BLAW 441 exam 1
following functions of a business: - answer1. formation
2. operation
3. dissolution
Agency - answer1. a person (principle) hires someone (an agent) to do something for
him
-it can be a natural or legal person
-ex. Coca-Cola is the principle; CEO is Coca-Cola agent
2. principle may be held liable for actions of unauthorized agent if negligent with private
info
principal agent relationship - answer1. five responsibilities are owed to one another
-failure to do so results in a breech
2. business cannot operate without an agent
3. american law protects a third party
-unless third party participates in wrongdoing
-agent and principal must work it out
-if principal tells agent to do something wrongful, principle is held responsible
example- red lobster case - answer1. receipt with a racial slur and no tip
2. Barnes (customer) denied writing the slur on the receipt to his African American
waitress
3. Barnes is suing Red Lobster for defamation
-his name was on the receipt posted online
4. principal (Red Lobster) takes responsibility for the agent (waitress)
-it was a violation of company policy to post online
activity, transaction, wrongdoing - red lobster - answer1. always ask if the wrongdoer
had the authority to engage in the transaction in this order
a. activity (RL waitress had authority since hired as waitress)
b. transaction (yes, task is named for waitress; no if she wrote slur)
c. wrongdoing (defamation)
2. consider torts and contracts also
a. authority to engage in a transaction should only be in the best interest of the principal
employer and labor relations - answeremployees are protected through contracts with
employer and actions exercised within statutory rights
-ex. if false financial statements are created within a company, employee cannot be
fired for reporting to SEC because of the Sarbanes-Oxley act
Proprietorship - answer-A business where the owner is actually the business
,-simplest legal form of business
-owner assumes full liability, even with respect to personal finance
-Can operate under owner's name or trade name
Partnership - answer-2 or more people who carry on as co-owners of a business for
profit
-Limited partnership: 2 types of partners (general and limited)
Corporations - answer-a business where the shareholders at as a single entity
-shareholders hold no personal liability
-Most dominant form of business organization in the U.S.
to be successful we use the FIRAC method to analyze problems - answer1. the FACTS
of the case
2. the legal ISSUES of the case
3. that applicable RULE of law
4. the process used to APPLY the rule to the facts
5. the CONCLUSION of the case
FIRAC method example:
-jane is a surgeon who slipped and fell on a wet floor at a supermarket
-there were no warning signs posted
-Jane broke her arm and lost 6 months salary ($500,000) in income
-Jane sued the supermarket for lost wages and medical costs - answer-F: who are the
parties? defendant= Jane; plaintiff= supermarket and agents. what is the dispute? injury
to person. what are the reasons for the lawsuit? jane is blaming supermarket for injury.
is there a lower court decision? not applicable
-I: what injuries (person) did the plaintiff suffer? is the defendant responsible in any way
for his/her injuries?
-R: is this a tort or contract dispute? which rules/principles apply to this dispute?
-A: which facts support rule of law? are there exceptions or defenses to the rule of law?
what is each side's argument about the application of rules?
-C: which party has the best facts?
*end of intro*
The law of agency - answer-Body of law that is a mixture of *contract and tort law*
-Agency is a type of employment relationship that allows business to operate
contract vs. tort law - answer-contract: a form of law that makes promises legally
enforceable
-tort: a form of law that governs civil relationships between people (most tort cases deal
with negligence issues/a civil wrong)
examples of agents: - answer-an actual person needed to operate a legal entity (natural
person)- the person represents the business
-electronic agent- computers used to run legal entities (Ebay)
, Agency (principal-agent relationship) - answer-the fiduciary relationship between
principal and agent; this relationship is founded on a high degree of trust and
confidence
principal - answer-the party who hires or employs another to act on his/her behalf
-drives the agency relationship
agent - answer-a party who agrees to act on behalf of another subject to his or her
control
-the agent has the authority to conduct business with a third party
-an agent can be found liable under tort law for not respecting the fiduciary relationship
fiduciary - answer-a person having a duty created by his or her undertaking to act
primarily for another's benefit in matters connected with the undertaking
-relationship founded on trust and confidence
Benefit of agency relationship - answerprincipal forms agency contract-->agent creates
contract with third party on behalf of principal-->third party
-principals obligation to perform the contract
agent contracts with third party on behalf of principal - answer-the agent has been given
authority from the principal
-the contract can be formal or informal
principal is obligated to perform contract made between agent and third party - answer-
the agent is NOT responsible for filling the contract
-if the contract is against public policy then it is void and not enforceable
there are 4 ways to form an agent relationship, but only one is needed to confirm that
the agent is employed on behalf of the principal: - answer1. agreement
2. estoppel
3. ratification
4. operation of law
problems with these relationships arise mostly in: - answer-formation issues
-failing to act properly on behalf of principal
ex. of an agent: insurance agent or real-estate agent - answer-if a person is seeking
insurance:
-principal= buyer (person seeking)
-agent= insurance agent (trying to find the buyer the best company)
-third party- Allstate insurance
The employer-employee relationship - answer1. the employer hires an employee to
perform some physical service
following functions of a business: - answer1. formation
2. operation
3. dissolution
Agency - answer1. a person (principle) hires someone (an agent) to do something for
him
-it can be a natural or legal person
-ex. Coca-Cola is the principle; CEO is Coca-Cola agent
2. principle may be held liable for actions of unauthorized agent if negligent with private
info
principal agent relationship - answer1. five responsibilities are owed to one another
-failure to do so results in a breech
2. business cannot operate without an agent
3. american law protects a third party
-unless third party participates in wrongdoing
-agent and principal must work it out
-if principal tells agent to do something wrongful, principle is held responsible
example- red lobster case - answer1. receipt with a racial slur and no tip
2. Barnes (customer) denied writing the slur on the receipt to his African American
waitress
3. Barnes is suing Red Lobster for defamation
-his name was on the receipt posted online
4. principal (Red Lobster) takes responsibility for the agent (waitress)
-it was a violation of company policy to post online
activity, transaction, wrongdoing - red lobster - answer1. always ask if the wrongdoer
had the authority to engage in the transaction in this order
a. activity (RL waitress had authority since hired as waitress)
b. transaction (yes, task is named for waitress; no if she wrote slur)
c. wrongdoing (defamation)
2. consider torts and contracts also
a. authority to engage in a transaction should only be in the best interest of the principal
employer and labor relations - answeremployees are protected through contracts with
employer and actions exercised within statutory rights
-ex. if false financial statements are created within a company, employee cannot be
fired for reporting to SEC because of the Sarbanes-Oxley act
Proprietorship - answer-A business where the owner is actually the business
,-simplest legal form of business
-owner assumes full liability, even with respect to personal finance
-Can operate under owner's name or trade name
Partnership - answer-2 or more people who carry on as co-owners of a business for
profit
-Limited partnership: 2 types of partners (general and limited)
Corporations - answer-a business where the shareholders at as a single entity
-shareholders hold no personal liability
-Most dominant form of business organization in the U.S.
to be successful we use the FIRAC method to analyze problems - answer1. the FACTS
of the case
2. the legal ISSUES of the case
3. that applicable RULE of law
4. the process used to APPLY the rule to the facts
5. the CONCLUSION of the case
FIRAC method example:
-jane is a surgeon who slipped and fell on a wet floor at a supermarket
-there were no warning signs posted
-Jane broke her arm and lost 6 months salary ($500,000) in income
-Jane sued the supermarket for lost wages and medical costs - answer-F: who are the
parties? defendant= Jane; plaintiff= supermarket and agents. what is the dispute? injury
to person. what are the reasons for the lawsuit? jane is blaming supermarket for injury.
is there a lower court decision? not applicable
-I: what injuries (person) did the plaintiff suffer? is the defendant responsible in any way
for his/her injuries?
-R: is this a tort or contract dispute? which rules/principles apply to this dispute?
-A: which facts support rule of law? are there exceptions or defenses to the rule of law?
what is each side's argument about the application of rules?
-C: which party has the best facts?
*end of intro*
The law of agency - answer-Body of law that is a mixture of *contract and tort law*
-Agency is a type of employment relationship that allows business to operate
contract vs. tort law - answer-contract: a form of law that makes promises legally
enforceable
-tort: a form of law that governs civil relationships between people (most tort cases deal
with negligence issues/a civil wrong)
examples of agents: - answer-an actual person needed to operate a legal entity (natural
person)- the person represents the business
-electronic agent- computers used to run legal entities (Ebay)
, Agency (principal-agent relationship) - answer-the fiduciary relationship between
principal and agent; this relationship is founded on a high degree of trust and
confidence
principal - answer-the party who hires or employs another to act on his/her behalf
-drives the agency relationship
agent - answer-a party who agrees to act on behalf of another subject to his or her
control
-the agent has the authority to conduct business with a third party
-an agent can be found liable under tort law for not respecting the fiduciary relationship
fiduciary - answer-a person having a duty created by his or her undertaking to act
primarily for another's benefit in matters connected with the undertaking
-relationship founded on trust and confidence
Benefit of agency relationship - answerprincipal forms agency contract-->agent creates
contract with third party on behalf of principal-->third party
-principals obligation to perform the contract
agent contracts with third party on behalf of principal - answer-the agent has been given
authority from the principal
-the contract can be formal or informal
principal is obligated to perform contract made between agent and third party - answer-
the agent is NOT responsible for filling the contract
-if the contract is against public policy then it is void and not enforceable
there are 4 ways to form an agent relationship, but only one is needed to confirm that
the agent is employed on behalf of the principal: - answer1. agreement
2. estoppel
3. ratification
4. operation of law
problems with these relationships arise mostly in: - answer-formation issues
-failing to act properly on behalf of principal
ex. of an agent: insurance agent or real-estate agent - answer-if a person is seeking
insurance:
-principal= buyer (person seeking)
-agent= insurance agent (trying to find the buyer the best company)
-third party- Allstate insurance
The employer-employee relationship - answer1. the employer hires an employee to
perform some physical service
