LSTD Exam 3 Review Justin Evans
QUESTIONS & ANSWERS(GRADED A+)
agency - ANSWERa legal relationship in which the parties agree, In some form, that
one party will act as an agent for another party, called the principle, subject to the
control of the principle.
fully disclosed agency - ANSWERWhen the third party entering into the contract
knows:
The identity of the principal and knows that the agent is acting on behalf of the
principal in the transaction
partially disclosed agency - ANSWERif the third party knows that the agent is
representing a principal but does not know the actual identity of the principal
agency law requires one to be aware of - ANSWER1. legal requirements for creating
an agency,
2. liability of a principle for the agent's conduct and,
3. duties and obligations of the parties
Agents are classified in these 3 categories - ANSWER1. Employee agents
2. independent contractor agents
3. gratuitous agents
Employee agents - ANSWERIndividual employees who are authorized to transact
business on behalf of the employer principle
(Principles are liable for the actions or omissions (negligence) of the employee
agents
Independent contractor agents - ANSWERnot considered employees and have no
legal protections of employees such as minimum wage and overtime compensation
laws
Gratuitous agent - ANSWERagents who act on behalf of a principle without receiving
any compensation
Employee agent vs Ind. contractor - ANSWERAlthough the parties themselves may
agree to a certain classification, the status of an agent is not based on what the
parties agreed to but is instead determined by the actual working relationship
between principal and agent.
Substance over form - ANSWERWhen applying the law, courts look to the intent of
parties involved and adhere to a standard of good faith and fair play instead of
applying the letter of the law in a way that would violate fundamental principles of
fairness and consistency.
, factors of employee agent vs ind. contractor - ANSWERCourts consider:
whether the worker is engaged in a distinct occupation or business,
whether, considering the kind of occupation and locality, the work is usually done
under the principal's direction or by a specialist without supervision
the skill required,
whether the principle or worker supplies the instrumentalities, tools, and place of
work
the length of time for which the services are to be performed,
the method of payment, whether by time or by job,
wheather the work s part of the principal's regular business
whether the parties believe they are creating an employer-employee relationship
ABC test - ANSWERThe individual is free from direction and control
the service is performed outside the usual course of business of the employer
the individual is customarily engaged in an independently established trade,
occupation, profession, or business of the same nature
IRS three prong test - ANSWERbehavioral aspects of the agency
the financial arrangements between principal and agent
the type of working relationship between the parties
Creation of the agency relationship - ANSWERManifestations and Consent
Control
Formalities
Liability of the principal for acts of the agent - ANSWERwhen a third party claims that
the principal is liable for an agent's act, he is asserting that the principal is
responsible for any legal consequences of that act
authority - ANSWERCreation of an agency relationship typically involves the agent's
power to bind the principal to third parties (and third parties to the principal) in an
agreement of some type.
primary sources of agent's power
1. actual authority
2. apparent authority
3. ratification
QUESTIONS & ANSWERS(GRADED A+)
agency - ANSWERa legal relationship in which the parties agree, In some form, that
one party will act as an agent for another party, called the principle, subject to the
control of the principle.
fully disclosed agency - ANSWERWhen the third party entering into the contract
knows:
The identity of the principal and knows that the agent is acting on behalf of the
principal in the transaction
partially disclosed agency - ANSWERif the third party knows that the agent is
representing a principal but does not know the actual identity of the principal
agency law requires one to be aware of - ANSWER1. legal requirements for creating
an agency,
2. liability of a principle for the agent's conduct and,
3. duties and obligations of the parties
Agents are classified in these 3 categories - ANSWER1. Employee agents
2. independent contractor agents
3. gratuitous agents
Employee agents - ANSWERIndividual employees who are authorized to transact
business on behalf of the employer principle
(Principles are liable for the actions or omissions (negligence) of the employee
agents
Independent contractor agents - ANSWERnot considered employees and have no
legal protections of employees such as minimum wage and overtime compensation
laws
Gratuitous agent - ANSWERagents who act on behalf of a principle without receiving
any compensation
Employee agent vs Ind. contractor - ANSWERAlthough the parties themselves may
agree to a certain classification, the status of an agent is not based on what the
parties agreed to but is instead determined by the actual working relationship
between principal and agent.
Substance over form - ANSWERWhen applying the law, courts look to the intent of
parties involved and adhere to a standard of good faith and fair play instead of
applying the letter of the law in a way that would violate fundamental principles of
fairness and consistency.
, factors of employee agent vs ind. contractor - ANSWERCourts consider:
whether the worker is engaged in a distinct occupation or business,
whether, considering the kind of occupation and locality, the work is usually done
under the principal's direction or by a specialist without supervision
the skill required,
whether the principle or worker supplies the instrumentalities, tools, and place of
work
the length of time for which the services are to be performed,
the method of payment, whether by time or by job,
wheather the work s part of the principal's regular business
whether the parties believe they are creating an employer-employee relationship
ABC test - ANSWERThe individual is free from direction and control
the service is performed outside the usual course of business of the employer
the individual is customarily engaged in an independently established trade,
occupation, profession, or business of the same nature
IRS three prong test - ANSWERbehavioral aspects of the agency
the financial arrangements between principal and agent
the type of working relationship between the parties
Creation of the agency relationship - ANSWERManifestations and Consent
Control
Formalities
Liability of the principal for acts of the agent - ANSWERwhen a third party claims that
the principal is liable for an agent's act, he is asserting that the principal is
responsible for any legal consequences of that act
authority - ANSWERCreation of an agency relationship typically involves the agent's
power to bind the principal to third parties (and third parties to the principal) in an
agreement of some type.
primary sources of agent's power
1. actual authority
2. apparent authority
3. ratification
