Fiduciary relationship

(owe special obligations to one another)

results from the manifestation of concsent by one person to another that the other shall act in his, or her behald and the subject to his or her control and consent by the other so to act.

Employees: (Employees who deal with third parties are normally deemed to be agents of their employers.)

Details of the performance controlled by the principle

-Have the power to represent and bind principle

-Social security, witholding laws, safety regulations apply

Independent contractors

-details of performance controlled by the agen

-may or may not be able to bind principle - depends on scope of services

-statuetes do NOT apply (SS, witholding laws, safety regulations)

-responsible for own liability, no witholding taxes for them

*independent contractors are preferable but if your company grows you will want employees

How to determine Employee/Independent Contractors

(court must look at all facts/circumstances of relationship)

How do we determine

-How much control does principle have over details of work? (Most important factor)

-Is worker engaged in an occupation distinct from principle? (If so, INDEPENDENT CONTRACTOR)

-Is work done under principle's direction or by a specialist without supervison? (Principle=EMPLOYEE)

-Does the principle supply the tools at the place of work? (EMPLOYEE)

-Length of person's employment? (long time= IC)

-Method of payment (by time period or at completion of job? (Payment every month/two weeks = employee)

-What degree of skill is req'd of the worker?  (If a great deal is req'd this may indicate that the person is an IC hired for a specialized job and not an employee)

Do workers benefit from employee status?

Sometimes.

for tax purposes and to be protected under cetrtain employment laws.

Federal governing employment discrimination apply only when an employer-employee relationship exists.

"Works for Hire"

-employee vs. I.C

-Any copyrighted work created by an employee is a "work for hire" and the copyrights belong to the employer

- Freelance artists (i.c's) generally own their works unless they contract away those rights. (PLain dealer etc.)

Who has capacity of the contract?

Principle or agent?

Principle has the capacity of the contract.

- agent derives the authority to enter into contracts from the principla and because a contract made by an agent is legally viewed as a contract of the principle.

-Minors/Kids

-Person who is legally incompetent

Agency by Ratification

FINISH

Agency by Estoppel Case Study:

Motorsports Marketing, Inc. v Wiedmaier Inc

-Michael faxes credit app for Motorsports sales manager, Lesa James. 

-Michaels mother Marsha signed the form as "Secretary-Owner" of Wiedmaier, after she signed, Michael added himself to the list of owners and credit line was approved.

Michael order $100,000 worth of merchandise, stopped making payments and skipped town. 

-Motorsport contacted Mother and requested payment.

-Motorsport Sue for paying on the unpaid amount. Wiedmaier refuses.

Ruling: Wiedmaier to pay 135,000.  Were liable. 

-Situations where the principle has not done anything to confer actual or apparent authority on agent but agen still binds people.

- Emergencies:

Sony HQ being hit by tsunami in Japan hours after CEO Howard Stringer.

-Acgents reacting to an emergency will by covered by Operation of law even if their principle is not present.

What are the five duties of Agents to Principles?

Finish!!!

(1)

1. Performance: Agent will use reasonable diligence and skill in performing work.

Contract Agent:                                                        Gratuitious Agent:

-Must behave reasonably under circumstances

-Liable for breach of contract

-If expertise is claimes must "live up" to claims

Notification:

-Must tell principle about all matters that come to agent's attention regarding the subject of the agency

-Generally the law assumes that the principle is aware of introfmation known by the agent regarding subject matter

-Notice to agent = Notice to principle

Loyalty: when you are working for a principle you cannoit steal from them. Ideas or opportunities.

"agent must act solely for the benefit of the principle and not in their own self-interest or the interest of a third party."

Also, any information obtained by agent through this relationship is confidential and must be shared. Obligated to. 

Obedience:

The agent  must follow the lawful and clear instructions of the principle.

If not clear agent must be reasonable and act in good faith.

EXCEPTION: emergency situations where principle cannot be reached

Accounting: 

-Agent must keep and make available to the principle all property and funds received by the agent on behald of the principle

-Must keep separate accounts---Lawyers keep IOLTAS (trust fund used for fees paid to lawyers for