Chapter 14Employment RelationshipsI. AgencyA. Agency Defined 1. General Definition: An employment for the purpose of representation in establishing relations between a principal and third parties Pg. 3752. Purpose of Relationship: The Principal uses the agent to expand business opportunities and takes advantage of the agencies expertise 3. Classes of agent - page 3764. Universal: Designated to do all act, power of attorney to conduct business transactions5. Special Agent: Authority to represent the principal 6. Gratituous: Volunteer based, same duties as other agentsB. Creation of Agency Relationship Pg 3761. Desire and consent2. Four methodsa. agreement of the parties: Oral or written contract authorization of agent for the principal b. ratification: Acceptance of responsibility i. express: Principal clearly signals that he intends to be bound to the agreement unless otherwise authorized.ii. implied: Principal behaves as if he has an intent to ratify the unauthorized agreement. Does not specifically state so, but accepts benefits. Principal receives payments but does not rejectc. agency by estoppel: Actions by the principal that might lead someone to believe that an agency has authorityd. by operation of law: Some emergency exists and somebody acts to assist the principal Pg. 377C. Duties and Powers of Agent/Principal Pg. 3781. Authority: Agents power to change the principals obligations a. Actual: Authority given by the principal to the agent. Expressed or impliedb. Apparent: Principal creates an appearance of authority in anagent that leads a third party to conclude reasonably that the agent has authority to act for the principal. EX: Agent becomes managerc. Cove Management: No apparent authority cannot rely solely on the assertion of the agent to find apparent authority. PG. 3792. Principal’s Duties to Agent Pg. 380a. Cooperation: Performing responsibilities in the agreementb. Compensation: Pay for reasonable value of servicesc. Reimbursement: Reasonable expenses the agent incurs d. Indemnification: Pay the agent for damages or losses suffered while acting in the scope of his authority3. Agent Duties to Principal Pg. 381a. duties as fiduciary: Agent is honest, trust, and confidenceb. duty of loyalty: Agent is required to place the principals interests ahead of his own and of the third party. Cannot compete with the principal or competitors c. duty of obedience and performance: Follow instructionsd. duty of reasonable care: Must undertake and execute duties with skill and care a reasonable person would usee. duty to account: Funds and properties of the principal have been entrusted in him f. duty to inform: Inform principal of all facts relevant to the agencyg. Bearden: Violates all duties Pg. 381D. Liability for Contracts Pg. 382-3831. Disclosed principal: Identity is known by a third party at the timethe third party enters a contract with the agent.a. actual authority: Disclosed principal is liable to the third party for the contract made by the agentb. apparent authority: Same as Actual2. Undisclosed Principal: One who’s identity is unknown Pg. 383a. Authority: Undisclosed principal is bound if agent has authority.b. Scope: If agent is sued, the agent is entitled to indemnification but must have been acting in the scope of their authority3. Yim: Agent becomes liable for contractE. Termination of Agency Pg. 383-3841. Method of Termination: Specific date, the purpose of the agency ends, reasonable notice, upon agreement of the parties2. Termination by Operation of Law: Prinicpal passes away, or agent, or subject of the agency is destroyedII. Employees and Contractors Pg. 385-386 Fig. 14.3A. Master-Servant Relationships: the master or employer and works under direct control of the employer hire Servant or employee. HistoricallyB. Employees As Servants and Agents: Employees have the same rules as agents Pg. 388C. Employment-At-Will: Unless you have an employee contract. Or do not have an expressed or implied employment contract1. limitations: Employee is free to fire you at any time. Free to quitfor any reason. Very few limitations. 2. Guz: Fired for no reason, does not win just because he has been there for a long time is guaranteed. At Will Apllies Pg. 389D. Employer-Independent Contractor Relationships1. Definition of Independent Contractor: Someone who contracts oragrees with an employer to provide a service but is not controlledby the employer in the performance of the service. The more control a worker has, the more independent they are. No torts2. France: E. Tort Liability Pg. 393-3941. General Rule: A principal or employer is responsible or liable forthe torts of an agent or employee if the tort was authorized by theprincipal, or if the tort occurred in the scope of employment. 2. Principal Liability: Liable for agents torts and bad acts. (Authorized) As long as working within the scope of employment Pg. 3943. Vicarious Liability: Principal is liable for unauthorized intentional or negligent torts of agents acting within the scope of employment Pg. 395a. Factors: Same general nature, authorized to be in the location, serving the principals interest b. respondeat superior: “Let the master answer.” Employer is in a better position to protect the public because they control their employeesc. Armstrong4. Determining Liability for an Independent Contractor – factors in determining who is an IC? (also in Long case in Chapter 15)5. Independent Vs, Employees: Employers are not responsible for torts of independent contractors. Factors: Extent of control of the master over the details of the worker, nature of the workers business, level of specialization or skill, the more skilled the more independent, duration of employment, shorter the more independent, who supplies the materials, method of payment, taxes, if taxes are taken out, they are independent, relationships of this work to the employers regular business, belief of the