Principals and Agents

Question 1

Who can be principal?

Answer 1

Any person with the capacity to contract, excluding minors and anyone incapacitated by illness or intoxication.

Question 2

Types of entities that can be principals:

Answer 2

1. Employer
2. Corporation; LLC
3. Partnership; LLP

Question 3

What must one do to be considered a principal?

Answer 3

1. Control the day-to-day activities of the agent
2. Give the agent tools to work at the work place
3. Paying agent on a structured pay period
4. Directing the ways in which agents should finish and perform tasks

Question 4

T or F: Unincorporated associations can be principals

Answer 4

False

Question 5

Who can be an agent?

Answer 5

Any person or entity who has minimal capacity, including a minor

Question 6

To have minimal capacity, an agent must be able to:

Answer 6

1. Assent to the agency relationship;
2. Perform the tasks on behalf of the principal; and
3. Be subject to the principal’s control

Question 7

Employee relationship

Answer 7

The employer has the right to control the agent’s physical conduct of work

Question 8

Independent contractor relationship

Answer 8

The principal does not control or have the right to control the agent’s physical conduct of work

Question 9

Characteristics of an independent contractor:

Answer 9

1. Maintain a high level of independence
2. Free to work for other people
3. Paid on a fixed fee
4. Owns own tools

Question 10

Terminating an agency relationship

Answer 10

Either party can terminate an agency relationship unilaterally