BUS 241 American College of California Jones v Reserve Insurance Company Case Review

Case For Review on Page 442, Chapter 25

Q: # 3: ( Jones’s Reserve Insurance Co., Ariz. 253N. E. 2d 849)

Clarke and Manko, both agents of Reserve Insurance Company, attended a convention relating to their work, although their attendance was not required by the company. While at the convention,  Clarke and Manko met Jones, a former agent of  Reserve insurance. Following one of the convention meetings attended by all three, a fight developed between Clarke and Jones over a book, which Jones contended that Clarke had not returned to him. Jones, who was injured in the fight, sued the Reserve Insurance Company, claiming that the company was liable for the tort of assault and battery committed by one of its agents, Clarke, acting in the agency’s scope.

Q: Can the Reserve Insurance Company be held responsible for Clarke’s behavior? (Read Chapter 25).

Discuss and cite the resources. If you use your textbook, cite it too.

Provide examples for each and one case lawsuit example of violations of the employer-employee relationship.

Goldman | Sigismond
9e
1
CHAPTER
25
Principal-Agent, EmployerEmployee, and Third-Party
Relationships
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Learning Objectives
➜ Describe the three types of authority
an agent has, and define the scope of
the agency.
➜ Explain the various contract
liabilities between the principal and
the agent.
➜ Name who is liable for criminal acts
committed by the agent and
employee.
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25.2
Liability of Principal and Employer
to Third Parties
➜ The principal is legally liable to third
parties for contracts an agent makes
as long as the agent operates within
the authority given to her or him.
➜ Ratification of an unauthorized
contract.
➜ Injuries from torts.
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25.3
Contract Liability of Principal
➜ Generally, the principal is bound by
contracts if the agent acts within the
scope of authority.
➜ Scope of authority: extent of agent’s
authority to carry out principal’s
business.
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25.4
Authority
➜ Express.
➜ Implied.
➜ Emergency.
➜ Apparent.
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25.5
Express Authority
➜ Express authority: authority
specifically given to agent by
principal.
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25.6
Implied Authority
➜ Implied authority: authority agent is
understood to have to carry out
purpose of the agency.
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25.7
Emergency Authority
➜ Emergency authority: authority an
agent has to act in event agent cannot
consult principal for express
authority to act.
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25.8
Apparent Authority
➜ Apparent authority: authority
principal leads third parties to believe
agent has because of principal’s
words or conduct.
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25.9
Actions Outside Scope
of Authority
➜ Sometimes an agent performs an act
that is outside the scope of her or his
authority.
➜ Ratification of an unauthorized act
may be either express or implied.
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25.10
Ratification
➜ Express ratification: occurs when the
principal approves of the transaction
either in writing or orally.
➜ Implied ratification: occurs when a
principal knows that an unauthorized
act has taken place but decides to
accept it and keep its benefits.
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25.11
Tort Liability of Principal
and Employer
➜ Vicarious liability: person’s liability
for someone else’s acts.
➜ Respondeat superior: doctrine that a
principal is liable in certain cases for
the wrongful acts of an agent.
➜ Scope of the agency: extent of agent’s
duties to carry out principal’s
business.
Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25.12
Liability of Agent and Employee to
Third Parties
➜ As long as an agent has the authority
to act, the agent has no personal
liability on a contract.
➜ When an agent who has no authority
to do so makes a contract, however,
he or she is bound by the contract,
but the principal is not.
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25.13
Contract Liability of Agent
➜ The agent is liable to third parties in
the following cases:
1. The agent enters into a contract
without authority.
2. The agent does not disclose the
principal’s identity to third parties.
→
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25.14
Contract Liability of Agent
3.
The agent is careless in signing a
contract.
4. The agent voluntarily agrees to
become liable on a contract.
5. A person pretends to be an agent.
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25.15
Agent Acts Without Authority
➜ When a third party deals with an
agent, the third party is in fact
dealing with the principal.
➜ As a result, the law does not
recognize the agent as a party to the
contract when he or she acts within
the scope of authority.
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25.16
Agent Acts for
Undisclosed Principal
➜ Individuals and businesses
sometimes prefer to keep secret from
third parties their connection with a
particular transaction.
➜ Undisclosed principal: principal
whose identity is not known to third
parties with whom agent makes
contracts.
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25.17
Agent Is Careless in Signing
➜ If the agent is acting for a disclosed
principal, the agent should be careful
to sign the principal’s name to a
written contract first and then sign
his name as agent.
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25.18
Agent Agrees to Personal Liability
➜ By signing a contract, the agent
assumes equal liability with the
principal.
➜ This same situation may also occur
when an agent agrees to become
personally liable on the contract to
induce the third party to enter into
the contract.
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25.19
Person Pretends to Be an Agent
➜ A person who pretends to be an agent
of another is personally liable for any
contracts made with a third party.
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25.20
Tort Liability of Agent
and Employee
➜ The third party may sue either the
principal or the agent, the employer
or the employee, or both jointly.
➜ The agent or employee is liable as the
person who actually committed the
tort.
Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25.21
Criminal Liability of Principal,
Agent, Employer, and Employee
➜ Generally, neither a principal nor an
employer is liable for criminal acts
committed by the agent or employee.
➜ The agent or employee is personally
liable.
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25.22