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UNCW BLA 361 - The Outside Relationship

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Fair Use Exception – Educational PurposesCreated by Pamela S. Evers, Assoc. Prof., UNCW, for Educational Purposes © 2001 (w/updates) Contract remedies› for breach of fiduciary duty and performance. Can sue in tort› libel, slander, trespass, deceit, fraud.  Constructive trust theory› For money/ property Agent steals from Principal. Avoidance of contract if Agent doesn’t do as told Indemnification (agent protects Principal) Right to compensation, reimbursement, indemnification and cooperation. Agent can withhold performance and demand an accounting. Agent can recover damages for past services and future damages. By agreement› Agreed term of relationship ends› Agreed purpose (e.g., house sale) is achieved› Mutual agreement› Agency at will (principal terminates agency) Note: if one party’s departure from relationship violates the agreement, the termination is wrongful for which the remedy is damages By inability to perform› If agency requires license and Agent or Principal loses the license, agency ends › Bankruptcy of Agent or Principal ends agency ifthe bankruptcy affects ability to perform› Death/incapacity of Principal or Agent› Disloyalty of Agent› Changed circumstances  Destruction of subject matter; change of law Once agency ends, Agent has no authority to bind Principal Principal’s duty to indemnify Agent continues› For expenses/liability during agency Note! Agent’s duty of confidentiality continues indefinitely! Some agency relationships are irrevocable Example: if Agent has power coupled with an interest (e.g., interest in land to be sold), only the Agent can terminate the agency› Principal has neither power nor right to terminate! Is Principal liable for contracts entered into by Agent? Is Agent liable for contracts entered into for Principal? When is a third party liable to Principal and to Agent? When is Principal liable for the torts of Agent?  When is Agent liable for torts committed while working for Principal? Generally, Agent is not liable for contracts made on behalf of fully disclosed Principal However, a third party can recover from either Agent or Principal if Principal is only partially disclosed or undisclosed Nat’l Realtors Association HQ, Washington, DC Principal’s liability for Agent’s contract with a third party depends on whether Agent’s actions (contracts, representations) were authorized or unauthorized by Principal In general, Principal is liable to 3rd party for contracts made by Agent if Agent acts within scope of authority Unauthorized acts are acts outside of Agent’s express, implied or apparent authority If Agent has no authority, Principal is not liable, but Agent alone is liableManager, Cabella’s, Sidney, NE General Rule: Agent is liable for his/her crimes, Principal is not› Unless Principal authorized or participated in crime› Negligent hiring or supervision theories may be applicable to create Principal’s liability Some jurisdictions hold Principal liable for Agent’s crimes if Principal violated statute A person is always liable for his or her own torts To determine whether a Principal also is liable for Agent’s tortious conduct, first determine whether worker is employee or independent contractorWorkerPrincipal Generally Not Liable(unless strict liability)Outside CSE-P Not LiableWithin CSE -P Liable“Course and Scope of Employment”Independent ContractorEmployeeFactorsLiability Analysis Agent is liable to 3rd party for his own torts.  Principal also may be liable for Agent’s torts if they result from:› Principal’s own tort› Principal’s authorization of tort› Agent’s unauthorized but fraudulent conduct made within scope of agency› An employment relationship Let the master answer Theory of liability that applies only to Employer-Employee relationships (master and servant) Principal/Employer/Master is vicariously liable for Agent/Employee/Servant’s negligent torts committed within the Agent’s “course and scope of employment” Facts: at construction site, an excavator bucket disconnected, fell, and crushed an employee of the construction company What questions arise?  How could an employer prevent this type of lawsuit? Principal liable for intentional torts committed with the scope of employment Employee is a tortfeasor as well Employer is liable for Employee’s acts which Employer knew or should have known the Employee had a propensity to commit (negligent hiring or supervision) What were the facts? What was the issue? What did the court hold and why (reasoning)? How should an employer prevent this type of lawsuit? What were the facts? What was the issue? What should the court hold and why? How should an employer prevent this type of lawsuit? General rule: Principal/Employer is notliable for acts of independent contractors because Principal/Employer has no right to control Independent Contractor is liable for his/her own torts Exception: hazardous activitiesTrain derailment with fuel spill If Agent is authorized by Principal to hire subagents, Principal is liable for the acts of the subagent If Principal undisclosed, Agent is responsible for wages of subagents and Principal liable for torts of subagentsHourly worker at spinning mill.Port Commissioner, Port of LA Intelligent Agents: autonomous or semi-autonomous internet programs that interact with people or other programs to execute specific tasks, including searching, ordering and delivery of goods via “point and click” electronic contracts on the internet Generally, intell. agents have at least apparent authority to act for and bind Principal who is estopped from denying an electronic contractLet’s Test Your Agency IQ A realtor is the typical “agent.” When is a realtor your employee?• Is a tavern the agent of a liquor distributor? • Is a bartender an agent? Employee? When is a plumber an agent? An independent contractor? • When is a person who delivers mail an Employee? Agent? Independent contractor? May the software engineer take his talents, along with confidential information about his employer, to a new employer? • May the accountant refuse to work for a particular client of the Accounting Company if she doesn’t like the client? True=A, False = B› An agent is always liable for his own


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UNCW BLA 361 - The Outside Relationship

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