Podcast
Questions and Answers
What is the relationship between a principal and an agent?
What is the relationship between a principal and an agent?
- The principal authorizes the agent to represent them in business dealings. (correct)
- The agent volunteers to represent the principal.
- The principal does not authorize the agent.
- The agent has no authority from the principal.
An agency is a consensual relationship.
An agency is a consensual relationship.
True (A)
Who is liable for contracts made by an agent?
Who is liable for contracts made by an agent?
The principal
Termination of an agency can occur due to the death of the ______.
Termination of an agency can occur due to the death of the ______.
Define contingent liability.
Define contingent liability.
How has the term 'supervision' evolved in agreements?
How has the term 'supervision' evolved in agreements?
Independent contractors are held accountable for their actions.
Independent contractors are held accountable for their actions.
What does the term 'observation' imply in a supervisory context?
What does the term 'observation' imply in a supervisory context?
What designation places statutory employees between regular employees and independent contractors?
What designation places statutory employees between regular employees and independent contractors?
Four typical occupations of statutory employees include full-time insurance salespersons and ______.
Four typical occupations of statutory employees include full-time insurance salespersons and ______.
Study Notes
Principal and Agent
- Principal authorizes agent to act on their behalf in business dealings.
- Agency relationship is consensual; authority comes strictly from the principal.
Agency
- Defined as a mutual relationship between principal and agent.
- The agent cannot act unilaterally; must have clear authority from the principal.
The Principal
- Responsible for contracts made by the agent within their granted authority.
- Liable for negligence committed by the agent if operating within the scope of business duties.
Termination of an Agency
- Agency may be terminated due to:
- Death of the principal or agent.
- Occurrence of a specified event.
- Mutual consent of both parties.
- Subject matter becoming illegal.
Contingent Liability
- Refers to situations where a third party is not affected by contracts between two other parties.
- General Contractor (GC) may face vulnerabilities in these scenarios.
Supervision
- The term "supervision" is sensitive and has evolved in contract language.
- "Inspection" has been changed to "observation" to reduce perceived control over independent contractors.
Independent Contractors
- Unlike agents, independent contractors bear full responsibility for their actions.
- They operate without direct control from the principal.
Supervision pt.2
- Replacing "supervision" with "observation" helps maintain independent contractor status.
- Implies a lack of direct control over construction tasks being performed.
Observation
- Associated with passive involvement in project oversight.
- Suggests owner or representative is gathering information without directing work directly.
Statutory Employees
- A classification that falls between regular employees and independent contractors.
- Governed differently in terms of labor laws and benefits.
Typical Occupations of Statutory Employees
- Full-time insurance salespersons.
- Agent and commission drivers.
- Traveling or city salespeople.
- Homeworkers.
- Required to withhold FICA taxes on their income.
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Description
Test your understanding of key concepts related to agents and principals in business law. These flashcards cover essential definitions and relationships that define agency. Perfect for students looking to reinforce their knowledge in this area.
