by Estoppel

Express Authority

Granted by words or conduct that, reasonably interpreted, cause the agent to believe the principal grants permission for him to act.

Any ambiguity about the principal's intent, the courts look at the principal's objective manifestation not his subjective intent.

Something that is granted orally or writing

I want bella to go and buy something

Implied Authority

Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it.

General mandate

Bella goes to purchase apartment, have to hire law firm - didn't specifically tell her that she has to hire law firm, it is implied

Ex. Acquire Company A

Apparent Authority

A principal can be liable for the acts of an agent who is not, in fact, acting with actual authority, if the principal's conduct causes a third party to reasonably believe that the agent is authorized.

Have the principal's conduct that cause a third party that the agent has authority

Bella is new at firm, at cocktail party with prospective client who is mat, Malone comes over and says if you need anything done, call up bella, Malone has given bella apparent authority in matt's eyes

Agency by Estoppel

No one may claim that a person was not his agent, if he knew that others thought the person was acting on his behalf, and he failed to correct their belief

Ratification

If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it.

Ex. Accepting payment for the endorsement deals

Fully Disclosed Principal

Principal (agent says I am working on behalf of them, only principal will be liable)

Existence and Identity of principal is disclosed

An agent is not liable for any contracts

Partially Disclosed Principal

(agent has told party I'm working with them but doesn't say with who)

Only Existence of a principal is known or disclosed

Third party can recover from either the agent or the principal.

Undisclosed Principal (acted as if she was entering on her own, don't inform third party who they are)

Third party can recover from either the agent or the principal.

Corporation = Principle

Unauthorized Agent

(bella going out to buy apartment, wasn't asked to do that, no authority) important when dealing with startups, needs some money and enters into capital, cannot buy shares unless formed)

The principal is not liable and the agent is.

Ex. Unformed Corporation

Third Party Liability - Disclosed principals

Only the Principal may enforce a contract against a Third Party.

Third Party Liability -Partially or Undisclosed principals

A Principal or Agent may enforce a contract against a Third Party, but the principal receives all of the rights and benefits thereunder

Principal's Liability for Torts Committed by Their Agents

A Principal (Employer) will be liable to Third Parties for the physical harm caused by the negligence of their Agents (Employees) that are committed within the scope of employment.

Respondeat Superior; Vicarious Liability

Let the master answer, hold principle liable

2 Elements:

Employer (Master) - Employee (Servant) Relationship

Scope of Employment

Scope of Employment

authorization, detour, frolic

Intentional Torts

An Employer is NOT liable for the intentional torts of the Employee unless the Employer knew or should have known of the Employees propensities OR Employee was motivated, at least in part, by the desire to serve the Employer, or the conduct was reasonably foreseeable (nature of the work gives rise to hostilities) and the Employer ratified the Employees actions or failed to instruct otherwise.

Ex. Bouncer

Employer can ratify intentional torts of an employee if they know all of the material facts

Agent's liability for torts

Agents are always liable for their own torts

The injured party may not recover twice

However, they can recover partially from both parties

The principal can sue the agent if the third party recovers from the principal

Terminating an Agency

By completion of the agreed upon terms

By completion of the agreed upon purpose

Mutual agreement; no matter what the original agreement was

In an agency at will either party may terminate at any time

Wrongful termination

Either party may terminate but the wrongful party may have to pay damages

Termination ends the agents power to act on behalf of the principal

CONFIDENTIAL INFORMATION REMAINS CONFIDENTIAL EVEN AFTER TERMINATION

Operation of Law (Ex. Loss of qualification, Death etc.)

No longer able to be an agent

Foreign Corrupt Practices Act (FCPA)

Unlawful to bribe foreign officials for the purpose of obtaining business.

"Grease payments" - money expended to expedite process

US firms are liable for bribes made by foreign agents if they were aware of the illicit payments or the high probability that such payments were being made.

Business relationships

Business trusts

Joint ventures

Franchises

business trust

is an unincorporated association where one or more trustees manage property or conduct for-profit business activities on behalf of one or more beneficiaries.

Joint Ventures (JV)

a collaborative arrangement between two or more businesses or individuals to accomplish a specific purpose.

Governed by a contract between the parties

Courts sometimes apply partnership principles

Can create a separate business form when they enter into a joint venture - exist for a certain period of time

Cooperatives

any organization owned by and operated for the economic benefit of its members.

Formed by

1) a state's cooperative statute or

2) as a business form that adopts a cooperative approach to its business (e.g. LLC) or

3) by agreement of persons who do not create a formal business entity.

Every member gets one vote regardless of their contributions

Licensing

where a licensor contractually authorizes or permits a licensee to use the licensor's property.

Software (recurring revenue)

Franchise

a contractual arrangement where a franchisor licenses the right to use their intellectual property (i.e. trade name, commercial symbols, trademark or copyright) to a franchisee

At-Will

Protections still exist even in this employer/employee arrangement (i.e. common law, implied contractual protections, federal and state statutory laws

National Labor Relations Act, Unions in the U.S.

Created the National Labor Relations Board (NLRB) to enforce labor laws.

The NLRA prohibits employers from penalizing workers who engage in union activity (for example, forming a new union or joining a preexisting union)

The NLRA also requires employers to "bargain in good faith" with unions.

Family Medical Leave Act (FMLA)

was passed in 1993, which guarantees both men and women up to 12 weeks of unpaid leave each year for childbirth, adoption, or medical emergencies for themselves or a family member.

To qualify: the employer must have at least 50 employees and the employee must have worked at the business for at least 1 year.

Common Law Protection of At Will Employees Rights

Wrongful Discharge prohibits an employer from firing a worker for a bad reason.

A bad reason is one that violates basic social rights, duties or responsibilities, such as when an employee:

Refuses to violate the law

Ex. Lie to investigators

Exercises a legal right

Ex. Files a workers comp claim, employee has a legal right to do something and does it, can't fire them for doing that

Performs a legal duty

Ex. Jury duty

Truth in Hiring:

Oral promises made during the hiring process may be enforceable.

Employers may be liable for promises that they cannot keep or for failure to disclose important information in the hiring process

Employee Handbooks can create contracts (de facto)

some employers might go out and give them to the employees, not good thing bc they could be sued for not following rules

Covenant of Good Faith & Fair Dealing

In some cases, courts will imply a covenant of good faithand fair dealing in an at-will employment contract

i.e.: imposes a requirement of good faith when dismissing anemployee, even in at-will contracts

Defamation of Employees

Employers may be liable for defamation when giving false and unfavorable references about a former employee.

More than half of the states recognize a qualified privilege for former employers who give references

Intentional Infliction of Emotional Distress

can be a cause of action against an employer who condones cruel treatment of an employeee

Ex. Incidents surrounding one's dismissal

Whistleblowers

Employees who disclose illegal behavior of their employers.

The False Claims Act

protects employees from being fired who notify the government of their employer defrauding the government

Ex. Refusing to sign inaccurate reports

The Civil Service Reform Act and the Whistleblower Protection Act

= protect Federal employees who report wrongdoings.

The Sarbanes-Oxley Act of 2002

protects employees of publicly traded companies who provide evidence of fraud to investigators

The Occupational Safety and Health Act (OSHA) of 1970 (as amended).

was passed to ensure safe working conditions

OSHA sets specific health and safety standards

It obliges employers to keep the workplace "free from recognized hazards"

OSHA requires some employers to maintain records of all injuries and accidents

OSHA also allows for the inspection of workplaces + fines for unsafe conditions (strict liability)

Employee Privacy

In many places, off-duty conduct cannot be regulated by the employer.

Alcohol and drug testing is allowed by private businesses; government employers may test if signs of use are seen or if job safety is an issue.

Employers may not require or even suggest the use of lie detector tests.

Freedom of speech applies only to government restraints on speech, not to restraints imposed in the private sector.

The Electronic Communications Privacy Act of 1986 (ECPA)

permits employers to monitor workers' telephone calls, e-mail messages, and even "instant messages" if:

the employee consents,

the monitoring occurs in the ordinary course of business, or

in the case of e-mail, the employer provides the e-mail system.

Ex. Listening to telephone conversations; Web monitoring; Recording phone conversations; Text messages (need a warrant)

Fair Labor Standards Act (FLSA)

Wages (minimum wage and overtime pay)

Students and apprentices

Tipped employees: $2.13 + tips = minimum wage

40 hours per week

Child labor (unlawful to ship goods produced by businesses that use child labor)

Under 14

14-15 (limit how much time you can work and what you do)

16-17 (work longer hours but limit like during a school day)

Exceptions: (don't get over time in pay)

Executives

Learned professionals

Workers' Compensation

statutes ensure that employees receive payment for injuries incurred at work no matter whose fault it was for the injury.

Employee can still sue an employer if the employer acted intentionally or with gross misconduct

Social Security

pays benefits (medical insurance) to workers who are:

retired, disabled, incurred medical expenses (Medicare), and spouses and children of disabled or deceased workers.

Employees pay social security taxes which are matched by their employers

Federal Unemployment Tax Act (FUTA)

Set general guidelines for the states to implement their own unemployment plans

Employers must pay unemployment taxes

Does NOT apply to those who quit voluntarily or are fired for some bad conduct (i.e. illegal activity, drug use)

Applicants must be available and seeking work

ERISA

to protect workers covered by private pension plans.

Employers are NOT required to have pension plans for their employees

No more than 10% can be invested in the securities of the sponsoring employer

Vesting issues (Employer's contributions totally vest after 5 years or gradually over a 7 year period) - any money you contribute you can take out

Equal Employment Opportunity Commission (EEOC)

Federal agency responsible for enforcing most federal antidiscrimination laws.

Process for bringing a Title VII suit:

Plaintiff files a complaint with the EEOC

EEOC may investigate and attempt to reach a settlement out of court

EEOC can decide to sue the employer on the Plaintiff's behalf or the Plaintiff may bring their own suit

Title VII of the Civil Rights Act of 1964

Prohibits employers from discriminating on the basis of sex, race, color, religion, or national origin in regards to hiring, promoting, dismissal, compensation or other "term, condition, or privilege" of employment.

Discrimination can be proven 2 ways:

Disparate-Treatment (of an individual) - a single person was discriminated

Disparate-Impact (of a class of people) - everyone was not treated equally or impact equally by the policy

Employment Discrimination - Proof and defenses

Disparate Treatment: the Plaintiff must show evidence that the Defendant discriminated based on a protected trait

Defendant must articulate a legitimate, nondiscriminatory business reason for the action

Plaintiff must show that Defendant's reason is mere pretext (an excuse)

Disparate Impact: The Plaintiff must show evidence that the policy has a greater impact on a protected group than a non-protected group

Defendant must show that the policy is a business necessity for the job

Plaintiff can recover by proving the defendant's excuse is a pretext or that there was an alternative option that had a less discriminatory effect that employer did not take

Defenses to Claims under Title VII - Merit

Defendant hired X over Y because X had more experience or more relevant expertise

More common

Michael and jared work at Malone, promote jared and not Michael, jared has a higher degree, it won't be discrimination

Defenses to Claims under Title VII - seniority

Jared had been at the business longer, policy of promoting on seniority

If we say we promoted him bc of seniority, and no policy of this, then Michael has a strong argument

Defenses to Claims under Title VII - Bona Fide Occupational Qualification

It is important for business for you to be of this gender, or age

Hooters for example

Sexual Harassment as covered under Title VII

that creates a hostile work environment violates Title VII.

Ex. Lewd remarks, touching, intimidation, posting of indecent materials, asking for sexual favors, and other verbal or physical conduct of a sexual nature.

To determine whether the conduct creates a hostile work environment

one must look at all of the circumstances including the frequency of the conduct, its severity, whether it is physically threatening or humiliating, or a mere offensive utterance and whether it unreasonably interferes with an employee's work performance

To avoid sexual harassment lawsuits (as a business):

Used reasonable care to prevent and correct sexually harassing behavior

Have an anti-harassment policy in place and inform employees of it

Pregnancy Discrimination Act of 1978 (An Amendment to Title VII)

An employer may not fire or refuse to hire a woman just because she is pregnant.

If an employer allows time off for a medical disability, they must allow time off for maternity leave.

Title VII of the Civil Rights Act of 1964

Employers must make reasonable accommodation for a worker's religious beliefs unless the request would cause undue hardship.

Affirmative action is not required by Title VII, nor is it prohibited.

Intentional discrimination:

Compensatory and Punitive Damages (only for malice or reckless indifference)

Age Discrimination

The Age Discrimination in Employment Act (ADEA) of 1967 prohibits age discrimination against employees or job applicants who are at least 40 years old (but not under 40).

Applies to employers having 20 or more employees

Forced retirement at a certain age is prohibited except for police, top-level corporate executives, and Judges in Virginia!

Americans with Disabilities Act

A disabled person is someone with a physical or mental impairment that substantially limits a major life activity, or someone who is regarded as having such an impairment.

An employer may not disqualify a job applicant or employee because of disability as long as she can, with reasonable accommodation (would not create undue hardship) perform the essential functions of the job.

Enforced by EEOC

Trade Secrets

Valuable competitive info: customer list, chemical formula, market research, food recipes

State Law (uniform trade secret act enacted by all states)

Trademark

Words or images that shows source (i.e. branding): logos, Led Zeppelin logo

Regional and Federal Law

TM (unregistered trademark - not guaranteed) v. ® (registered federally)

Not necessarily required if used in commerce (common law rights in geographical area mark is used). Registering expands geographical rights.

Generic mark (no tm)à Descriptive term (no tm)à Suggestive Term (tm)à Fanciful/Abitrary (tm)

Copyright

Rights to control original works in tangible form: Stairway to heaven

Federal

© (federal registered) but auto

Patents

Federal

Patent Pending (filed patent, but not granted yet)

1 year after publicly introduced