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journal article Recent Developments in: The Economics of Organization: The Principal-Agent RelationshipActa Sociologica Vol. 36, No. 3, Rational Choice Theory (1993) , pp. 277-293 (17 pages) Published By: Sage Publications, Ltd. https://www.jstor.org/stable/4200860 Read and download Log in through your school or library Alternate access options For independent researchers Read Online Read 100 articles/month free Subscribe to JPASS Unlimited reading + 10 downloads Purchase article $41.50 - Download now and later Journal Information Acta Sociologica publishes papers on high-quality innovative sociology, carried out from different theoretical and methodological starting points, in the form of full-length original articles and review essays, as well as book reviews and commentaries. Articles that present Nordic sociology or help mediate between Nordic and international scholarly discussions are encouraged. Publisher Information SAGE Publications is an academic and professional publisher. We publish books, journals and software under the SAGE, Corwin Press, Paul Chapman Publishing, Pine Forge Press, SAGE Reference, SAGE Science and Scolari (US and Europe websites) imprints. Rights & Usage This item is part of a JSTOR Collection. ____ is the party that agrees to represent or act on behalf of the other (the _____) Agency (or Emp) Principle Employees who deal with third parties are usually deemed to be agents Employer-Employee Relationships: Between agency law and employment law which has a broader reach in terms of laws; and why? Agency Law, Because agency relationships can exist outside an employer-employee relationship agency law is based on
the ______ law, whereas much employment law is ______law. One who works for, and receives payment from, an employer but whose working conditions and methods are NOT controlled by the employer. An independent contractor is not an employee but may be an agent. examine or inspect closely and thoroughly The
IRS closely scrutinizes categorization of workers since employers can avoid _____ ___ _____ by hiring independent contractors instead of employees. What are IRS guidelines in trying to determine if Employers Agency relations to code them as official emp's.. Behavior A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised.Training Financial Control: Does the business have a right to direct or control the financial and business aspects of the worker's job? Consider: Investmentin the equipment ,Method of payment. Relationship: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes: Wriiten, Benefits. T/F a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status. Under the Copyright Act, any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is a Copyrighted work created by an independent contractor is normally owned by ________ unless the parties agree in writing that it is a “work for hire” and the work falls into nine specific categories. Formation of the Agency Relationship Generally, agency relationships are : Are consensual (ie consent). Require no consideration. Require principal to have contractual capacity (agent does not). Can be created for any legal purpose. _______ ___(state and federal) apply only to the employer employee relationship but not to employer-independent contractor relationships A person having a duty to act onthe behalf of— and primarily for the benefit of—another. Relationship involing trust and confidence. New trend geared around short-term employees -Gig Economy -Uber and Lift What is an advantage of principles they can conduct multiple operations Principal causes a third person to believe that another person is the principal’s agent, and the third person acts to her detriment in reasonable reliance on that belief. The Third Party’s Reliance(on the agent) Must Be Reasonable: Agency based on social
policy or legal duty, OR formed in certain situations when the agent is unable to contact the principal. Agency by Operation of Law Created by the Principal’s Conduct: It is not the acts or declarations of a purported agent (appear or claim to be or do something) Duties of Agents and Principals Agent’s Duties to the Principal: Notification: The agent must notify the principal of all matters concerning subject matter of agency. The law assumes that the principal is aware of any information acquired by the
agent that is relevant to the agency Performance: use of reasonable diligence and skill. If agent fails, liability for breach of contract may occur. Standard of Care. Reasonable Person If holds self out as possessing special skill held to that level Gratuitous Agent: No contract involved and agent is only liable for torts. (performs negligently) Notification: The agent must notify the principal of all matters concerning subject matter of agency. The law assumes that the principal is aware of any information acquired by the agent that is relevant Agent’s Duties to the Principal: Loyalty: undivided and not result in any secret profit for the agent. Maintain Confidentiality Obedience: Agent has a duty to follow lawful and clearly stated instructions of principal. Accounting Principal’s Duties to Agent: Compensation: Agent must be paid for services rendered. Reimbursement and Indemnification Cooperation: Principal must cooperate with agent and assist the agent in performing his/her duties— and must do nothing to prevent that performance. Safe Working Conditions: The principal is required to provide safe working premises, equipment, and conditions for all agents and employees. An agent can also withhold further performance and demand that the principal give an accounting. Demand for an Accounting: Principal’s Rights and Remedies against the Agent: Constructive Trust: Because anything that an agent obtains by virtue of the employment/agency relationship belongs to the principal, the agent holds such property in a constructive trust (an equitable trust imposed for reasons of fairness) for the principal. Avoidance: If an agent breaches the agency agreement or duties
under a contract, the principal has a right to avoid any contract entered into with the agent (at the principal’s election). Indemnification: In certain situations, when a principal is sued by a third party for an agent’s negligent conduct or if the agent violates the principal’s instructions, the principal can sue the agent for indemnification (an equal amount of damages). The principal has tort remedies if the agent engages in misrepresentation, ________ deceit, libel, slander, or trespass.. T/F Any breach of a fiduciary duty by an agent may justify the principal’s termination of the agency No contract involved and agent is only liable for torts. (performs negligently) What is the principalThe principal-agent relationship is an arrangement in which one entity legally appoints another to act on its behalf. 1 In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act.
How is the principal and agent relationship different to the employee and employer relationship?In the employment relationship, the employer is the principal and the employee is the agent. Both parties have an obligation to act in good faith to fulfill their obligations under the relationship. The employee has power to act as agent only to the extent authorized by the employer.
What is the relationship between agents and people?An Agency relationship is: [T]he fiduciary relation which results from the manifestation of consent by one person to another that the other person shall act in his behalf and is subject to his control; and consent by the other so to act. RESTATEMENT (SECOND) OF AGENCY 1(1).
What is the relationship between the contractor's employee and the principal?The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.
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Identify a correct statement about a principal-agent of employer-employee relationship
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