Homework answers / question archive / What are the differences among the following relationships: employer- employee, employer- independent contractor, and principal agent? What is at will employment? Employer- employee Based on the master-servant relationship There is a contract Presupposes employee works for employer on a continuous basis, subject to supervision by the employer and a level of control by the employer that does not exists in E-I contractor relationship

What are the differences among the following relationships: employer- employee, employer- independent contractor, and principal agent? What is at will employment? Employer- employee Based on the master-servant relationship There is a contract Presupposes employee works for employer on a continuous basis, subject to supervision by the employer and a level of control by the employer that does not exists in E-I contractor relationship

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1. What are the differences among the following relationships: employer- employee, employer- independent contractor, and principal agent? What is at will employment?

1. Employer- employee
   1. 1. Based on the master-servant relationship
      2. There is a contract
      3. Presupposes employee works for employer on a continuous basis, subject to supervision by the employer and a level of control by the employer that does not exists in E-I contractor relationship.
      4. Pays salary, needs to be withholding of federal income tax, social security, and medicare and employer is obligated to match the withholding
      5. Respondeat/superior DOES apply
         1. Employer is NOT liable for all torts committed by employee

B.Employer- independent contractor

1. 1. 6. Employed by the job
      7. Employer is not paying/hiring independent contractor to work on a continuing basis, but for a job, and when that job is completed the relationship is terminated ex, construction worker.
      8. Given form 10-99 not w2 (which employee gets in E-E)
      9. Pays his own social security, income taxes, and medicare

Biggest consequences between these relationships is vicarious liability

• Requirements for vicarious liability: establish the relationship (has to be EE),        

C. Principal-agent

• Agent may be an independent contractor OR employee
• If agent commits a tort, whether the principal is Vicariously liable depends on whether agent is an employee of contractor
• Duties include skills, keeping accounts, and giving information

D. AT Will employment

• Either party can terminate the relationship at will with/without cause (in reach of contract)
• Employee does not have contract with employer and can be let go with/without cause
• MOST COMMON 
• Exceptions (where employer could not terminate employee): jury duty, legal duty etc...

2. What is meant by respondeat superior and when does it apply?
   1. It is a tort/vicarious liability theory (NOT CONTRACT THEORY)
      1. On the basis of vicarious liability of an employer for the behavior of his employee for committing a tort while in the scope of employment
      2. Going and coming rule: refers to a legal principle exempting an employee from the scope of employment for a tort committed while commuting to or from work.
         1. If an employee commits a tort outside of work , he is NOT within the course & scope of his job and it CANNOT be said he was under the influence of the employer
            1. Principal CANNOT be held liable on a contract based on respondeat SUPERIOR
   2. It presupposes an employer-employee relationship
      1. does not apply to employer independent contractor relationship
3. What is the difference between actual and apparent  of the agent?
   1. Actual authority: can be expressed or implied; authority that is actually given by the principal to the agent
      1. There are certain things an agent will need implied authority to do to carry out an expressed authority ex, the authority to hire a surveyor (implied)
      2. the basis of an agents to the 3rd party liability is breach of warranty of authority in the absence of authority
   2. Apparent: where is an appearance of authority although it is not actually given/actual
      1. Based on act or not acting by principal
      2. The absence of a notice gives apparent authority
         1. APPEARANCE of agency authority
         2. Actual notice: has to be given to all third parties with whom the agent has done business
         3. Constructive notice: notice that has to be given to the public

            Ex, when an employee participates in fraud, his boss makes him come clean to everyone he's done a contract with (actual), and it comes in the newspaper (constructive)

AGENTS, OFFICERS, DIRECTORS ARE FIDUCIARIES

• Any knowledge agent has, has to be communicated to the principal

4. What is meant by discrimination and when is it illegal?
   1. Title 7
   2. Legal: level of experience and/or education/ bonafide occupational qualification
   3. Illegal:in terms of race, religion
      1. UNLESS IT IS A BONAFIDE JOB QUALIFICATION
5. What are the differences among the following types of businesses/organizations? Sole proprietorship, partnership, corporation, (“C”/”S”), limited partnership, and limited liability company
   1. Sole property
      1. One person
      2. Not a separate entity
   2. (ordinary) Partnership
      1. DOES NOT Have to be approved by the state to exist
      2. Created by contract
      3. The association together of 2 or more persons to carry on as co owners in a business for profit
      4. Each Partners are agents in a partnership, therefore they are partners for each other
      5. Partnership is NOT a (separate) entity
      6. Formed by contract/ based on contract
      7. Share profits/losses equally
         1. Business partnership property: customer list, phone numbers etc...
         2. Specific partnership property:assets are owned through tenancy, acquired, and used by the business ex, land, vehicles, equipment, software etc…
            1. Has right of proprietorship (one of dies, rights of asset goes to the other) ex, does not include estate
      8. Can be given entity treatment (like for ACCT purposes) but is not a separate entity
      9. Aggregate
      10. The partnership is the partners, the partners are the partnership
   3. Limited liability companies
      1. Have equal tax advantages to S corp. And partnerships
      2. Pass through: All profits and losses pass through to members
      3. No limit on members
   4. Limited partnerships
      1. Combination of a corporation and partnership
      2. Characteristics
         1. Can only be formed with the permission of the state
         2. There will be a contract between partners
            1. Partners are analogues to stockholders in a company
         3. Going to have at least 1 general partner (responsible for the management and have unlimited liability exposure for debts of LPship) and 1 limited partner (have no exposure, just put in capital/basically stockholders)
            1. General partner has same exposure as of a partner in ordinary partnership
   5. Corporation
      1. Both C and S are separate entities
      2. Can only be formed with permission of the state
      3. Functions as a separate entity, both C and S
      4. “C”
      5. “S”: means that if the corporation qualifies, then there is a document that is filed with the internal revenue service, and allows the corporation to be taxed the same way a partnership tax. Means that the corporation would file an income tax at the end of the yr, but not pay taxes. 
         1. If a corp has more than 100 shareholders/publicly traded it does qualify as “S”
         2. No foreign tradings in “S”
         3. Has to be closely owned and closely held (no more than a 100 shareholders, and they can only be individuals/trusts)
            1. None of the shareholders can not be corporations/foreign investors

• S corporations, partnerships, and limited liability companies are given the pass through treatment
• Limited partnerships IS NOT equal to a limited liability company
• Partnership law branches off of principal agent law

6.  What are the differences in Ch 7,11,13 in the Bankruptcy law? What courts have bankruptcy jurisdiction? Ch 13

 

Chapter 7:

• Straight up bankruptcy/liquidation
• debtor is saying he doesn't have anything, so schedules whatever assets he/she has (may be exempt)

Chapter 11:

• reorganization
• Where the debtor is filing for reorganization and extending the time window to pay debts, not doing straight liquidation, he is staying in business but is restructuring
• Automatic stay
  • Basically indiv. Saying “hey hold on I need some to reorganize”
• Creditors committee will examine

CHAPTER 7 OR 11 CAN BE VOLUNTARY (by individual) OR INVOLUNTARILY (by creditors)

Chapter 13:

• Individual
  • Wage earners plan
• Procedure for an individual to come up with some kind of plan of payment in a 3 to 5 yr period (for individuals only, not corps)

Chapter 4:

•  

 

CERCLA: comprehensive environmental recovery- has to do with cleanup liability in a brown field site, where somebody committed environmental violations

7.  What body of law is governed by article 3 of the uniform commercial code? What instruments are covered by this statute? What is the significance of negotiability?

• Negotiable instruments is governed by Article 3
  • Drafts, checks, cd’s, promissory notes (secured transaction) are covered by this statute
  • Causes holder to be immune from personal defenses in a due course

8. In the bankruptcy case, why is the term “filed for protection” used? What is the automatic stay and what follows it?

• Cases are filed in federal bankruptcy courts
• Means that once that bankruptcy petition has been filed, everything else is deceased
•  Automatic stay means that everything is put on hold (lawsuits etc..) as soon as the bankruptcy petition is filed
  • Under chapter 11 and 13, it gives the debtor time, under chapter 7 is means straight liquidation.
  • Results from the filing of  a bankruptcy petition

Bankruptcy law has got stricter over the years, not as “debtor friendly”