One Of The Most Fundamental Issues In Business Law In 471655

One Of The Most Fundamental Issues In Business Law Involves the Questi

One of the most fundamental issues in business law involves the question of when a company can be held liable for the acts of an individual person, whether this involves a contractual obligation or a personal injury (meaning a tort). Choose one of the scenarios below and explain whether you think the business is liable for the acts under the principles of agency law. A real estate agent hires a handful of local kids to do the landscaping of homes that he is trying to sell. In addition to the general payment, he reimburses them for the cost of gasoline for lawn mowers and other equipment. While mowing a lawn, one of the kids loses control of a lawn mower and it mows down a neighbor's very expensive collection of lawn gnomes. In a hurry to get his apartment complex painted, a homeowner hires three people he meets at the local home improvement store to do the work. Since they are not professional painters, he provides all the equipment and paint needed to do the work. While at the apartment complex, one of them breaks into an apartment, assaulting the resident and stealing a wallet. An entrepreneur decides to open up his own car-for-hire business and creates an app allowing anyone to connect with people who need a ride. The passengers pay the entrepreneur, who in turn pays a percentage to the driver. Other than the app, the entrepreneur has no involvement between the driver and the passenger. One night, a driver who is intoxicated picks up a passenger and then gets into an accident, resulting in the passenger being severely injured. For all discussions:

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Business law regulation of liability for the acts of individuals associated with a company hinges critically on the principles of agency law. This legal doctrine determines whether a company's actions can be imputed to it, thus establishing liability for acts committed by its agents or employees within the scope of their employment or agency relationship. In analyzing the scenarios presented, it is essential to examine the formation of agency, the scope of authority, and the nature of the acts involved.

Scenario 1: Landscaping by Real Estate Agent's Hired Kids

In this scenario, a real estate agent hires local kids to perform landscaping work and reimburses them for expenses, including gasoline. During work, an accident occurs where a mower damages a neighbor's lawn gnomes. Under agency law, liability depends on whether the kids are considered agents acting within the scope of their employment. The key factors include whether the kids were acting under the control or direction of the agent and whether the act was within the scope of their duties.

Since the kids were hired to do landscaping and were reimbursed for gasoline, it indicates a relationship akin to an employment or agency arrangement. Mowing lawns and managing equipment could be deemed within their scope of work, especially if the agent directed or supervised their activities. The accidental damage caused by the lawn mower, despite being unintentional, likely renders the real estate agent liable under vicarious liability principles, provided the act was committed within the scope of employment or agency authority.

Therefore, based on agency principles, the real estate agent is probably liable for the damages caused by the kids mowing the lawn, because their act, although accidental, occurred during their work activity and arose from their relationship with the agent.

Scenario 2: House Painter's Employee Breaks Into an Apartment

Here, a homeowner hires non-professional workers for painting and provides equipment. During their work, one worker commits an unrelated criminal act—breaking into an apartment, assault, and theft. Under agency law, liability hinges on whether the workers are deemed employees or independent contractors, and whether the criminal act falls within the scope of employment.

Given that the workers are hired informally and provided equipment by the homeowner, their status might be ambiguous. If the workers are classified as independent contractors, the homeowner generally is not liable for their acts outside of their job duties. However, if they are considered employees, the scope of their employment becomes relevant.

Most significantly, the criminal acts—breaking into an apartment and assaulting a resident—are not related to their painting duties and are considered scope of employment only if the employer authorized or directed such misconduct, which appears unlikely. Thus, the homeowner is unlikely to be liable for the criminal acts committed by the workers, as these acts fall outside the scope of their employment or agency.

Scenario 3: Car-for-Hire Business and Drunk Driving Accident

In this situation, an entrepreneur operates a ride-sharing app that connects drivers and passengers without direct involvement beyond facilitating the connection. The driver, who is intoxicated, causes an accident. Under agency law, liability of the entrepreneur hinges on whether the driver is an agent acting within the scope of employment or agency relationship.

Ride-sharing companies like Uber and Lyft have faced legal scrutiny over this issue. Courts often analyze whether drivers are independent contractors or employees, and if they are acting within the scope of their duties when incidents occur. Typically, drivers are considered independent contractors, and liability may be limited accordingly.

However, for liability to attach to the entrepreneur, the driver must be acting as an agent or employee at the time of the crash, within the scope of their employment. In cases of intoxication, courts often scrutinize whether the driver was on duty or engaged in company-related activities during the incident. If the driver was on a trip accepted via the app, within the operational scope, then the company might be held liable under vicarious liability principles.

In this case, since the driver was actively transporting a passenger via the app, and presumably within accepted use, the liability of the entrepreneur could be established due to the driver's status as an agent acting within the scope of their role, even while intoxicated. the fact that the driver was intoxicated complicates liability; but generally, the business could be held liable if the driver was on duty and acting as an agent at the time.

Conclusion

Each scenario illustrates how agency law informs business liability. The key factors include whether the individual was acting within an authorized scope, under control, or as part of the business activities. The lawnmower incident strongly suggests liability due to scope of employment; the criminal acts of the handyman likely do not impose liability; and the ride-sharing accident could result in business liability depending on driver status and scope of activity.

References

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