AGENCY. Introduction Agency One person acts for the benefit of and under the direction of another...
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Transcript of AGENCY. Introduction Agency One person acts for the benefit of and under the direction of another...
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AGENCY
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Introduction
Agency One person acts for the benefit of and under the
direction of another
Agent Person acting for the benefit of another
Principal Person directing another to act on his behalf
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TYPES OF RELATIONSHIPS
Principal/agent
Employer/employee
Master/servant
Employer/independent contractor
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How do you determine if a worker is an employee or an independent contractor?
Common-law agency test Who has the right to control the manner in which
the work is performed? IRS test
20 factors to determine whether someone is an employee or an independent contractor
Derived from results of court judgments
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IRS 20 FACTOR ANALYSIS
1. Instructions
2. Training
3. Integration
4. Services rendered personally.
5. Hiring, supervising, and paying
assistants.
6. Continuing relationships
7. Set hours of work
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IRS 20 FACTOR ANALYSIS
8. Full time required
9. Doing work on the employee’s premises
10. Order or sequenced set.
11. Oral or written reports
12. Furnishing tools and materials
13. Payment by hour, week, or month.
14. Payment of business or traveling expenses
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IRS 20 FACTOR ANALYSIS
15. Significant investment
16. Realization of profit or loss
17. Working for more than one firm at a time
18. Making services available to the general public.
19. Right to discharge
20. Right to terminate
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U.S. Supreme Court six-factor test
Whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;
Whether, and to what extent, the organization supervises the individual’s work;
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Whether the individual reports to someone higher in the organization;
Whether and to what extent the individual is able to influence the organization;
Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and
Whether the individual shares in the profits, losses, and liabilities of the organization.
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See John Weary v. William S. Cochran, 377 F.3d 522, 2004 U.S. App. Lexis 15589 (2004).
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LIABILITY TO EACH OTHER
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Duties of Agents to Principals Duty of Loyalty
Fiduciary Dual Agency Confidential Information
Duty to Obey Instructions Duty to Exercise Care and Skill
Ordinary care and skill common for kind of work
Duty to Communicate Information
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Duties of Agents to Principals
Duty to Account for Funds and Property Property
Return to principal or account for inability to do so An Accounting
Periodically give principal accurate record of receipts and expenditures
Commingling Keep principal’s property separate from own
Embezzlement If agent takes property with intent to deprive principal of it,
agent is guilty of the crime of embezzlement
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Duties of Principals to Agents
Duty to Compensate Contingent Compensation Procuring Cause Duration of Employment Real Estate Commissions Insurance Commissions
Duty to Reimburse and Indemnify Duty to Keep Accounts
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Enforcement of Liabilities between Principals and Agents
Breach of Duty by Agent Deduct damages from agent’s compensation Bring a lawsuit Pay no compensation Terminate agency
Breach of Duty by Principal Attach lien on principal’s property in agent’s possession Bring a lawsuit Terminate agency
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LIABILITY TO THIRD PARTIES
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CONTRACT LIABILITY
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The Agent’s Authority to Bind the Principal on Contracts
Actual Authority Express Authority
Example: Power of Attorney Implied Authority
Test - Justifiable belief of the agent Apparent Authority
Test - Justifiable belief of a third party Apparent Agent Duty of Third Persons to Determine Agent’s
Authority
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The Agent’s Authority to Bind the Principal on Contracts
Ratification Nature of Ratification
One may become liable through ratification for an unauthorized act that was done by an agent
Requirements for Ratification Agent must have acted on behalf of the principal Entire act must be ratified
Effect of Ratification Agent released from liability Principal is bound as if agent had been fully
authorized
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Contract Liability of the Agent Introduction Unauthorized Actions
Agent is liable to third party
Nonexistent or Incompetent Principal Agent is liable to third party
Agreements by the Agent to Assume Liability Joint liability between principal and agent
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Contract Liability of the Agent Disclosed Principal
Rights and Liabilities of Agent Rights and Liabilities of Principal
Undisclosed Principal Rights and Liabilities of Agent Rights and Liabilities of Principal
Partially Disclosed Principal Rights and Liabilities of Agent Rights and Liabilities of Principal
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TORT LIABILITY
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Employers may be vicariously liable for the actions of employees based on one of several theories:
1. negligent entrustment
2. failure to properly supervise
3. respondeat superior
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Respondeat superior is a strict liability theory.
The primary defense is that the employee was not acting within “the scope of employment.”
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An employee’s conduct is within the scope of his/her employment if it meets each of the following four tests:
1. It was of the kind that the employee was employed to perform.
2. It occurred substantially within the authorized time period.
3. It occurred substantially within the location authorized by the employer.
4. It was motivated at least in part by the purpose of serving the employer.
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See Rappaport v. International Playtex Corp., 352 N.Y.S. 2d
241
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Exception to Respondeat Superior: Fellow-servant rule