This is “Summary and Exercises”, section 20.4 from the book Legal Basics for Entrepreneurs (v. 1.0).
This book is licensed under a Creative Commons by-nc-sa 3.0 license. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms.
This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book.
Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages. More information is available on this project's attribution page.
For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. You may also download a PDF copy of this book (10 MB) or just this chapter (430 KB), suitable for printing or most e-readers, or a .zip file containing this book's HTML files (for use in a web browser offline).
An agent is one who acts on behalf of another. The law recognizes several types of agents, including (1) the general agent, one who possesses authority to carry out a broad range of transactions in the name of and on behalf of the principal; (2) the special agent, one with authority to act only in a specifically designated instance or set of transactions; (3) the agent whose agency is coupled with an interest, one who has a property interest in addition to authority to act as an agent; (4) the subagent, one appointed by an agent with authority to do so; and (5) the servant (“employee” in modern English), one whose physical conduct is subject to control of the principal.
A servant should be distinguished from an independent contractor, whose work is not subject to the control of the principal. The difference is important for purposes of taxation, workers’ compensation, and liability insurance.
The agency relationship is usually created by contract, and sometimes governed by the Statute of Frauds, but some agencies are created by operation of law.
An agent owes his principal the highest duty of loyalty, that of a fiduciary. The agent must avoid self-dealing, preserve confidential information, perform with skill and care, conduct his personal life so as not to bring disrepute on the business for which he acts as agent, keep and render accounts, and give appropriate information to the principal.
Although the principal is not the agent’s fiduciary, the principal does have certain obligations toward the agent—for example, to refrain from interfering with the agent’s work and to indemnify. The employer’s common-law tort liability toward his employees has been replaced by the workers’ compensation system, under which the employee gives up the right to sue for damages in return for prompt payment of medical and job-loss expenses. Injuries must have been work related and the injured person must have been an employee. Courts today allow awards for psychological trauma in the absence of physical injury.
One who has authority to act only in a specifically designated instance or in a specifically designated set of transactions is called
An agency relationship may be created by
An agent’s duty to the principal includes
A person whose work is not subject to the control of the principal, but who arranges to perform a job for him is called
An employer’s liability for employees’ on-the-job injuries is generally governed by