Nature of Agency Relationships

Question 1

What is an agency relationship?

Answer 1

Voluntary, fiduciary relationship between principal and agent.

Principal authorizes Agent to act on Principal’s behalf.

Question 2

Gratuitous Agency

Answer 2

Principal doesn’t compensate Agent for his work on Principal’s behalf.

Question 3

Contractual Agency

Answer 3

(1) Employer-employee (employer has right to control WHAT employee does and HOW employee does it)

OR

(2) employer-independent contractor (employer has right to control only WHAT agent does, but not HOW independent contractor does it)

Question 4

Factors that determine the employer’s right to control

Answer 4

+ Whether the work is typically performed by specialists without supervision

+ Who supplies Agent with tools and a place to perform the work

+ Length and exclusivity of employment relationship

+ Whether agent was paid by the job (more likely an independent contractor) or at regular intervals (employee)

+ Whether the work is part of Employer’s regular business