Ch13-SG - Chapter 13 This chapter covers agency...

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Chapter 13: Employment Relationships W HAT   THIS  C HAPTER  I S  A BOUT This  chapter   covers   agency   relationships,  including   how   they   are   formed   and  the  duties   involved.     An  agency  relationship involves two parties: the principal and the agent.  Employment relationships are agency relationships.  This chapter  also discusses some of the significant employment laws. C HAPTER  O UTLINE I. AGENCY RELATIONSHIPS In an agency relationship, the parties agree that the agent will act on behalf and instead of the principal in negotiating  and transacting business with third persons. A. E MPLOYER -E MPLOYEE  R ELATIONSHIPS Normally,   all   employees   who   deal   with   third   parties   are   deemed   to   be   agents.   Statutes   covering   workers’  compensation and so on apply only to employer-employee relationships. B. E MPLOYER –I NDEPENDENT  C ONTRACTOR  R ELATIONSHIPS Those who hire independent contractors have no control over the details of their physical performance. Independent  contractors can be agents. C. C RITERIA   FOR  D ETERMINING  E MPLOYEE  S TATUS The greater an employer’s control over the work, the more likely it is that the worker is an employee. Another key  factor is whether the employer withholds taxes from payments to the worker and pays unemployment and Social  Security taxes covering the worker. II. AGENCY FORMATION Consideration is not required. A principal must have capacity to contract.   An agency can be created for any legal  purpose. A. A GENCY   BY  A GREEMENT Normally, an agency must be based on an agreement that the agent will act for the principal. Such an agreement can  be an express written contract, can be implied by conduct, or can be oral. B. A GENCY   BY  R ATIFICATION A person who is not an agent (or who is an agent acting outside the scope of his or her authority) may make a  contract on behalf of another (a principal). If the principal approves or affirms that contract by word or by action, an  agency relationship is created by ratification. 107
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UNIT 4: THE EMPLOYMENT ENVIRONMENT C. A GENCY   BY  E STOPPEL When a principal causes a third person to believe that another person is his or her agent, and the third person deals  with the supposed agent, the principal is estopped to deny the agency relationship. D. A GENCY   BY  O PERATION   OF  L AW An agency relationship in the absence of a formal agreement may occur in family relationships or in an emergency,  if the agent’s failure to act outside the scope of his or her authority would cause the principal substantial loss. III.
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Ch13-SG - Chapter 13 This chapter covers agency...

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