FALSE

A party who employs another person to act on his or her behalf is called an authority.

A principal-accessory relationship is formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.

The extent of the agent's authority in a principal-agent relationship is governed by any express agreement between the parties and implied from the circumstances of the agency.

TRUE

Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written.

In most states, a real estate broker's contract to sell real estate must be in writing.

A power of attorney is one of the most formal types of implied agency agreements.

FALSE

There are two (2) kinds of powers of attorney: 1) the express power of attorney; and 2) the implied power of attorney

A general power of attorney confers broad powers on the agent to act in any matters on the principal's behalf.

A durable power of attorney remains effective even though the principal is incapacitated.

TRUE

An agency can be formed by the conduct of the parties.

Implied authority cannot conflict with express authority or with stated limitations on express authority.

Through agency by ratification, the principal is bound to perform, and the agent is relieved of any liability for misrepresentation.

An agency arrangement must be based on more than the conduct of the parties.

Agency by estoppels arises when a principal creates the appearance of an agency that in actuality does not exist.

Where an apparent agency is established, the principal is estopped from denying the agency relationship and is bound to contracts entered into by the apparent agent while acting within the scope of the apparent agency.

If there is no agreement as to the amount of compensation to be paid the agent, the law implies a promise that the principal will pay the agent the customary fee paid in the industry.

Unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency.

Agents are generally permitted to engage in undisclosed self-dealing with the principal.

Jon hired Sarah to manage his store. Sarah negligently hit Aimee with a shopping cart, injuring her as a result. Jon is liable to the customer.

The term respondeat superior means "let the master answer."

Under common law, a principal generally is not liable for injuries caused by its agents and employees while they are on their way to or from work.

The most important factor in determining whether one who performs services for another is an independent contractor is the degree of control that the hiring party exercises over the party performing the work.

One characteristic of independent contractors is that they cannot enter into contracts on behalf of the principal.

Assume Tom hires Mike as an independent contractor "security guard" for his apartment complex, but does not perform a background search, which would have revealed Mike's past "sexual predator" convictions. If Mike attacks Kathy, a tenant, Tom would not be liable, since Mike is an independent contractor.

If the principal labels someone an "independent contractor," then that conclusively determines whether independent contractor status exists.

An agency can be designed to terminate upon the occurrence of an event that is outside the control of the agent or principal.

If an agency is terminated by agreement between the parties, the principal is not legally required to give any third party notice of the termination.

What is the primary purpose of an agent in a principal-agent relationship?

A) protect the principal from legal liability

B) conduct business on behalf of the principal

C) enter into contracts with the principal

D) operate as a partner with the principal

E) maintain the principal's status quo

B) conduct business on behalf of the principal

Someone who is authorized to act on behalf of another is generally known as a(n):

A) agent.

B) independent contractor.

C) employee.

D) surety.

E) principal.

A) agent.

A party who employs another person to act on his or her behalf is called a(n):

A) agent.

B) independent contractor.

C) employee.

D) surety.

E) principal.

E) principal.

Which of the following is not a type of agency?

A) express agency

B) implied agency

C) apparent agency

D) agency by ratification

E) agency by certification

E) agency by certification

An express agency requires:

A) a written agreement between the principal and the agent.

B) an oral or written agreement between the principal and the agent.

C) no agreement, if the conduct indicates an implied agreement.

D) an ongoing arrangement for a reasonable period of time.

E) an agreement that the agent is exclusively responsible for the principal's business and/or personal affairs.

B) an oral or written agreement between the principal and the agent.

Which of the following is created based on a specific agreement?

A) implied agency

B) express agency

C) apparent agency

D) agency by necessity

E) agency by ratification

B) express agency

Authority that a third party may reasonably assume the agent possesses is called:

A) express authority.

B) implied authority.

C) apparent authority.

D) incidental authority.

E) equitable authority.

C) apparent authority.

Which of the following agency agreements gives an agent the broadest range of powers?

A) a general power of attorney

B) a special power of attorney

C) a general attorney-in-fact

D) a special attorney-in-fact

E) an implied power of attorney

A) a general power of attorney

A ________ power of attorney limits the agent to those acts specifically enumerated by the agreement.

A) limited

B) qualified

C) special

D) conditional

E) truncated

C) special

In a power of attorney relationship, the agent is called the:

A) attorney-in-fact.

B) attorney-in-equity.

C) attorney-at-law.

D) third party beneficiary.

E) incidental beneficiary.

A) attorney-in-fact.

A(n) ________ power of attorney remains effective even though the principal is incapacitated.

A) permanent

B) absolute

C) unconditional

D) durable

E) general

D) durable

When an express agency agreement does not provide enough detailed agency powers to cover all contingent situations, what type of authority does an agent have to act in the event of an emergency that is not specifically covered by the agency agreement?

A) express agency

B) apparent agency

C) agency by estoppel

D) incidental authority

E) apparent authority

D) incidental authority

When a principal creates the appearance of an agency that does not actually exist, which kind of agency is established?

A) apparent authority

B) inherent authority

C) express authority

D) implied authority

E) equitable authority

A) apparent authority

The fact that Basil hires employees to work at a cheese shop he manages, despite the fact that his employment agreement with the store owner says nothing about him being able to hire employees, is an example of:

A) port authority.

B) apparent authority.

C) express authority.

D) implied authority.

E) ratification authority.

D) implied authority.

An agent negotiates a contract with a third party for which the agent did not have express authority. Which of the following is true?

A) The principal can never be held liable on the contract, because the agent exceeded his authority.

B) The principal can be liable on the contract, but only if the agent had implied authority to enter into the contract.

C) Principal can b liable on contract, but only if apparent authority's present.

D) The principal may not ratify the contract.

E) Principal may ratify the contract, or the principal may be held responsible if the existence of either implied or apparent authority can be established.

E) The principal may ratify the contract, or the principal may be held responsible if the existence of either implied or apparent authority can be established.

A principal owes a duty to ________ the agent for any losses the agent suffers because of the principal's conduct.

A) exemplify

B) certify

C) qualify

D) indemnify

E) ratify

D) indemnify

The legal rule of ________ knowledge means that the principal is assumed to know what the agent knows.

A) attributed

B) imputed

C) asserted

D) implied

E) transferred

B) imputed

The duty of loyalty is generally a duty of:

A) the principal.

B) the agent.

C) both the principal and agent.

D) neither the principal nor the agent.

E) the principal only, if the agent is a gratuitous agent.

B) the agent.

In an agency relationship, which of the following is not one of the common ways in which the duty of loyalty can be breached?

A) self-dealing

B) dual agency

C) usurping an opportunity.

D) using general knowledge

E) misusing confidential information

D) using general knowledge

What distinguishes the duties of reimbursement and indemnification?

A) Reimbursement is an agent's duty, while indemnification is a principal's duty.

B) Reimbursement is a principal's duty, while indemnification is an agent's duty.

C) Reimbursement relates to expenses incurred by the agent that were authorized by the principal, within the scope of the agency, and necessary to discharge the agent's duties in carrying out the agency, while indemnification typically relates to losses suffered by the agent because of the principal's misconduct.

D) Reimbursement relates to third parties, while indemnification relates to the principal.

E) Reimbursement applies only to actions that were within the scope of the agency, while indemnification relates to all actions of the agent.

C) Reimbursement relates to expenses incurred by the agent that were authorized by the principal, within the scope of the agency, and necessary to discharge the agent's duties in carrying out the agency, while indemnification typically relates to losses suffered by the agent because of the principal's misconduct.

A principal has a duty of compensation:

A) in all agency arrangements.

B) only in agency arrangements that expressly provide for compensation.

C) in all agency arrangements, except for "gratuitous" agency arrangements.

D) to pay the agent before he or she performs agency duties.

E) to pay the agent, even where the agent failed to produce the required result under a contingency fee agreement.

C) in all agency arrangements, except for "gratuitous" agency arrangements.

Which of the following is not a duty that the principal owes to the agent in an agency relationship?

A) compensation

B) reimbursement

C) obedience

D) cooperation

E) indemnification

C) obedience

All of the following are duties of the agent to the principal except:

A) loyalty.

B) notification.

C) performance.

D) indemnification.

E) accountability.

D) indemnification.

 ________ agency occurs when an agent acts for two (2) or more different principals in the same transaction.

A) Bilateral

B) Mutual

C) Dual

D) Bifurcated

E) Common

C) Dual

An agent owes a ________ duty not to act adversely to the interests of the principal.

A) qualified

B) conditional

C) fiduciary

D) emissary

E) eleemosynary

C) fiduciary

What is the tort liability of an agent if the tort was committed within the "course and scope" of the agency?

A) The agent is released from liability.

B) The agent and the principal will be held equally liable.

C) The agent is liable for his or her own tortuous conduct.

D) The agent will be liable, but only if the principal is unable to pay the victim's damages.

E) The principal can assert the contributory negligence defense.

C) The agent is liable for his or her own tortuous conduct.

Generally, which of the following is true about the liability of a principal for the tort of an agent, and the liability of an agent for the tort of a principal?

A) A principal is not liable for an agent's tort, and an agent is not liable for a principal's tort.

B) A principal has greater liability for an agent's tort than an agent has for a principal's tort.

C) An agent has greater liability for a principal's tort than a principal has for an agent's tort.

D) A principal and an agent have approximately the same degree of liability for each other's tort.

E) A principal is never liable for an agent's tort.

B) A principal has greater liability for an agent's tort than an agent has for a principal's tort.

Under agency law, the legal significance of a "frolic and detour" is that:

A) an employee can be liable to an employer if the frolic and detour is not authorized.

B) it can determine if an employee is liable on a contract made on the employer's behalf.

C) it can determine whether someone working for a business is an employee or an independent contractor.

D) it can determine whether an employer is liable for the negligence of an employee.

E) it can determine whether an employee is liable for torts he commits on the job.

D) it can determine whether an employer is liable for the negligence of an employee.

The "motivation" test and the "work-related" test are used to determine whether:

A) an employer is responsible for the intentional tort of an employee.

B) an employer is responsible for the negligence of an employee.

C) an employee is responsible for a contract entered into on behalf of the employer.

D) an employee is responsible for the tort he commits while on the job.

E) an employee is responsible for negligence committed while on the job.

A) an employer is responsible for the intentional tort of an employee.

Which of the following is true about the tests used to determine whether a principal is responsible for the intentional torts of his agent?

A) The "work-related" test and the "motivation" test are two names for the same test.

B) In most states, the plaintiff can choose which test to use.

C) Application of the "work-related" test will result in employer liability more frequently than through use of the "motivation" test.

D) Under either test, the plaintiff must also prove that the agency was fully disclosed in order to recover.

E) Application of the "motivation" test will result in employer liability more frequently than through use of the "work-related" test.

C) Application of the "work-related" test will result in employer liability more frequently than through use of the "motivation" test.

The degree to which an agent discloses the agency relationship affects the contract liability of:

A) the agent.

B) the principal.

C) both the agent and the principal.

D) neither the agent nor the principal.

E) the agent, but only if the third party either knew or should have known of the agency.

A) the agent.

Why is it legally permissible for a plaintiff to hold an agent liable on a contract when the existence of the agency arrangement was not disclosed?

A) so that the outcome in a contract situation is the same as that for a tort

B) to discourage the use of undisclosed agency arrangements

C) to offset the fraud frequently present in such a situation

D) so a third party can rely exclusively on the reputation of the agent when entering into such an agreement

E) to ensure that the principal fulfills its obligations under contracts negotiated by authorized agents

D) so a third party can rely exclusively on the reputation of the agent when entering into such an agreement

Which of the following is true regarding a situation where an agent exceeds the scope of his or her authority in entering into a contract?

A) The agent would never be held liable to the third party.

B) The agent would always be held liable to the third party.

C) The principal would always be held liable to the third party.

D) The principal would never be held liable to the third party.

E) The principal is not liable on the contract unless the principal ratifies it.

E) The principal is not liable on the contract unless the principal ratifies it.

Compared to an employee, an independent contractor is characterized by:

A) not being paid as much for the work performed.

B) a lack of liability for his or her own actions.

C) more freedom to perform designated work in a manner he or she deems appropriate.

D) less ability to hire others for assistance.

E) more control exercised by the principal.

C) more freedom to perform designated work in a manner he or she deems appropriate.

Which of the following is true about determining whether someone working for another person is an independent contractor or an employee?

A) The classification of the person doing the work depends on that person's job title.

B) The classification of the person doing the work depends on whether the parties to the arrangement consider the person doing the work to be an employee or an independent contractor.

C) The classification of the person doing the work depends on whether the person is also acting as an agent.

D) The classification of the person doing the work depends on a number of factors, with no single factor being any more significant that the others.

E) The classification of the person doing the work depends on a number of factors, with the most important factor being the degree of control over that person's work exercised by the person who is paying for the work.

E) The classification of the person doing the work depends on a number of factors, with the most important factor being the degree of control over that person's work exercised by the person who is paying for the work.

The crucial factor in determining whether someone is an independent contractor or an employee is the ________.

A) amount of time the worker has been associated with the principal

B) degree of control the principal has over the worker

C) degree of skill necessary to complete the assigned task

D) the method of paying the worker, whether by time or by job

E) job title the principal assigns to the worker

B) degree of control the principal has over the worker

Principals cannot avoid liability for ________ activities that they assign to independent contractors.

A) any

B) professional

C) non-professional

D) inherently dangerous

E) express

D) inherently dangerous

Which of the following does not automatically terminate an agency?

A) bankruptcy of the agent

B) bankruptcy of the principal

C) supervening illegality

D) death of the agent

E) death of the principal

A) bankruptcy of the agent

Which of the following is not true regarding notification of agency termination?

A) Termination of an agency without appropriate notice to third parties does not extinguish an agent's actual authority to act on the principal's behalf.

B) If proper notification of agency termination is not given to a third party, the agent still has apparent authority to bind the principal to contracts with third parties.

C) Direct notice of agency termination is often in the form of a letter.

D) Direct notice of agency termination must be given to all persons with whom the agent dealt.

E) Direct or constructive notice of termination must be given to all third parties who have knowledge of the agency, but with whom the agent has not dealt.

A) Termination of an agency without appropriate notice to third parties does not extinguish an agent's actual authority to act on the principal's behalf.

A principal gives an agent express authority to "do what it takes to get my car running right." The authority that the agent has to enter into contracts for the purchase of auto parts is:

A) apparent authority

B) authority by estoppel.

C) inherent authority.

D) express authority.

E) implied authority.

E) implied authority.

The fact that Holly may hire employees to work at a lingerie shop that she manages, despite the fact that her employment agreement with the owner says nothing about Holly's right to hire employees, is an example of:

A) express authority.

B) implied authority.

C) apparent authority.

D) ratification authority.

E) intentional authority.

B) implied authority.

Sandy, an old car enthusiast, has been hired by Pat to find and buy a fully-restored 1955 Ford Thunderbird for Pat. Sandy finds such a car in pristine condition, and she would actually like to purchase the Thunderbird for herself. She tells Pat about the car, but Pat declines to purchase the car because it has an automatic transmission. Sandy then buys this car for herself. What has Sandy done in violation of her duty of loyalty?

A) Sandy has usurped an opportunity.

B) Sandy has not violated her duty of loyalty to Pat.

C) Sandy has engaged in self-dealing

D) Sandy has competed with the principal.

E) Sandy has misused confidential information.

B) Sandy has not violated her duty of loyalty to Pat.

Bob sells real estate in Knoxville, Tennessee for a real estate sales company. One afternoon, he shows a client two homes in Knoxville, and the client tells Bob that there is a great cabin for sale in Gatlinburg, about 40 miles from Knoxville. Bob drops the client off in Knoxville and travels to Gatlinburg to check out this property, because he would like to purchase a place for his family to "get away" on weekends. As he is entering Gatlinburg, he accidentally hits and injures a pedestrian. In determining whether Bob's employer can be held liable, a court will:

A) apply the "work-related" test and find the employer liable.

B) not find the employer liable under the "coming and going" rule.

C) use the "frolic and detour" rule to determine the employer's liability.

D) determine the outcome based on the degree of disclosure of the agency relationship.

E) apply the "motivation" test, and find the employer liable.

C) use the "frolic and detour" rule to determine the employer's liability.

As the Wyoming Tetons are playing the Missouri Ozarks in a baseball game, a fan who is sitting near the Tetons' dugout starts yelling at Mickey Macho, one of the Tetons' relief pitchers, telling him that his pink minivan makes him look like a suburban family man. Macho, because he feels insulted, picks up a nearby bench and throws it at the fan, who is injured as a result. The fan then sues the Tetons. The fan could recover from the Tetons:

A) under the "work-related" test, but not under the "motivation" test.

B) under the "motivation" test, but not under the "work-related" test.

C) under either the "motivation" or the "work-related" test.

D) under neither the "work-related" test nor the "motivation" test.

E) under the "work-related" test, but only if the fan can prove that the fan did not assume the risk.

A) under the "work-related" test, but not under the "motivation" test.

Pedro hires Andrea to negotiate the purchase of a sailboat for Pedro. Andrea decides to buy a sailboat from Sally that meets Pedro's specifications. Andrea tells Sally that the purchase is really being made by Pedro, and Andrea and Sally sign a written contract, with Andrea signing on Pedro's behalf. Based on this situation:

A) Pedro is not liable on this contract, but Andrea is liable.

B) neither Andrea nor Pedro can be held liable on this contract.

C) Andrea is not liable on this contract, but Pedro is liable.

D) either Andrea or Pedro could be held liable on this contract.

E) Pedro is liable on the contract, but only if Andrea is insolvent.

C) Andrea is not liable on this contract, but Pedro is liable.

Donna contracted with Michael's Drug Corporation to buy sedatives on behalf of Clark, a dentist. Clark instructed Donna to use Donna's own name, and to not disclose to Michael's that she was working on Clark's behalf. If Donna signs the contract in her name only and Clark refuses to honor it:

A) Donna is not liable on the contract, because she only acted as an agent.

B) Donna is liable on the contract, but she may sue Clark for indemnification.

C) Donna is liable on the contract, but she may sue Clark for reimbursement.

D) Donna is liable on the contract, but she may sue Clark for compensation.

E) Clark has no liability to anyone, since his name was never disclosed.

B) Donna is liable on the contract, but she may sue Clark for indemnification.

John is hired at minimum wage in a fast-food restaurant. John works at the counter taking customer orders, accepting payment, and giving the orders to the customers. John must work in accordance with a detailed procedures manual. John is:

A) an independent contractor, but not an agent.

B) an employee, but not an agent.

C) an independent contractor, as well as an agent.

D) an employee, as well as an agent.

E) an independent contractor and an agent.

D) an employee, as well as an agent.

Mike, a league official, calls Beth, asking her to referee a soccer game. Beth is not obligated to serve as a game referee. If she accepts the assignment, Mike will tell her the exact start time of the game, the fact that she must wear an approved uniform, and the amount of compensation she will be paid for serving as referee. Once on the field, Beth is in complete control of fulfilling her responsibilities. Beth is considered an:

A) agent in a undisclosed agency.

B) agent in a partially disclosed agency.

C) agent in a disclosed agency.

D) independent contractor.

E) Incidental contractor.

D) independent contractor.

Principal has entered into a six-month contract during which Agent will sell Principal's products on a commission basis. Although Agent is complying with all terms of the agreement, during the third month Principal tells Agent she is no longer is authorized to sell his products, and will receive no further commissions if she does. Which of the following is true?

A) Agent continues to have a duty to sell, because the six-month period has not yet expired.

B) Principal has the power, but not the right, to terminate the agency.

C) Principal has the right, but not the power, to terminate the agency.

D) Principal has both the right and the power to terminate the agency.

E) Principal has neither the right nor the power to terminate the agency.

B) Principal has the power, but not the right, to terminate the agency.

Why can an apparent agency be created only through the representations of the principal, but not those of the apparent agent?

From the standpoint of fairness, if a principal creates a situation where it would be reasonable for a third person to assume that an agent has the authority to act on her behalf, the principal should be held liable on a contract entered into by the apparent agent with the third party. If the principal, however, had no involvement in creating apparent authority, the principal should not be held liable on a contract entered into by the apparent agent with the third party.

Why would an agent not disclose the existence and identity of the principal when negotiating a contract, given that doing so would avoid agent liability on the contract? What should an agent do when the principal does not want to be disclosed?

There are many business situations where it is in the principal's interest for his or her identity to remain unknown. Often, if the principal has "deep pockets" a third party will alter a price to get more money. Sometimes third parties choose not to deal with certain people, so to effect a deal, identities may need to be withheld. An agent should be aware of the risk of personal liability, and factor that into the amount of compensation charged. In some situations, the agent might be able to negotiate a liability release clause into contracts with third parties.

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 sell the home for as low as $2,100,000, but that she should try to obtain the highest possible price, without disclosing the fact that he was willing to accept $2,100,000. 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 afford to spend no 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's his bottom price." Anne then proposed to her friend that they "pool their resources," with Anne fronting some money through her friend, but not having Anne's name on the contract as a purchaser. Before they could finalize 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?

Anne at least started to violate the duty of loyalty by self-dealing. Anne's disclosure of Peter's "bottom-dollar" price was also a violation of her agency duties, even though it appeared that her friend could not have bought the property for Peter's asking price. In attempting to represent the interests of buyer and seller simultaneously, Anne improperly acted as a dual agent. As a dual agent, Peter could claim all compensation he gave to Anne.

Adam was a factory sales agent for the Wave Warrior, a line of personal watercraft. His territory was the Atlantic coast of Florida, and he sold to retail dealers. One Friday morning Adam made one sales call, but at 10:00 a.m., he headed to Tampa for the weekend. His boss was unaware of his early departure. Adam took the most powerful Wave Warrior with him. Even though he was outside his territory, he put the craft in the water and gave numerous sales demonstrations on Friday afternoon near Tampa. He made two sales, and arranged for delivery to be made through a Miami dealer, one of his favorites in his territory. Adam was not supposed to make sales in this manner, but he realized it was unlikely that his employer would find out. After his second sale, he took the buyer on a ride to show some of the craft's capabilities, and struck a swimmer near the beach, injuring the swimmer. Discuss the liability of Adam and his employer for the injuries.

Assuming that Adam was negligent, he would be liable. The employer's liability would depend on the factual question of whether Adam was acting within the scope of his employment when the injury occurred. One issue is whether Adam was on a "frolic and detour" at the time of the accident.

Susan hired an agent, Ricardo, to buy food for her restaurant. Susan told the manager of her supplier, Good Food, that Ricardo could buy supplies on her account. Unfortunately, Susan caught Ricardo stealing cash from the register, and fired him immediately. Susan took no steps to notify Good Food that Ricardo no longer had the authority to purchase food on her account. After he was fired, Ricardo went to Good Food and purchased $1,000 of food in Susan's name. Ricardo sold the food to his friends in order to acquire money to leave town. Is Susan liable to Good Food?

Yes, Susan is liable to Good Food. She had an obligation to notify Good Food that Ricardo was no longer authorized to purchase food using her account. Susan's failure to do so results in her contractual liability.

Mary has been hired to write courses for a Web-based training organization. Mary works at the organization's corporate office. She is given content guidelines, a contract for each course that she writes, and she is paid a flat fee upon satisfactory completion of the course. It can take anywhere from two weeks to six weeks to complete a course. The organization wants its affiliated contractors to work in its corporate office with a regular forty-hour workweek, unless they need to be elsewhere in order to conduct content-related research. The organization provides a computer to Mary. Mary also is able to use the services of other employees at the organization for the purposes of word processing and editing. Is Mary an employee, or an independent contractor?

Mary is probably an independent contractor, because she is paid on an irregular basis upon the completion of each course. It is not quite clear how much control is exercised over how she performs her work, but it appears that she has considerable freedom, provided she stays within course guidelines. The requirement to be present during the workweek, the availability of the services of other employees, and the availability of a computer would weigh somewhat in favor of Mary being treated as an employee. Ultimately, the "independent contractor versus employee" determination is a factual determination for the court to make.

Kathy owns an apartment building on the edge of a densely-populated city. It has become dilapidated. It would be more expensive to renovate the existing building than to tear it down and rebuild, so she hires the Big Boom Demolition Company to implode the building. Kathy, who knows nothing about demolitions, simply tells Big Boom that she wants the demolition completed by August 1. She will be on vacation in Japan at the time, and will return on August 8. Mike, who has twenty-one years of demolition experience and is the manager of Big Boom, secured the proper governmental permits, and set the explosive charges. On August 1, at the time allowed in the permit, the explosives are detonated. Although barriers were set up keeping the public away for a radius of one-half mile in all directions, the debris scattered over a three-quarter mile radius, harming several people. This was because Mike used more dynamite than was necessary. What are the relationships of the parties, and who is liable for the injuries?

Kathy is a principal, and Big Boom is an independent contractor. Big Boom is not supervised or controlled, performs a specialized task that requires particular expertise, and is not a regular employee working on a per-job basis; instead, the company is paid per job, and supplies its own tools. Nevertheless, Kathy will be liable for the independent contractor Big Boom's negligence, because Big Boom was hired to perform an inherently dangerous activity for which a principal cannot escape or mitigate liability.

Ann has contracted to be Paul's agent for the sale of Paul's home. The contract provides that the duration of this agency is 120 days. Within the first week, Ann has found a potential buyer and is involved in negotiations. The following week, Paul notifies Ann that he is terminating the arrangement, but Ann proceeds to negotiate a sale with the potential buyer. These negotiations became very tense, and Ann became frustrated with the buyer's unwillingness to move on the price and hit the buyer in the face, injuring her. Because the buyer liked the home very much, Ann and the buyer did negotiate a contract. Discuss the legal issues in this situation.

Paul had the power to terminate the agency; thus, Ann no longer had any authority, and the sales contract is not valid. Because Paul did not have the right to terminate the agency, Ann could recover damages for breach of contract, most likely the amount of her lost commission. The buyer could recover any damages from Ann caused by Ann's false representation that she had authority. Paul terminated Ann's actual authority to act on his behalf; however, since there is no indication that he gave notice of termination to the buyer, Ann still had apparent authority to bind him. With respect to the intentional tort, Ann would be liable, because everyone is liable for his or her own tortuous conduct. It is unlikely that Paul would be held liable for the intentional tort because Ann is an independent contractor, selling a home is not an inherently dangerous activity that could not be delegated, and there is no indication that Paul was negligent in contracting with Ann.