Chapter 32 Part 1 - Lecture Outline
• Agency Law • Employer Responsible for Wrongful
Acts of Employees
• Impact in Other Areas of Law • Respondeat Superior
• Broad or Narrow Authority to Act • Independent Contractor
• Principal – Agent Examples • Employee Example
• The Basics • Independent Contractor Example
• Must be Consensual Relationship
• Implied by Conduct
• Principal in Control
• Identifying the Principal
Agency Law
Principal Authorizes Agent to Perform Certain Acts on Principal’s Behalf
Often Involving Third Party
Agent’s Actions With Third Parties Binding on Principal
Agency Law
Agency Law Impacts Many Different Aspects of Law
• Corporations – Corporations (Non-Humans) Act Through Agents (I.E., Board of Directors,
Officers)
• Tort Law – Employers Act Through Employees - Responsible for Torts/Wrongful Acts of
Employees If Employee Acting Within Scope of Employment
• Contract Law – Agent Can Bind Principal to Contracts with Third Parties
• Elder Law – Elders Often Name Close Relatives To Act As Their Agent When They Are
Unable to Do So On Their Own
Agency
One Person (Agent) Acts On Behalf of Another (Principal)
The Relationship Takes Many Forms and Can Involve
Broad or Narrow Authority Granted to the Agent to Act
on Behalf of the Principal. It is a Fiduciary Relationship
Whereby In Executing His or Her Authority to Act, the
Agent Performs In the Best Interests of the Principal.
Dictionary definition fiduciary relationship
a relationship in which one party places special trust,
confidence, and reliance in and is influenced by another
who has a fiduciary duty to act for the benefit of the
party. — called also confidential relationship, fiduciary
relation.
Agency – Must Have a Principal and an Agent
Agent Principal
Attorney Client
Attorney Represents Client – Attorney Acting As Agent of Client
Agency – Must Have a Principal and an Agent
Agent Principal
Financial Advisor Client
Financial Advisor Acts on Behalf of Client
Principal –
Agent Basics
•Agreement – Principal and Agent – Consensual –
Consideration Unnecessary (Example: Running an
Errand For a Friend – In Writing, Oral Or Implied by
Conduct
•Subject to Control of Principal – Principal Dictates
Parameters of Agency and In Some Instances How to
Perform Actions Required
•On Behalf of Principal – Actions of Agent Made On
Behalf of Principal – Principal Benefits From Agent’s
Actions
•Must Be For Legal Purpose – Cannot be for Commission
of Crime
Agency Relationship – Consensual Agreement
In Writing – Example – Retainer Orally – Example – One Neighbor Asks Other
Agreement With Attorney to Neighbor to Sign and Accept Delivery of
Represent Client In Particular Package
Matter
Agency
Relationship
Consensual
Agreement Implied
Every Week – Neighbor Purchases Groceries
For Another Neighbor (Principal) – Principal
Leaves $100 and Grocery List on Table In
Backyard – Agency Relationship Implied By
Conduct.
Agency Relationship – Subject to Control of Principal
Attorney Hired to Represent Neighbor to Sign For Packages to Hold For
Client In Negligence Case Against Other Neighbor – Not to Open Package
the Plumber Not In IRS Audit. and/or to Use Contents
Agency Relationship – Subject to Control of Principal
• Client Authorizes Attorney to Settle
Case – For How Much
• Client Authorizes Attorney to Hire
Expert Witnesses
• If Attorney Charges Hourly Rate –
Client May Limit Amount of Hours
Attorney – Agent My expert testimony
is!!!
Client – Principal
File Complaint – Initiate Lawsuit
on Client’s Behalf
Agency Relationship – Identifying Who Principal Is
The Principal Is the Party to Whom the Agent’s Actions Benefit.
Damage Award
The Client – Principal Received A Damage Award As a Result of Attorney – Agent’s
Representation.
The Neighbor – Principal Received Packages Delivered to and Signed For by Neighbor - Agent
Agency Relationship – Who is the Principal
Parent
High School Teacher
Parent is Aware That High School Teacher Is Installing a Fence in a School Yard – At School
Meeting, Parent Asks Teacher If He Had Enough Tools. High School Teacher Says No. Parent
Loans the Teacher Her Chain Saw. High School Teacher Negligently Cuts Through Home
Owner’s Utility Line Adjacent to School. Is the Parent the Principal? Have to Ask Whether
She Received Any Benefit from High School Teacher’s Actions. Was He Acting On Behalf of
Her?
Agency Relationship – Who is the Principal
Parent
High School Teacher
• High School Teacher – Agent – Acting on Behalf of ?
• Is Parent the Principal?
• Is School the Principal?
Agency Relationship – Employer Responsible For Wrongful Actions
of Employee (Torts) – Respondeat Superior
Employer Responsible
For Torts Committed By
Employee If
Committed In Scope of
Employment –
Respondeat Superior
Issue: Who Is
Employee?
Employee – Employer Controls
Employee’s Schedule, Job Description and Independent Contractor (Architect) – Not an
Provides Work Tools/Supplies/Materials Employee – Controls Own Schedule,
Provides Own Work Necessities – Not
Supervised by Person or Entity Who Hired
Agency Relationship – Employer – Employee Relationship –
Respondeat Superior
Waiter Negligently Spilling Hot Coffee on Diner
Waiter Agent in Capacity of Employee of Restaurant
Because:
Restaurant Hired Waiter to Serve Diners
Restaurant Generates Revenues From Diners
Waiter Negligently Spilled Coffee While Serving
Diners (Within Scope of Employment)
Result:
Restaurant Responsible for Injuries of Diners
Employee Also Responsible for Injuries of Diners
Because Committed Tort
Diner Likely to Go After Restaurant
Agency Relationship
Independent
Contractor
•Plumber Hired by Restaurant to Fix Leaking Dishwasher
•Plumber Independent Contractor Not An Employee
•Plumber Agent of Restaurant
•Restaurant Does Not Control How Plumber Performs
•If During Course of Fixing Sink – Plumber Acts Negligently and
Causes Damage to Restaurant Below – Restaurant That Hired
Plumber Not Responsible
