Chapter 19 legal environment on business

What is an agency relationship?

A legal relationship where an agent acts on behalf of a principle and can bind the principle in contracts or legal obligations

What is actual authority?

Authority expressly or implied given by the principal to the agent

What is apparent authority?

Authority that exists because the principal’s words or conduct lead third parties to reasonably believe the agent has authority

What is ratification?

When a principal approves an unauthorized act after it occurs, making it binding.

What is a disclosed principal?

the third party knows both that an agent is acting and who the principal is

Who is liable on contracts made by an authorized agent for a disclosed principal?

The principal

What is a [partially disclosed principal?

The third part knows an agent exists but does not know the principals identity?

Who may be liable when the prinicpal is partially disclosed?

Both the principal and the agent

What is an undisclosed principal?

The third party believes they are dealing only with the agent

Can a third party recover damages from both the principal and agent?

No. they may sue both but can recover only once

What is an electronic agent?

A semi-autonomous computer program that conducts transactions

What law governs electronic agents?

Uniform electronic transactions Act (UETA)

What must an online purchasing system provide under UETA?

A chance to review and correct mistakes before submitting an order.

What happens if no error-correction opportunity is provided?

The buyer may avoid the transaction

Is a principal liable for unauthorized acts of an agent?

Generally, no

When is an unauthorized agent personally liable?

When the third party reasonably believed the agent had authority

When is an unauthorized agent NOT liable?

If the third party knew or suspected the agent lacked authority

When is a principal liable for an agent’s tort?

When the tort occurs within the scope of employment or the principal was negligent

What is negligent supervision?

Failing to properly supervise or instruct an agent

Example of negligent supervision?

Giving a salesperson incorrect product information that causes misrepresentation

What is innocent misrepresentation?

A false statement made honestly but incorrectly

Is a principal liable for an agent's innocent misrepresentation?

Yes, if made within actual or apparent authority

What is intentional misrepresentation?

Knowingly making false statements

Is the principal liable for intentional misrepresentation?

Yes, if committed within the scope of employment

What does “respondent Superior” mean?

Let the superior answer

What doctrine makes employers liable for employee torts?

Respondent Superior

What is vicarious liability?

Liability imposed without personal fault because of the relationship between parties.

Why does respondent superior exist?

Employers are in the best financial position to bear losses

What does “course and scope of employment” mean?

The employee is performing assigned job duties

Is an employer liable is an employee causes an accident while making deliveries?

Yes

Is an employer liable for accidents during an employee’s commute?

Generally, no

Is an employer liable if the employee is performing work while commuting?

Yes

What is a detour?

A minor personal deviation from work

IS an employer liable during a detour?

usually yes

What is a frolic?

A substantial personal departure from employment

Is an employer liable during a frolic?

Generally no

What are intentional torts?

Assault, battery, false imprisonment, defamation, conversion, IIED

Can an employer be liable for an employee’s intentional tort?

Yes, if the committed within the scope of employment

Example of employer liability for intentional tort?

A bouncer assaults a customer while performing security duties

Example of false imprisonment?

A security guard detains an innocent customer for hours

What is negligent retention?

Keeping an employee after learning they pose a danger

Example of negligent retention?

Retaining a violent bouncer after repeated assaults

What is the most important factor distinguishing employees from independent contractors?

The employers right to control the work

Do employees control independent contractors?

Do employers generally control employees?

Yes

Who provides tools for an independent contractor?

The contractor

How are employees usually paid?

Regular payroll with tax withholding

How are independent contractors usually paid?

Lump sum with no tax withholding

What tax form do independent contractors receive?

Form 1099

Are independent contractors entitled to overtime?

No

Are independent contractors covered by employment discrimination laws?

Generally, no

Is an employee generally liable for an independent contractors’ torts? and why not?

no; because the employer does not control the contractor’s work

Is an employer usually liable for an employee’s crimes?

No

When can an employer be liable for a crime?

If the employer directed, authorized, or participated in it

How can agency terminate by agreement?

Expiration, completion of purpose, specified event, mutual agreement or unilateral termination

Can unilateral termination breach the agency contract?

Yes

What events automatically terminate agency?

Death of principal. death of agent, insanity, destruction of subject matter, impossibility, bankruptcy, war

When should third parties be notified of termination?

When the agent has apparent authority

Why is notice important?

To prevent third parties from relying on apparent authority after the agency ends

Why is worker classification for uber and Lyft difficult?

Drivers have some characteristics of employees and some of independent contractors

Why do some scholars propose a “dependent contractor” category?

Because rideshare drivers often lack control over important aspects of the job but also don’t fit the traditional employee model