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- Discuss the various duties, responsibilities, and liabilities of the Principal-Agent (employer-employee) relationship as outlined in the text.
- Requirements: 250 words minimum initial post
Discuss the various duties, responsibilities, and liabilities of the Principal-Agent (employer-employee) relationship as outlined in the text.Requirements: 250 words minimum initial post
MBA/MSL 646 The Legal Environment of Business Belhaven University Unit 6 Contract Remedies, Management of Employee Conduct – Agency Biblical F oundation I Corinthians 12:12 -14 Just as a body, though one, has many parts, but all its many parts form one body, so it is with Christ. For we were all baptized by one Spirit so as to form one body — whether Jews or Gentiles, slave or free — and we were all given the one Spirit to drink. Even so the body is not made up of one part but of many . Philippians 2:6 -7 Who, being in very nature God, did not consider equality with God something to be used to his own advantage ; rather, he made himself nothing by taking the very nature of a servant, being made in human likeness . Proverbs 3:27 Do not withhold good from those to whom it is due, when it is in the power of your hand to do so. Contract Performance When is performance due? Performance is due at the time specified in the contract In the instance that events must occur in relation to performance Conditions precedent – events that give rise to performance Conditions concurrent – when benefits are exchanged at the same time Standards for performance Complete performance is required Substantial performance allowed in contract cases (just as good standard) Substantial performance = nonmaterial breach E -Commerce: Payment Methods Credit cards; Digital Cash; Person -to -Person Payment; PayPal Performance – Excuse When performance is excused Impossibility – contract cannot be performed Example – cannot build house if the land is washed away Commercial Impracticability Basic assumptions parties made are no longer true Can protect themselves by putting in force majeure clause which covers problems such as wars, embargoes, depressions Novation Two original parties agree, along with third party, to substitute one party for another Accord and Satisfaction Agreement reached to discharge a disputed obligation Fair Credit B illing A ct Allows debtors the opportunity to challenge the figures on credit card monthly statements Monthly bills must have address or phone number for the debtor to write or call in the event the debtor wishes to challenge the statement Debtor must notify the company in writing within 60 days of receiving the statement C reditor has 30 days to acknowledge Creditor has 90 days to take action Debtor need not pay protested amount or finance charges from said amount during protest period C ollection Collection rights of the creditor Regulated by FDCPA (Fair Debt Collections Practices Act) if it is a consumer debt Application 3 rd party collection agencies Attorneys Prohibits unreasonable collection practices by collection agencies Examples – cannot contact before 8:00 am or after 9:00 pm; cannot disrupt sleeping hours of a debtor that works a night shift Collection, cont. Collection rights of the creditor, cont. Must provide written verification of debt if debtor asks or within 5 days after contact with debtor Must include amount of debt, name of creditor, debtor’s right to disputed debt Restrictions Cannot disclose debt to a 3 rd party Cannot “harass, oppress, or abuse” the debtor Collection, cont. Penalties for FDCPA violations FTC responsible for enforcement Injunction Debtor may collect actual damages Debtor may collect up to $1,000 in additional damages Litt v. Portfolio Recovery Associations LLC, 146 F.Supp . 3d 857 (E.D. Mich. 2015) Court held that debt collector violated safe harbor provision when it called debtor’s parents over 200 total times, with over 100 calls after parents informed the collector that debtor did not reside there E nforcement Suits to enforce debts Reduce to judgment for execution Garnishment Limited to 25% of wages (50% for child support) Bankruptcy If debtor does not qualify for bankruptcy, may have to enter debt adjustment plan Debts discharged in bankruptcy except Alimony Child support Student loans Taxes Fair Credit R eporting A ct Designed to provide debtors some rights and protections regarding the credit information held by third parties Provides for openness of credit reports Limitations on disclosure Can disclose to debtor his/her own report Can disclose to creditor with signed credit application Can disclose to potential employer Can disclose for court’s subpoena Fair Credit R eporting Act, cont. Limitations on content No bankruptcies longer than 10 years ago No lawsuits finalized longer than 7 years ago No disclosures of criminal convictions finalized more than 7 years ago unless for $50,000 in credit or $20,000/year job Debtor’s right of correction Notify agency; if no connection may write 100 word statement of explanation R emedies Types of damages Compensatory – put party in same position they would have been in without the breach Incidental damages – cost of finding replacement; attorney fees Consequential damages – damages experienced in relation to 3 rd parties Lost profits; late penalties Liquidated damages – amount of damages agreed up in advance of breach Third Party R ights Assignments Original party to contract assigns his/her benefits under the contract to another Example – credit company sells credit contract for present value to another who undertakes its collection Assignee has same rights as original party Delegation Transfer of obligations under contract Does not release original contracting party Third Party Beneficiary Parties originally named in the contract to benefit from the contract Example – insurance beneficiaries are third party beneficiaries International Issues Bill of Lading – is a receipt for shipment of goods issued by the carrier to the seller Provides evidence of who has title to the goods Helps control access and payment of the goods How it works The buyer will not gain access to the goods unless and until the seller provides the necessary documents for release of the goods Letter of credit issued by buyers bank to seller Seller may draw on the letter of credit to receive payment Assuring performance Need for force majeure clause Stability of currencies Nature of Agency Law Agency relationship is one which one party agrees to act on behalf of another Examples – sales clerks; real estate agents, sports agents Principal – party for whom the agent acts Agent – party who acts for another Nature of Agency Law, cont. Master/Servant relationship Relationship in which the master/principal exercises a great deal of control over the servant/agent. Most common – employer/employee Factors that control whether this type of relationship exists Level od supervision Level of control Nature of agent’s work Regularity of hours and pay Length of employment Nature of Agency Law, cont. Independent Contractor Hired to perform a task but the individual is not directly supervised Example – lawyer Agency law is governed by the Restatement of Agency 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 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 relationship for longer than one year Principal must have legal capacity Age and mental capacity Capacity: Unincorporated associations do not have legal capacity Members will be held liable since there is no principal Agency Creation, cont. The capacity of agent becomes an issue when it concerns Authority to enter contracts Potential liability to third parties Implied Authority The extension of express authority by custom Apparent Authority When a third party is led to believe that an agent had the proper authority to deal but actually did not Agency by estoppel Thomas v. Weatherguard Construction Company, Inc., 42 N.E.3d 21 (Ill. App. 2015) – court awarded individual, who was lead to believe that he was fired by company and not an independent contractor, past commission owed Agency by Ratification Retroactive agency; principal reviews contract and voluntarily decides to honor it Principal -Agent R elationship Agent’s Responsibilities Agent acts in the principal’s best interests Loyalty, trust, care, obedience Loyalty Agent can ’t represent both sides Can’t make a profit at principal’s expense Lucini Italia Co. v. Grappolini , 2003 WL 1989605 (N.D. Ill. 2003) – the court held for the principal and awarded damages when the agent took a deal for his self benefit and did not disclose the dealing with the principal Noncompete Clauses Courts are striking a balance between an individual’s right to work and an employer’s right to protect trade secrets Requirements for Noncompete Clauses 1. The need for protection The employee must have access to trade secrets or be starting new business to be in competition 2. Reasonableness in scope Time Geographic scope 3. Valid formation Are subject to principles of contract laws – specifically consideration Voluntary Rights and Duties Agent: Obedience Follows principals instructions Need not do anything illegal Agent: Duty of Care Give time and effort Follow through Principal: Duties and Rights Duty to pay – except in gratuitous agency relationships Duty to reimburse Principal’s Liability Principal’s Liability to 3 rd Parties Principal has full liability for authorized acts of agent and those done with apparent authority Liability of Principals for Torts Must have a master/servant relationship, not an independent contractor relationship Liable for torts of servants in the scope of employment Scope – doing master’s business Doctrine of respondeat superior – let the master answer Not liable for the torts committed while on a frolic Faverty v. McDonald’s Restaurants of Oregon, Inc., 892 P.2d 703 (Ct. App. Or. 1995) – the court held McDonald’s liable for the car accident death of a high school student employee after he was allowed to work several shifts with no sleep and drive home Non -scope Issues Negligent Hiring Failure to screen Failure to do background check Negligent Retention Failure to take action when employee engages in dangerous behaviors or takes risks Knowledge + Inaction = Liability Lange v. National Biscuit Co., 211 N.W.2d 783 (Minn. 1973) Here the court held that an employer is liable for an assault by his employee when the source of the attack is related to the duties of the employee and the assault occurs within work -related limits of time and place Agency Issues Principal’s Liability Principals are generally not liable for the torts of Independent Contractors Exceptions Inherently dangerous activities Negligent hiring of independent contractors Principal provided specifications for project or job Agency Termination Due to Definite duration of time Agent quits/fired Principal dies/is incapacitated By giving public notice or constructive notice (trade publication) By giving actual notice (letters) Without giving notice, agent will have lingering apparent authority Termination of At -will Do Conduct regular reviews of employees, using objective, uniform measures of performance Give clear, business -related reasons for any dismissal, backed by written documentation when possible Seek legal waivers from older workers who agree to leave under early retirement plans, and make sure they understand the waiver terms in advance Follow any written company guidelines for termination, or be prepared to show in court why they’re not binding in any particular instance Don’t Make oral promises of job security to employees who might later be laid off – breach of contract Put pressure on an employee to resign in order to avoid getting fired – coercion suit Make derogatory remarks about any dismissed worker, even if asked for a reference by a prospective employer – defamation suit Offer a fired employee a face – saving reason for the dismissal that’s unrelated to poor performance – wrongful discharge suit Public Policy The public policy protection – whistleblowers Whistle Blower Protection Act of 1978 False Claims Act – permits government contractors whose tips and disclosures to federal investigators and agencies result in fines and penalties to collect 30% of those fines and penalties Sarbanes -Oxley (SOX) – prevents the retaliation for employees who raise concerns about financial reports or internal controls of their companies Complete reading assignments Complete writing assignments Answer discussion questions Complete unit quiz 28 What’s Next ? Jennings , M. (2017 ). Business; It’s Legal, Ethical, and Global Environment . (11 th ed.). South -Western Cengage Learning . The Holy Bible 29 References