Chapter 14

agency relationships

independent contractor

works and gets payments from employer but working conditions and style isn’t controlled by employer

employee

work under company’s direction & control while receiving benefits and pay

agency relationship

business dynamic where agent is authorized to act on behalf of principal to deal with third parties

how agency relationships are formed

agreement, ratification, estoppel, operation of law

agency by agreement

implied agreement that agent will act for principal, and principal agrees to have the agent act

agency by ratification

principal approves unauthorized act performed on their behalf, they are responsible for everything

agency by estoppel

principals behavior creates impression that individual is authorized to act on their behalf (even without contract)

agency by operation of law

legal relationships where authority is created by existing laws instead of contract (family, emergency, corporate)

agency duties to principal

performance, notification, loyalty, obedience, accounting

agency duties explained

performance - use reasonable diligence & skill in work

notification - notify principal of concerning matters

loyalty - act solely for benefit of principal

obedience - follow lawful instructions of principal

accounting - keep account of property & funds paid

principal duties to agent

compensation, reimbursement, cooperation, safe working conditions

principal duties explained

compensation - duty to pay agent for services

reimbursement - reimburse agent for incurred expenses

cooperaation - cooperate & assist agent with duties

working conditions - inspect & provide safe working conditions & equipment

equal dignity rule

agents authority must be in writing if contract is on behalf of principal

power of attorney

authorization for another to act as one’s agent/attorney in specific situations

apparent authority

aquired when principal causes third party to believe agent has authority even though they don’t

ratification

official binding of agreement, turns into committment

when principal is liable for agents negligence

agent caused harm when acting within scope of their assigned duties

ways to terminate an agency

act of parties or operation by law

termination by act of parties

wrongful termination, agency with interest, notice of termination

termination by operation of law

death, bankruptcy, impossibility, changed circumstance, war