Exam 14: Agency and the Employment Relationship

An employee (servant) who works for an employer (master):

Agency relationships must be evidenced by a written contract.

If an American company sends an American employee to work in its office in France, the employee may be under French employment law.

Express authority consists of the agent's:

Fiduciary duties apply to principals; agents have only non-fiduciary duties.

An auctioneer who sells goods is likely an agent and independent contractor.

Fact Pattern 14-1 Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. -Refer to Fact Pattern 14-1. Meg enters into a contract with the office supply vendor in Emile's name. Because the office supply vendor is a friend, Emile has always negotiated these contracts and he is angry with Meg when she tells him that she signed the contract. In this case, Emile is:

An independent contractor is not an employee of the person who hires her.

In her relations with her principal, an agent must meet the "ordinary standard of conduct" imposed on people engaged in business dealings.

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his dismissal breached an implied contract to be terminated only for cause.

Express or actual authority may only be created by written instruction or written contract.

An agency through operation of law is established:

An agency is created when an agent agrees to act for, or in place of, the:

In Bearden v. Wardley Corp., where Gritton's real estate agent cheated her in a deal, the court held that Wardley, Gritton's employer, violated its ____ to Bearden:

An agent may not legally bind a principal to contracts without the principal agreeing to each contract.

If either the principal or agent dies, the agency relationship is suspended until replacements continue the agency's purpose.

In Cove Management v. AFLAC, Galgano, an independent contractor who solicited insurance business for AFLAC, rented office space from Cove under AFLAC's name. When Galgano defaulted on payments, Cove sued AFLAC contending that Galgano was its agent when he rented the office, so AFLAC was liable. The appeals court held that AFLAC:

When a principal creates an impression of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal, the agent is said to have:

When liability is imposed on the principal for the unauthorized torts of an agent, it is called:

The duty of ____ requires an agent to place the principal's interests before the agent's personal interests or those of any third party: