I. Introduction to Agents, Servants and Independent Contractors
A. In General
1. Labeling the players
e) Independent contractors – may or may not be an agent, but is not a servant
2. Restatement (Second) of Agency § 1 –
a) Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.
b) The one for whom action is to be taken is the principal.
c) The one who is to act is the agent
3. Restatement (Second) of Agency § 2 –
a) A master is a principal who employs and agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.
b) A servant is an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right of control by the master.
c) An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking. He may or may not be an agent.
4. When is an employing party responsible for the agent’s actions?
a) In K, look at the principal/agent relationship.
b) In Tort, employing party must be master.
B. Statutory Modifications to the Common Law of Agency
1. Payment of Wages
a) Employer is defined as any officer or agent
b) Thus, employee can sue anyone who knows about the failure to pay
c) Dumas – held that the legislature intended to impose individual liability on agents or officers of a corporation who knowingly permit their corporation to violate the Payment of Wages Act.
C. Who is an Agent?
1. Johnson v. Arbabi (SC 2003)
a) The marriage relation of the parties is not necessarily enough to establish the fact that the one is the agent of the other
b) However, implied agency can arise by the conduct of the parties
2. Starting & Ending the Agency Relationship
a) A principal must only have that capacity necessary to execute a K or deed in order to establish ( or cancel) the agency relationship. Do not have to have
c) Filing partnership tax returns suggests partnership
d) Facts against partnership:
(1) No partnership agreement
(2) Money goes to one person’s bank account
(3) Property is titled to individuals
e) Ct considers control as the critical factor
f) Have to consider the equitable factors:
(1) 40-50 year history
(2) Earlier settlement amongst the brothers
3. Grissum v. Reesman
a) Ct found no partnership
b) Sister and brother in partnership and brother died
c) FactShared profits by using them to live off of
d) Equitable reason – she is going to get all the assets anyway. This is really a Tax case
(1) As a partner, only ½ is subject to taxation; she already owns the other half.
D. Beck v. Clarkson (SC 1989) (p. 2-18)
1. One partner left, formed another partnership, and took the business opportunity.
2. Two kinds of partnership:
a) Term = if partner quits early, breach of K, and damage remedy