Chapter 18Management of Employee Conduct Agency.ppt

Chapter 18Management of Employee Conduct: Agency Terminology Nature of Agency: Agency relationship is one in which one party agrees to act on behalf of another. Examples: sales clerks, real estate agents, sports agents. Agent: Party who acts for another. Principal: The party for whom the agent acts. Terminology Master/Servant: Relationship in which the master/principal exercises a great deal of control over the servant/ agent. Most common form is employer/employee relationship. Factors that control whether this type of relationship exists: Level of supervision. Level of control. Regularity of hours and pay. Length of employment. Terminology Independent contractor: Hired to perform a task but is not directly supervised. Example: Lawyer. Agency Law: Restatement of Agency. Common law followed by most courts. Terminology Three Parts to Agency Law: Creating the agency relationship. Relationship between principal and agent. Relationships of agent and principal to third parties. Agency Creation Creating the Agency Relationship: when the principal hires someone. Express Authority Agency. Created by principal stating or writing that agency exists and the authority thereof. Requires oral or written agreement - must be in writing if required by statute of frauds. Example: Agency contract is longer than one year. Agency Creation The Writing. If the agent’s contracts must be in writing, the authority must be in writing. Principal Must Have Legal Capacity. Age and mental capacity. Agency Creation Capacity: unincorporated associations do not have capacity: Have no legal existence. Members will be liable since there is no principal. The capacity of agent becomes an issue when it concerns: Authority to enter contracts. Potential liability to third parties. Agency Creation Implied Authority: the extension of express authority by custom. Apparent Authority: Arises from the way agents present themselves to third parties. Also called agency by estoppel or ostensible authority. Exam