Agency and Labor Law
The Principal’s Liability on the Contract
Assignment
Crash agrees to have Steve represent him in various transactions as an agent to secure him performance contracts and endorsement deals.
Crash writes a letter to Bob that Steve is his agent. Unbeknownst to Bob, Crash specifically instructed Steve to only make endorsement deals with Bob. However, Steve signs a contract for Crash to attend a birthday party performance.
In all other cases, Steve has express authority to enter into any contract on behalf of Crash. So Steve makes a contract with Jimmy for a performance at a bar. Jimmy knows Steve is an agent, but he doesn’t know who Steve is an agent for.
Finally, Steve makes an endorsement contract with Fred.
Fred has no idea whether Steve is representing anyone.
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- Is Crash liable for any of these contracts?
- Is Steve liable for any of these contracts?
- Write between 500 – 750 words (approximately 2 – 3 pages) using Microsoft Word.
- Attempt APA style, see example below.
- Use font size 12 and 1” margins.
- Include cover page and reference page.
- At least 60% of your paper must be original content/writing.
- No more than 40% of your content/information may come from references.
- Use at least two references from outside the course material, preferably from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the two reference requirement.
NOTES
Business Law II
Agency
This lecture will cover the law concerning agency.
In a principal-agent relationship, the parties have agreed that the agent will act on behalf and instead of the principal in doing business with third persons. This has some profound consequences, as this will make the principal liable for contracts entered into by the agent and for misdeeds of the agent in many situations. Nonetheless, principal-agent relationships are very common. For example, the employer-employee relationship is one example of such a relationship as is the employer-independent contractor relationship. The significant distinction between these two relationships is the amount of control the principal exercises over the agent in the course of the agent’s duties. And although these two types of principal-agent relationship seem similar, the consequences stemming from each classification are very significant. These consequences include the principal’s liability for the torts of the agent and the principal’s legal obligations toward the agent. For example, the doctrine of respondeat superior will hold the principal liable for torts committed by the agent in most situations. However, it does not apply in the independent contractor situation.
These relationships can be formed in various ways. However, all these relationships require an affirmative indication that the agent agrees to act for the principal and the principal agrees to have the agent so act. Agency can be created by agreement. These contracts need not be written (unless the Statue of Frauds applies). Agency can also be created by ratification. This occurs when a principal affirms a contract made by a person not currently an agent (or an agent acting outside of his or her authority). Agency can be created by estoppel in the situation when a principal causes a third person to believe that another is the principal’s agent, and the third person deals with the other. Finally, agency my be created by operation of law in some situations.
The creation of this relationship creates various duties and rights on both sides. The agent’s duties are:
1. Performance- the agent must use ordinary care as expected of a reasonable person under the circumstances.
2. Notification- the agent must notify the principal of issues concerning the subject matter of the agency.
3. Loyalty- the agent must act solely for the benefit of the principal. This means an agent cannot represent two principals in the same transaction without disclosing the conflict and obtaining consent.
4. Obedience- the agent must follow the principal’s instructions.
5. Accounting- the agent must account for all property and money received and paid out on behalf of the principal.
The principal’s duties are:
1. Compensation- The principal must pay an agent for services rendered and do so in a timely manner. The amount will be either agreed upon, the customary value, or whatever is reasonable.
2. Reimbursement and Indemnification- The principal must reimburse an agent for sums disbursed at the principal’s request or for necessary expenses in the agent’s performance of his or her duties. The principal must also indemnify the agent.
3. Cooperation- The principal must cooperate and assist the agent.
The agent’s authority is not absolute. The agent will have express authority given by the principal either orally or in writing. The agent will have the implied authority conferred by custom, inferred from the agent’s position or implied by virtue of being reasonably necessary to carry out express authority. Additionally, there are doctrines that hold the principal liable even when the agent does not have real authority. Apparent authority exists when the principal causes a third party to reasonably believe that an agent has authority when the agent does not. If the third party reasonably relies on those assurances and is harmed, the principal is estopped from denying the existence of the agency relationship. Finally, the principal may elect to ratify an agent’s actions made without authority. The agent’s authority does not last indefinitely. It may expire after the occurrence of a specified event, after a lapse of time, by mutual agreement or by termination of one party. However, it is important that the principal convey to third parties that the agency relationship has been terminated.
Employment Law
This lecture will cover various employment laws.
It is critical to understand the doctrine of “at will” employment as a baseline for this distinction. Under this doctrine, employers can fire workers for good, bad, or no reasons, and employees are likewise empowered to quit for any reason. This doctrine can be abrogated by implied or express contract between the employee and employer. And although there are some public policy exceptions, including one for whistleblowers, this doctrine gives employees and employers a lot of latitude to determine the terms of conditions of employment.
However, the 20th century has seen a number of laws that limit the reasons that an employer can fire (or take an adverse action against an employee) as well as providing minimum standards for employee safety and privacy. The Fair Labor Standards Act is one of the most significant labor laws. This law establishes a minimum wage, limits (or prohibits) child labor, and provides regulation of overtime work.
Law also protect an employee’s reasonable expectations of privacy will be taken into account in monitoring cases (though notice of monitoring will make such expectations unreasonable). The Electronic Communications Privacy Act prohibits the interception of employee communications on machines not provided by employers. And lie-detector and drug tests are similarly regulated.
The safety of employees has been an area of especial growth. State worker’s compensation laws establish procedures for compensating most workers injured on the job. Oftentimes, these laws also greatly limit the employee’s recourse against an employer for any employer negligence that may have contributed to the employee’s injuries. And Congress created the Occupational And Safety Administration (OSHA). This agency ensures that workplaces meet certain safety standards, and the agency requires employers to keep records of compliance.
The greatest laws restricting at-will employment relate to the various discrimination statutes that were passed in the wake of the Civil Rights Movement. Chief among these is Title VII of the Civil Rights Act of 1964. Broadly, this act prohibits employment discrimination on the basis of race, color, religion, national origin or gender (many of the protections to this act were offered to the disabled and elderly by the Age Discrimination in Employment Act of 1967 and the Americans with Disabilities Act of 1990). Acts are monitored by the Equal Employment Opportunity Commission. These laws prohibit both intentional and unintentional discrimination. In the case of disparate-treatment unintentional cases, for example, the plaintiff must establish a prima facie case. The elements of this are: 1) the employee is a member of a protected class; 2) he or she applied and was qualified for the job in question; 3) he or she was rejected by the employer; 4) the employer continued to seek applicants for the position with a person not in a protected class. And these statutes also prohibit sexual harassment. Finally, an employee is protected from retaliation for helping another make a claim of discrimination.
Finally, there have been numerous laws regulating unions and the relationship between unions and employers. Several laws have been passed in this area. In the earlier part of the 20th century, these laws were mostly centered around protecting unions by establishing classes of protected activity, such as strikes and boycotts by the Norris-LaGuardia Act. The National Labor Relations Act enshrined employees rights to organize and collectively bargain as well as creating the National Labor Relations Board to regulate unions. These laws also set up procedures for getting unions recognized to bargain collectively and various procedures governing collective bargaining, union elections, and strikes. The laws also define and prohibit various employer (refusing to negotiate in good faith) and union unfair labor practices (discriminating against workers not in a union).
