If the pursuing patron were actually an off duty

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Exploring Microeconomics
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Chapter 9 / Exercise 9
Exploring Microeconomics
Sexton
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1. If the pursuing patron were actually an off duty employee of Chili’s, how would that im- pact your agency analysis? 2. When the pursuing patron called the Chili’s employee with a description of the pursuit, and that employee in turn called the police, isn’t that an act of consent by Chili’s? 1. Because Chili’s Grill and Bar had no direction or control over the activities of the pursuing patron, the pursuing patron should be classified as an independent contractor agent. 2. The Chili’s employee consented to the agency relationship by accepting the pursuing patron’s description of the teenagers’ car and path of the chase and relaying that information to the 911 dispatcher. 3. Because there was no right of control whatsoever over the actions of the pursuing patron, there can be no agency relationship between the pursing patron and Chili’s. 4. Chili’s benefited from the information provided by the pursuing patron, because it learned the identity of the customers who skipped out on their bill. 5. The pursuing patron is properly classified as a gratuitous agent, because the pursing patron was not compensated for the information provided. 3
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Exploring Microeconomics
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Chapter 9 / Exercise 9
Exploring Microeconomics
Sexton
Expert Verified
4. Liability of principal for acts of the agent : one of the most important aspects of agency law is that the principal may be liable for the acts of the agent either through a contract obligation or through vicarious liability in tort a. contract liability : the principal is contractually liable to the third party if the agreement negotiated by the agent was authorized, i.e. the agent had the power to bind the principal in the transaction 1. actual authority : the parties’ agreement expressly conferred authority on the agent to reach agreement with the third party or the authority is implied based on custom or the course of past dealings 2. apparent authority : the principal conveyed the appearance of legitimate authority to the third party and the third party was objectively reasonable in her belief that the agent is in fact authorized to act for the principal 3 . ratification : the principal retroactively affirms a previously unauthorized act of the agent by either ratifying the transactions or not repudiating the act by retaining the benefits while knowing that the benefits resulted from an unauthorized act by the agent b. tort liability : the doctrine of respondeat superior makes the employer liable for the employee’s tortuous conduct resulting in some physical harm or injury and occurring within the employee’s scope of employment 1. scope of employment : the agent’s tortuous conduct must have been related to her duties as an employee of the principal, occurred substantially within the reasonable time and space limits, and been motivated, in part, by a purpose to serve the principal a. frolics : when an agent, during a normal workday, does something purely for her own reasons that is unrelated to employment, it is considered a frolic and the principal is not responsible for activity; b. detours

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