1. *LP8: Agents & Employees
Four subjects relating to Agency:
•1. Authority of Agent
•2. Termination of Authority
•3. Relationship between Agents & Principals
•4. Relationship with Third Parties
2. *
*An agent is a person who has the
authority to act for a principal.
*The scope of the authority is
determined by the agency
relationship and may be
express, implied, or apparent.
3. *
Express Authority
*
Principal grants an agent authority to act on
behalf of the principal in writing.
*
*
Either limited or general in nature.
Limited authority can be granted to act for the
principal in a particular situation or
transaction.
4. *
Implied Authority
*
Agent possesses implied authority to carry out
powers expressly granted
*
For example, an employee who is expressly
authorized and directed to deposit funds in
the employer’s bank account, is impliedly
authorized to endorse any checks, so that they
may be deposited.
5. *
Apparent Authority
*
*
Agent appears to possess authority.
A third person would reasonably believe that
the agent has the authority by the principal’s
conduct.
6. *
Authority to act for the principal may
be terminated by:
*Agreement
*Revocation
*Completion of purpose
*Death or mental incapacity of the
principal
7. *
Agent's Duties Owed to Principal Principal's Duties Owed to Agent
• Loyalty to the principal
• Obey instructions of the
principal
• Use reasonable skill and
judgment Communicate
with the principal Account
for funds received
• Compensate the agent according
to terms of agreement
• Reimburse the agent for
expenses
• Indemnify and hold the agent
harmless if a claim is made
against the agent for actions
taken with the scope of the
agent’s authority on behalf of the
principal
8. *
Independent Contractor
As a general rule, a person is an independent
contractor if:
*The person or organization for whom the
service is performed has the right to control
or direct only the result of the work done by
the person and does not the means and
methods of accomplishing the result.
9. *
Common Law Employee
*An employee must perform duties as
instructed by the agent, even if the
employer gives the employee freedom of
action.
*What matters is that the employer has
the right to control the details of how
the services are performed.
10. *
Statutory Law Employee
* Some persons are defined as employees by statute, such as:
* A full-time traveling or city salesperson who solicits orders from
wholesalers, restaurants, or similar establishments on behalf of
a principal. The merchandise sold must be for resale (e.g., food
sold to a restaurant) or for supplies used in the buyer's business.
* A full-time life insurance agent whose principal business activity
is selling life insurance and/or annuity contracts for one life
insurance company.
* An agent-driver or commission-driver engaged in distributing
meat, vegetables, bakery goods, beverages (other than
milk), or laundry or dry cleaning services.
* A home worker performing work on material or goods furnished
by the employer.
12. *
If a person dies without a will, the person is said
to have died intestate. Consequences:
•State statutes will determine how the person's
estate is distributed.
•A guardian may be appointed for the
decedent's children.
• Large estate: an administrator will be
appointed to distribute the assets.
13. *
Consequences, cont’d
*State statutes usually divide a person's estate
among the surviving spouse and children, if any.
*If the decedent was not married and died
without children, then state laws will often
direct that the decedent's property be
distributed to the person's surviving parents.
*If no parents living, then to the decedent's
surviving brothers and sisters.
14. *
Write down the following familial relations:
1. Your parents (as stated on your current birth
certificate).
2. The
parents of your parents. If any person
has already passed, place a box around their
name. Write in any married step-parents.
3. Any biological siblings (including ½ siblings).
4. Any stepsiblings (underline these names).
5. Any aunts and uncles.
16. *
*A "Last Will & Testament“- direct distribution of
assets to designated beneficiaries upon a
person's death.
*The person who makes a will, called the
testator, can also name the personal
representative (often called the executor) who
will distribute the assets.
*If the testator has minor children, then he/she
may also be able to designate a guardian for
the children, if the other parent has previously
died.
17. *
*Creates a separate legal entity (a trust), that has the
legal authority to own property.
*The person who creates the trust is called the trustor
or grantor.
*Property is then transferred to the trust and
administered by trustee, a person or entity, such as the
trust department of a bank, designated in the trust
document.
*The trustee administers the trust in accordance with
the provisions of the trust document.
*Usually, the trustee of a living trust is directed to
manage the property in the trust for the benefit of the
designated beneficiary during the beneficiary's
lifetime.
18. *
*Joint checking and savings accounts
* Real estate owned in joint tenancy
*Life Insurance
*Gifting prior to death
*IRA or other retirement plan with a
designated beneficiary
*Living Wills & Health Care Powers of
Attorney