BLS 112 Chapter 32: Chapter 32

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Business Law and Society
BLS 112
S U N Y Ulster

Chapter 32: Agency Formation & Duties I. Agency Relationships  In Principal-Agent relationship, parties agree that agent acts on behalf & instead of rd principal in negotiating & transacting business with 3 parties  Fiduciary  heart of agency law o [noun] duty to act primarily for another’s benefit o [adj] fiduciary relationship involves trust & confidence  Employer-Employee Relationship o Employees who deal with 3 rdparties act as agents of employers o Employment laws apply only to employer-employee relationship ▪ Social Security, Worker’s Compensation, Unemployment, etc.  Employee-Independent Contractor Relationship o Independent Contractor: not employees; those who hire them have no control over details of work performance o May or may not involve agency relationship  Determination of Employee Status o Criteria used by COURTS ▪ How much control does employer exercise over details of work? • Considerable control  employee status ▪ Is the worker engaged in occupation/business distinct from employer • Yes  independent-contractor ▪ Is work usually done under employer’s direction or by specialist without supervision? • Under employer direction  employee status ▪ Does the employer supply tools at place of work? • Yes  employee status ▪ For how long is the person employed? • Long period of time  employee status ▪ What is the method of payment? (time period vs. job completion) • Time period  employee status ▪ What degree of skill is required of the worker? • Great degree of skill  independent contractor o Disputes involving employment law ▪ Workers benefit from employee status (more protection) o Disputes involving tort liability ▪ Can effect employer’s liability for worker’s actions o Criteria used by IRS ▪ Most important factor = degree of control business has over worker o Employee Status & “Works for Hire” ▪ Copyright Act: any copyrighted work created by employee within scope of employment at the request of employer is a “work for hire” • Employer owns copyright to work II. Formation of the Agency Relationship - Agency relationships = consensual  voluntary consent & agreement by both parties o A person must have contractual capacity to be principal o Any person can be agent (including minors) o Relationship created for any legal purpose ▪ Illegal = unenforceable - Agency by Agreement o Agency Agreement can be in form of: ▪ Express written contract ▪ Oral Agreement ▪ Implied by conduct - Agency by Ratification o Ratification  principal approves or affirms a contract by word or a
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