CA Bar Exam Agency & Partnership
Independent Contractor vs. Employee ️️To determine if someone is an independent contractor or
an employee, courts look at whether the principal controls the method and manner of the agent's work.
(also consider the factors)
Factors that establish whether...
Independent Contractor vs. Employee ✔️✔️To determine if someone is an independent contractor or
an employee, courts look at whether the principal controls the method and manner of the agent's work.
(also consider the factors)
Factors that establish whether principal controls manner and method of performance ✔️✔️(1) The
skills required for the work (i.e. doctor is highly skilled);
(2) whose tools or facilities are used;
(3) basis of compensation (i.e. based on time or job completion);
(4) duration of employment;
(5) what the understanding of the parties is (what the K says/ what was agreed to is not determinative,
but it helps); and
(6) whether the person was hired to further the principal's business (i.e. non-business purpose like
mowing the lawn likely indicates I.C. status)
Actual Authority (for Principal-Agent) ✔️✔️authority an agent reasonably believes she has based on
dealings with the principal.
Actual Authority (for Partners) ✔️✔️Authority a partner reasonably believes she has based on
dealings with the partnership, can be based on partnership agreement or consent of the partners.
Revocation of Actual Express Authority ✔️✔️Revoked by:
(1) A unilateral act of either Principal or Agent; or
(2) Principal's death or incapacity.
Actual Implied Authority ✔️✔️Authority which O gives A through custom or circumstance.
(1) Necessity = all tasks which are necessary to accomplish an expressly authorized task;
, (2) Custom = all tasks which are customarily performed by persons w/ A's title or position; and
(3) Prior Dealings (btwn P and A) = all tasks which agent believes is authorized based on P's prior
acquiesce.
Ratification ✔️✔️Authority granted AFTER K has been entered into. Occurs when agent purports to
enter into a K on P's behalf (but w/o authorization) and subsequently P validates the act and becomes
bound.
Requires:
(1) P knows all material facts;
(2) acceptance of entire transaction; and
(3) capacity (legal age and competency)
Principal's K Liability to Third Parties ✔️✔️*For principal to be held liable for Ks an agent entered into
with a third party, P has to authorize (actual or apparent) or ratify the K.*
Principal's liability to 3rd Parties for Independent Contractor's Intentional torts ✔️✔️Generally,
principals are not liable for an independent contractor's torts
EXCEPTIONS:
(1) ultra hazardous activities; and
(2) estoppel.
Principal Liability for Independent Contractor engaged in Ultra Hazardous Activities ✔️✔️If Indep. C is
engaged in ultra-hazardous activities, principal can be held liable for tort to 3rd party.
Estoppel Doctrine ✔️✔️Under the estoppel doctrine, if the principal creates the appearance of an
employer-employee relationship and the third-party relies on that relationship, the principal will be
estopped from denying relationship and will be liable under the doctrine of respondeat superior.
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