Exam 30: Liability of Principals, Agents, and Independent Contractors

Philip wanted to buy a new car.Philip did not know much about cars,but his 17-year-old daughter Andrea did because she had recently started driving and had drooled over new cars since she was 12 in anticipation of the day she would start driving.Andrea said she would go out and make the purchase on Philip's behalf if he would let her have the new car once a week.Philip agreed because he figured she'd probably manage to talk him out of any car at least once a week.Philip told Andrea,"I don't want anything fancy.Something like a Ford Pinto should be sufficient." "Oh,Dad!" Andrea said,"They quit making Pintos in 1980.You know you don't want anything that small anyway.You even complained about the Taurus being too small." Philip responded,"That's right,I guess.But,I don't need anything with all that power equipment and fancy stereos.Just get me a good,basic,comfortable car that isn't too small." "I can do that," responded Andrea."I'll find you the best car for your wants and needs." "It's a deal," said Philip. Andrea shopped around and ended up at a Pontiac dealer.Throughout the entire experience,she kept thinking that her dad needed a more sporty image.She was tempted to get him a Trans Am but thought this might be too much.Because she knew he wouldn't be comfortable in a small car,she decided on a full-size Bonneville sedan.After explaining to the salesperson that this car would be for her father,the salesperson talked Andrea into the sport model,which had a more powerful engine,special wheels,and suspension. Philip was initially upset with this choice,but after Andrea correctly explained that the sport model was only about $1,500 extra and Philip cooled off and started driving the car.Six weeks later he returned the car to the dealer,explaining that his daughter was supposed to buy a basic model and the sport suspension on this car rode too roughly. 1.Can the dealer hold Philip to the contract? Give all reasons why or why not. 2.Can the dealer hold Andrea to the contract? Give all reasons why or why not.

The basic rule for whether the principal is liable for negligence of an agent is whether the agent intended to commit the tort.

An undisclosed agency exists where the third party is aware that the party he is dealing with is an agent,but does not know the identity of the principal.

An agent's competing with the principal is generally a breach of the duty of:

A manufacturer of computer disk drives has contracted with you for you to be its agent in finding customers for their products.You arrange (without the principal's knowledge)a sale of the disk drives to a computer assembly business that you and your sister own.You have:

An agent who wishes to avoid liability on contracts he enters into on behalf of the principal should make sure that the principal is:

Why is the agent able to be held liable on a contract when the existence of the agency arrangement was not disclosed?

Billy owns a bike shop in a coastal California town.His shop sells and repairs bikes.One of his employees was repairing a bike with one of those pesky intermittent problems that would never occur when the repair technician was around.The customer said that the gears periodically would not shift properly.The employee took the bike out for a test ride hoping to replicate the problem.The problem did not appear.Because it was approaching noon,the employee decided to ride the bike home to have lunch.On the way back to the shop,the employee hit a small child and injured her.Discuss the liability of the employee and Billy's bike shop for the injuries to the child.

An employee of Slap-em-up Construction Company negligently drops some materials and injures a pedestrian on the sidewalk below.The liability of the employer to the injured pedestrian depends on:

Which of the following is not one of the common ways in which the duty of loyalty can be breached?

Anne was hired by Peter to sell a condominium in San Francisco.The asking price for the modest two-bedroom unit was $2,300,000.Peter told Anne he would go as low as $2,100,000,but no lower,but that she should try to get as high a price as possible.If he couldn't get that much for it,he said he would use it as rental property.A good friend of Anne's was in the market for a two-bedroom condominium in San Francisco.In fact,this friend had come to Anne to help her find a place and negotiate for it.Anne's friend said that she could absolutely not spend more than $2,000,000.When Peter hired Anne to sell his condominium,Anne told her friend about it and the asking price.Anne told her friend,"Don't even bother.He won't go below $2,100,000,that is his bottom price." Anne's friend accepted that.Anne then proposed to her friend that they go in together,with Anne fronting some money through her friend,but not having Anne's name on the contract as purchaser.Before they could work out the details,Anne's friend received a raise and decided to buy the condominium.Anne negotiated a price of $2,100,000 on Peter's behalf.Peter later found out that Anne had told her friend about his bottom price,and about the plan for Anne to help buy the house.What claims,if any,does Peter have?

A principal is not liable for injuries caused by independent contractors.