Business Law Study Set 1

Business

Quiz 38 :

Third Persons in Agency

Quiz 38 :

Third Persons in Agency

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Lowell Shoemaker, an architect, was hired by Affhouse to work on a land development project. In September Shoemaker contacted Central Missouri Professional Services about providing engineering and surveying services for the project. Central submitted a written proposal to Shoemaker in October. About a week later, Shoemaker orally agreed that Central should proceed with the work outlined in the proposal. When the first phase of the work was completed, a bill of $5,864.00 was sent to Shoemaker. Shoemaker called Central and requested that all bills be sent directly to the owner/developer, Affhouse. When the bills were not paid, Central sued Shoemaker and Affhouse. The trial court entered a judgment against Shoemaker for $5,864 and he appealed. Shoemaker acknowledged that he did not disclose the identity of the principal to Central at the time the transaction was conducted, and explained: Q. You never told Mike Bates or Central Missouri Professional Services that you were an agent for Affhouse or any other undisclosed principal A. That ' s correct. I never did. Q. Another note I wrote down was that the subject of Affhouse came up in your conversations with Mike Bates of Central Missouri Professional Services after he sent the bill to you A. The early part of the year, yes. Shoemaker contends that since he made clear to Central that he was an architect and not the developer, there was no binding oral contract between Central and him. Decide. [ Central Missouri Professional Services v. Shoemaker, 108 S.W.3d 6 (Mo. App.)]
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LS, an architect who was hired by X company to work on a project; later LS Company had contracted with CMP services in order to provide the engineering materials for the project. CMP services had sent a written proposal to the LS Company after a week LS had orally agreed to it. After the approval, CMP services had completed the first part of the work and have sent a bill of $5,864 to L. He requested the CMP services to send all the bills to the owner of X company. After the bills were not paid CMP services sued on LS and the X Company, then the court entered a judgement that the LS has not disclosed the identity of the principle to CMP services that he does not disclose the identity at the time of transaction.
Undisclosed principal: when the agent does not reveal the identity of the principal to the third party, then the unknown principal is known as undisclosed principal. In such a case the agent is responsible for the contract made with the third party.
Agents may intentionally liable for the contracts with the third party.
In this situation the X Company is the principal and the CMP service is the third party and the LS is an agent for the X Company. Since, LS had made the contract with the CMP services that he does not provide any written approval for the proposal sent by the third party. Only an oral acceptance was given by the LS and the third party had started the work.
In this context, both the agent and the principal are not responsible and liable for the third party. In fact documentation plays a crucial role where it acts as an evidence for the future use.
Hence, without a written agreement a contract cannot be valid and the agent would not be liable for the third party.

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Jason Lasseigne, a Little League baseball player, was seriously injured at a practice session when he was struck on the head by a poorly thrown baseball from a team member, Todd Landry. The league was organized by American Legion Post 38. Claude Cassel and Billy Johnson were the volunteer coaches of the practice session. The Lasseignes brought suit on behalf of Jason against Post 38, claiming that the coaching was negligent and that Post 38 was vicariously liable for the harm caused by such negligence. Post 38 contended that it had no right to control the work of the volunteer coaches or the manner in which practices were conducted and as a result should not be held vicariously liable for the actions of the coaches. Decide. [Lasseigne v American Legion Post 38, 543 So 2d 1111 (La App)]
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Refer to the case Lasseigne v American Legion Post 38
Case Issue
The facts to this case are:
• A child (plaintiff) was injured while practicing baseball.
• The practice session was coached by volunteers organized by a community service organization (defendant).
The issue is whether defendant is liable for the actions of their volunteers.
Relevant Terms, Laws, and Cases
Respondeat superior
• Imposes liability of the principal or employer of actions by agent or employee.
• Known as vicarious liability.
Liability of independent contractors
• Typically, independent contractors are not considered agent or employees.
• Thus, liable for their own actions.
• But, hirer can be liable if they control the actions of the contractor.
Opinion
The court held for the defendant. They argued that:
• The baseball league was organized by defendant, but the defendant never supervised the practice sessions.
• Each team was sponsored by independent businesses.
• Teams were coached by people, usually parents, not affiliated with the defendant.
The coaches were independent and not affiliated with the defendant, thus the defendant is not liable for their actions.

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On July 11, 1984, Jose´ Padilla was working as a vacation-relief route salesperson for Frito-Lay. He testified that he made a route stop at Sal's Beverage Shop, where he was told by Mrs. Ramos that she was dissatisfied with Frito-Lay service and no longer wanted its products in the store. He asked if there was anything he could do to change her mind. She said no and told him to pick up his merchandise. He took one companyowned merchandise rack to his van and was about to pick up another rack when Mr. Ramos said that the rack had been given to him by the regular route salesperson. Padilla said the route salesperson had no authority to give away Frito- Lay racks. A confrontation occurred over the rack, and Padilla pushed Mr. Ramos against the cash register, injuring Ramos's back. Frito-Lay has a company policy, clearly communicated to all employees, that prohibits them from getting involved in any type of physical confrontation with a customer. Frito-Lay contended that Padilla was not acting within the course and scope of his employment when the pushing incident took place and that the company was therefore not liable to Ramos. Ramos contended that Frito-Lay was responsible for the acts of its employee Padilla. Decide. [Frito-Lay, Inc. v Ramos, 770 SW2d 887 (Tex App)]
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Refer to the case Frito-Lay, Inc v Ramos
Case Issue
The facts to this case are:
• R was injured during a confrontation by an employee of F.
• The confrontation resulted from an argument involving F 's merchandise.
• The employee confronted R while working sales for F.
The issue is whether F is liable for the actions of their employee.
Relevant Terms, Laws, and Cases
Respondeat superior
• Imposes liability of the principal or employer of actions by agent or employee, while operating within the scope of their agency or employment.
• Known as vicarious liability.
Opinion
The court held that F was liable for the action of the employee. They argued that:
• Employers are liable when the employee caused injury resulting from the scope of employment.
• The injury resulted from the employee trying to confiscate the merchandise from R believing that they belonged to the company.
Thus, F is liable because their employee injured someone when conducting business for F.

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Brazilian Colombian Co. (B C), a food broker, ordered 40 barrels of olives from Mawer- Gulden-Annis (MGA). MGA's shipping clerk was later told to make out the bill of lading to B C's customer Pantry Queen; the olives were shipped directly to Pantry Queen. Eight days after delivery, the president of B C wrote MGA to give it the name of its principal, Pantry Queen, and advised MGA to bill the principal directly. Pantry Queen was unable to pay for the olives, and MGA sued B C for payment. B C contended that it was well known to MGA that B C was a food broker (agent) and the olives were shipped directly to the principal by MGA. It stated that as an agent, it was not a party to the contract and was thus not liable. Decide. [Mawer-Gulden-Annis, Inc. v Brazilian Colombian Coffee Co., 199 NE2d 222 (Ill App)]
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Which of the following statements is (are) correct regarding the relationship between an agent and a nondisclosed principal I. The principal is required to indemnify the agent for any contract entered into by the agent within the scope of the agency agreement. II. The agent has the same actual authority as if the principal had been disclosed. a. I only b. II only c. Both I and II d. Neither I nor II
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Neal Rubin, while driving his car in Chicago, inadvertently blocked the path of a Yellow Cab Co. taxi driven by Robert Ball, causing the taxi to swerve and hit Rubin's car. Angered by Rubin's driving, Ball got out of his cab and hit Rubin on the head and shoulders with a metal pipe. Rubin sued Yellow Cab Co. for the damages caused by this beating, contending that the employer was vicariously liable for the beating under the doctrine of respondeat superior because the beating occurred in furtherance of the employer's business, which was to obtain fares without delay. The company argued that Ball's beating of Rubin was not an act undertaken to further the employer's business. Is the employer liable under respondeat superior [Rubin v Yellow Cab Co., 507 NE2d 114 (Ill App)]
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Frey entered into a contract with Cara Corp. to purchase televisions on behalf of Lux, Inc. Lux authorized Frey to enter into the contract in Frey's name without disclosing that Frey was acting on behalf of Lux. If Cara repudiates the contract, which of the following statements concerning liability on the contract is not correct
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Myles Murphy was appointed by Cy Sinden, a famous developer, to purchase land for a shopping center near the intersection of I-95 and Route 1. Mary Mason, the property owner, contracted with Murphy for the sale of the property. Because of an economic downturn, Sinden was unable to provide the planned behind-the-scenes financing for the venture, and the contract was not performed. Mason's real estate experts determined that she lost $2 million because of the breach of contract. Mason also discovered that Sinden was "behind the deal." If Mason elects to sue Sinden, who turns out to be unable to pay the judgment because of the collapse of his business "empire," can she later bring suit against Murphy
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Steven Trujillo, told by the assistant door manager of Cowboys Bar "to show up to work tonight in case we need you as a doorman," came to the bar that evening wearing a jacket with the bar logo on it. Trujillo "attacked" Rocky Medina in the parking lot of the bar, causing him serious injury. Prior to working for Cowboys, Trujillo was involved in several fights at that bar and in its parking lot, and Cowboys knew of these matters. Medina sued Cowboys on two theories of liability: (1) respondeat superior and (2) negligent hiring of Trujillo. Cowboys's defense was that respondeat superior theory should be dismissed because the assault was clearly not within the course of Trujillo's employment. Concerning the negligent hiring theory, Cowboys asserted that Trujillo was not on duty that night as a doorman. Decide. [Medina v Graham's Cowboys, Inc., 827 P2d 859 (NM App)]
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Steve Diezel, an employee of Island City Flying Service in Key West, Florida, stole a General Electric Credit Corp. (GECC) aircraft and crashed the plane while attempting to take off. GECC brought suit against Island City on the theory that it had negligently hired Diezel as an employee and was therefore legally responsible for Diezel's act of theft. Diezel had a military prison record as a result of a drug offense and had been fired by Island City twice previously but had been immediately reinstated each time. Island City claimed that the evidence was insufficient to establish that it had been negligent in employing Diezel. Decide. [Island City Flying Service v General Electric, 585 So2d 274 (Fla)]
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Leo Bongers died intestate. Alfred Bongers and Delores Kuhl, Leo's nephew and niece, were appointed personal representatives of his estate. Leo left more than 120 antique cars, trucks, and motorcycles. The estate hired Bauer-Moravec to sell the vehicles at auction. Auctioneer Russ Moravec suggested that the vehicles be sold at an airstrip auction in May, June, or July. The estate rejected this recommendation and insisted that the sale be conducted in January on a farm owned by the estate. On January 30, the auction took place beginning at 9:30 A.M. with temperatures below freezing and some 800 people jammed into the bid barn. One auctioneer had purchased Putnam hitch balls to be used with mylar-type ropes so that small farm tractors could tow the vehicles into and out of the bid barn. One hour into the auction, Joseph Haag was seriously injured when a hitch ball came loose from the drawbar of the tractor towing an antique Studebaker truck. Haag sued the estate, claiming that Bauer-Moravec was acting as agent for the estate and that its negligence in not properly attaching the hitch ball and in using mylar-type tow rope rather than chains should be imputed to the estate under the doctrine of respondeat superior. The estate defended that it was not liable for the torts of the auctioneer and its employees because the auctioneer was an independent contractor. Decide. [Haag v Bongers, 589 NW2d 318 (Neb)]
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A principal will not be liable to a third party for a tort committed by an agent:
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Mills Electric Co. signed a contract with S S Horticulture Architects, a two-person landscaping partnership operated by Sullivan and Smyth, to maintain the grounds and flowers at the Mills Electric Co. plant in Jacksonville, Florida. Mills checked references of S S and found the company to be highly reputable. The contract set forth that S S would select the flowers for each season and would determine when to maintain the lawns so long as they were properly maintained. The contract called for payments to be made to S S on the first workday of each month, and the contract stipulated that "nothing herein shall make S S an agent of the company." The contract also required that S S personnel wear uniforms identifying them as employees of S S. S S had other accounts, but the large Mills Electric plant took up most of its time. While working on a terraced area near the visitors' entrance to the plant, Sullivan lost control of his large commercial mower, and the mower struck Gillespie, a plant visitor, causing her serious injury. A witness heard Sullivan apologizing to Gillespie and saying that "running that mower on the terrace is a two-person job." Gillespie brought suit against Mills Electric Co., contending Mills should be held vicariously liable. Decide.
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Richard Pawlus was an owner of Dutch City Wood Products, Inc., which did business as "Dutch City Marketing." Pawlus purchased merchandise from Rothschild Sunsystems from April 24 to June 24 using the designation "Richard Pawlus Dutch City Marketing" on orders and correspondence. In October, Rothschild was notified that Pawlus was acting on behalf of the corporation when the merchandise was purchased. Rothschild sued Pawlus for payment for the merchandise. Pawlus contended that he was an agent of the corporation and was thus not personally liable. Decide. [Rothschild Sunsystems, Inc. v Pawlus, 514 NYS2d 572 (App Div)]
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Beverly Baumann accompanied her mother to Memorial Hospital, where her mother was placed in intensive care for heart problems. A nurse asked Baumann to sign various documents, including one that authorized the hospital to release medical information and to receive the mother's insurance benefits directly. This form stated: "I understand I am financially responsible to the hospital for charges not covered by this authorization." Baumann's mother died during the course of her hospitalization. The hospital later sued Baumann to recover $19,013.42 in unpaid hospital charges based on the form she signed, which the hospital called a "guarantee of payment." Baumann contended that she signed the document as an agent for her mother and was thus not personally liable. Decide. [Memorial Hospital v Baumann, 474 NYS2d 636]
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Moritz, a guest at Pines Hotel, was sitting in the lobby when Brown, a hotel employee, dropped a heavy vacuum cleaner on her knee. When Moritz complained, the employee insulted her and hit her with his fist, knocking her unconscious. She sued the hotel for damages. Was the hotel liable [Moritz v Pines Hotel, Inc., 383 NYS2d 704 (App Div)]
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The Bay State Harness Horse Racing and Breeding Association conducted horse races at a track where music for patrons was supplied by an independent contractor hired by the association. Some of the music played was subject to a copyright held by Famous Music Corp. The playing of that music was a violation of the copyright unless royalties were paid to Famous Music. No royalties were paid, and Famous Music sued the association, which raised the defense that the violation had been committed by an independent contractor specifically instructed not to play Famous Music's copyrighted material. Decide. [Famous Music Corp. v Bay State Harness Horse Racing and Breeding Association, Inc., 554 F2d 1213 (1st Cir)]
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Cox engaged Datz as her agent. It was mutually agreed that Datz would not disclose that he was acting as Cox's agent. Instead, he was to deal with prospective customers as if he were a principal acting on his own behalf. This he did and made several contracts for Cox. Assuming Cox, Datz, or the customer seeks to avoid liability on one of the contracts involved, which of the following statements is correct
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