Business Law - Exam 3

Agency Relationship

requires consent, control, and a fiduciary relationship. DOESN'T require a written agreement, formal agreement, or compensation.

Principal

the person who gives directions.

Agent

the person who receives and carries out directions.

Consent

the agent has to agree to the agency relationship.

Control

the agent has to follow directions under the principal's control.

Fiduciary Relationship

when someone needs to act in the best interests of someone else; the agent acts for the principal.

Written Agreement

NOT required in an agency relationship, it doesn't have to be in writing UNLESS the underlying contract needs to be in writing i.e. a land transfer.

Formal Agreement

NOT required in an agency relationship, there's no specific language used to form the relationship.

Compensation

NOT required in an agency relationship, consideration CAN exist, but it's not a requirement.

Duties of Agents to Principals

Duty of Loyalty, to Obey Instructions, and of Care.

Duty of Loyalty

defines the fiduciary relationship, the agent must act in the best interest of the principal.

Duty to Obey Instructions

the agent must obey instructions given to them.

Duty of Care

the agent must act as a reasonable person.

Agent Duty Breach

the agent breaches one of their duties; the principal can seek damages, profits, or rescission.

Damages

the principal recovers the amount that was lost as a result of the agent's breach of duty. Ex: Agent sells a 120k house for 100k, principal receives 20k in damages.

Profits

the principal takes any profits made by the agent who breached their duty. Ex: Through confidential info, an agent buys a property nearby, making profits. These go to the principal.

Rescission

the principal returns what they got and receives back what they spent. Ex: The principal returns the house that the agent purchased to breach their duty and gets their money back.

Pure Power Boot Camp, Inc v. Warrior Fitness Boot Camp

a woman started Warrior Fitness. She hired ex-military men to run the bootcamp. 2 agents, Belliard and Fell quit and started a new company by taking Warrior's customer list and converting them to Pure Power. Ruled in favor of Warrior Fitness, because the 2 men breached duty of loyalty by taking the list (trade secret). Starting a new company wouldn't be a problem UNLESS there was a non-compete.

Duties of Principals to Agents

Duty to Compensate if provided in the agreement, Indemnify for reasonable expenses, and to Cooperate with agent.

Duty to Compensate

the principal must compensate if the agreement says so; ex: money for the agency relationship.

Duty to Indemnify

the principal must reimburse the agent for any losses/expenses they suffer by simply doing the job.

Duty to Cooperate

the principal must cooperate with the agent so that the agent can do their job properly.

Termination by Act of the Parties

lapse of time, purpose achieved, or mutual agreement.

Lapse of Time

termination when the period for the agency relationship expires. Ex: 6 month period passed, you're no longer an agent.

Purpose Achieved

termination when the goal of the agency relationship has been completed. Ex: Once the house is sold, you're no longer an agent.

Mutual Agreement

termination by mutual agreement between the principal and agent. Can be mutual or one-sided (agent quits).

Termination by Operation of Law

death/insanity, impossibility, bankruptcy, changed circumstances, and war.

Death/Insanity

termination if the principal or agent dies or is mentally impaired.

Impossibility

termination if fulfilling the task is impossible. Ex: Selling a house that recently got destroyed.

Bankruptcy

termination if the principal is bankrupt. The agent shouldn't sell for them.

Changed Circumstances

termination if a new law prevents the task from being completed.

War

termination if a war starts.

Authority Types

actual authority (expressed/implied) and apparent authority.

Actual Authority

when authority is either explicitly or inexplicitly given to the agent by the principal.

Express Authority

actual authority in which clear directions are given to the agent and are specifically stated.

Implied Authority

actual authority in which other tasks are implied such that those tasks are reasonable. Ex: Sell my house => advertising, calling people, etc.

Apparent Authority

When a 3rd party reasonably believes that an agent has authority as a result of the situation handled by the principal.

Disclosed Principal

a situation in which the contract formed with a 3rd party discloses the principal's identity. In crisis, the principal is liable to the 3rd party and the agent isn't.

Partially Disclosed Principal

a situation in which the contract formed with a 3rd party discloses the agent's identity and a mention of the existence of a principal. In crisis, the principal and agent are liable to the 3rd party, either joint or separate.

Undisclosed Principal

a situation in which the contract formed with a 3rd party discloses only the agent's identity. In crisis, agent is liable and are entitled to indemnification. If the 3rd party discovers the principal's identity, the principal is liable.

Unauthorized Act

a situation in which the contract formed with a 3rd party discloses the principal's identity, but the agent had no authority to form such contract. Agent is liable in a crisis.

Ratification

when the principal in an unauthorized act situation decides to comply with the contract after the fact.

Liability for Torts & Crimes

1) What happened? (Accidental/Intentional), 2) If accidental, who did it? (Employee/Idp Contractor), 3) If employee, did it happen within course and scope of employment?

Accidental Employee Tort Within Scope Of Employment

the principal is liable, joint & separate between parties. Minor detours allowed.

Accidental Employee Tort Not Within Scope of Employment

the principal isn't liable due to frolicking. Unreasonable to expect the agent's outrageous behavior.

Accidental Idp Contractor Tort

principal NOT liable UNLESS 1) Negligent Hiring or 2) Negligent Supervision

Negligent Hiring

failure from the principal to conduct a proper background check on the agent, not noticing past poor behavior.

Negligent Supervision

failure from the principal to fire their agent after previously hearing comments/seeing proof of their current poor behavior.

Intentional Tort

principal NOT liable when not a foreseeable event, UNLESS 1) Authorized Act, 2) Negligent Hiring, or 3) Negligent Supervision

Authorized Act

when the principal allows the agent to act in a dangerous way (ex: Keep and use a gun at a bar to keep peace).

Employment At Will

employers can always fire their employee for any reason/no reason at all OR employees can leave at any time; UNLESS doing so violates an employee's contractual/legal rights.

Akima LLC Case

a woman rides her bike near Washington D.C. and shows a bad finger to the presidential motorcave. It goes viral, she gets fired and sues for wrongful termination, arguing it was against public policy. Didn't rule in her favor because she wasn't a government employee. Private companies aren't bound to the 1st amendment.

Employment Security Contract Laws

1) Promises Made During Hiring, 2) Employee Handbooks, and 3) Covenant of Good Faith and Fair Dealing

Promises Made During Hiring

enforceable promises that exceed employment at will when the employee gets fired wrongly. Ex: Promise that nobody gets fired in 6 months, gets fired in 3 months without reason.

Employee Handbooks

can sometimes create promises. Ex: Violation procedure with 4 violations before getting fired, but you get fired after the 1st violation.

Covenant of Good Faith and Fair Dealing

employers must treat employees fairly; can't avoid firing by enforcing hard working conditions to make employees quit themselves.

Employment Security Tort Laws

1) Defamation and 2) Workplace Bullying

Defamation

when an old employer lies to the ex-employee’s new company, spreading lies about their poor performance and falsely ruining their reputation.

Workplace Bullying

show intentional infliction of emotional distress; 1) Proof that something extreme/outrageous happened and 2) It caused serious emotional harm.

Family and Medical Leave Act (FMLA)

a federal law stating that employers with >50 employees must allow 12 weeks of unpaid time off each year for a qualified reason. On return, employees return to original positions. Violations include damages for lost wages, job reinstatement, or promotion if denied.

Qualified Reason

you have a baby, you adopt a baby, or you/someone in the family (parents, kids, spouse) has a serious condition.

Peterson v. Exide Technologies

Peterson worked for a warehouse, driving a forklift. He was previously cited in forklift accidents multiple times. When he suffered an injury once, he asked FMLA for time off, and they validated it. Then, they fired him. He sued and argued he was legally on FMLA time and was retaliated against, HOWEVER, ruled in favor of the companty because they fired him for his past reckless behavior.

Whistleblowing

an employee reports the illegal behavior of an employer. Ex: Safety violation.

Retaliation

when an employee gets fired as a result of the report. Ensure that reports are made to the right place, otherwise, whistleblowing protections can't cover you.

Off-Duty Activities

1) Lifestyle Laws, 2) Smoking, 3) Alcohol and Drug Use

Lifestyle Laws

anything you do that's LEGAL and OUTSIDE of work, you can't be fired for.

Smoking

29 states protect employees that smoke, TX doesn't.

Free Speech Rights

1) National Labor Relations Act (NLRA) and 2) Social Media Policies

National Labor Relations Act (NLRA)

a federal law that legalizes unions and supports concerted activity.

Concerted Activity

the usage of free speech to communicate with a COWORKER about WORKPLACE CONDITIONS.

BMW Case

BMW hypes up a event with fancy food, but there's only hotdogs. A BMW employee takes a picture and posts it to coworkers. Concerted Activity! Another dealer crashes their range rover, and the same BMW employee takes a picture and posts it to coworkers. NOT concerted activity! Wasn't about WORKPLACE CONDITIONS.

Employment Contracts

being employed for a certain amount of time. In this scenario, employees CAN’T leave.

Violating the Law

an exception to employment at will; when a company tells you to do something illegal, and you say no, so they try to fire you. BUT THEY CAN’T.

Exercising a Legal Right

an exception to employment at will; employers can’t fire employees for exercising legal rights, protecting against the government.

Supports Fundamental Societal Values

an exception to employment at will; employers can’t fire employees if it’s bad for society.

Occupational Safety and Health Act (OSHA)

establishes standards, improves working conditions, and enforces 25 whistleblowing laws.

OSHA Standards

1) Every company posts a notice with OSHA contact info if any violations occur, 2) Every company must keep strict records and report injuries/fatalities, 3) Following reports, OSHA conducts an investigation. 4) OSHA can do announced/unannounced inspections.

OSHA Fines

each fine starts at $8,000. Refusals to fix policies may increase each fine up to $165,000.

Guns

regulated by state law; employers can put up notices i.e. "Guns are prohibited".

Bring Your Gun To Work Law

you can bring your gun and leave it in the car parked on the employers premise so long as it's locked away; some states don't enforce it.

Fair Labor Standards Act (FLSA)

Applies if an employer has employees; manages child labor, minimum wage, tipped workers, and overtime & exemptions policies.

Employee vs. Contractor

depends on how much control the employer has over a person's job. Higher control => employee. When a contractor becomes an employee, labor costs increase by 20% for the company. Hence, some employers try to avoid these costs and mislabel their employees.

Mislabeled as a Contractor

FLSA allows you to recover money if you were mislabeled as a contractor; all the hours you didn't make $7.25, overtime hours missed, and benefits missed.

Child Labor

under FLSA, children who are <14 years old can't work. If eligible, then the number of hours is limited, except for babysitting/working for a family business.

Minimum Wage

established federally by FLSA; $7.25 per hour.

Tipped Workers

must make $7.25 per hour through tips under FLSA.

Overtime & Exemptions

every hour worked >40 hours a week entitles you to 1.5x the wage amount. Exception: salary positions (administration), no 1.5x payment.

Workers' Compensation

state based law; employees receive compensation (weekly wage & keep position) if injured on the job. If they refuse the compensation, they can sue the company.

Health Insurance (COBRA)

requires employers to allow employees to keep health insurance after leaving the job for 18 months, but they must pay the full cost of it.

Social Security

federal law provides a financial safety net for retirees. Part of each paycheck is stored away in a bucket. When you reach retirement age, you get a paycheck from the bucket.

Social Security Fears

people fear that we will lose social security because of the shrinking workforce. They added a new policy; that the longer you wait, the more you get.

Affordable Care Act (ACA)

requires companies of a certain size to offer health insurance.

Pensions (ERISA)

a federal law that establishes rules for companies/employers that offer pension plans to their employees.

National Labor Relations Act (NLRA)

grants the right to 1) Organize and join a union (legalized unions) 2) Bargain collectively, to band together and gain power. 3) Engage in concerted activities

Concerted Activity

activity related to 1) A coworker and 2) About workplace conditions, so long as the individual 3) isn't a supervisor.

U.S. Constitution

prevents discrimination in government employment areas (protects government employees).

1866 Civil Rights Act

protects against RACIAL discrimination i.e. ex-slaves. A popular tool for recovery as claims are valid for 4 years and there are unlimited damages.

1963 Equal Pay Act

right the historical wrongs of women being paid less than men; employers can't pay employees of the OPPOSITE SEX for doing EQUAL work.

EEOC

agency tasked with enforcing the civil rights act of 1964, equal pay act of 1963, and FSLA.

Protected Class

5 classes: race, color, religion, national origin, and gender. (NOT beauty, weight, etc.)