BUS 340 Lecture Notes - Lecture 20: Vicarious Liability, Apparent Authority, Sole Proprietorship
Michael Le
Arc
Bus 340
Business Law
Introduction to Business Associations (Business Entities) (Macro Law)
The Legal Environment Box
● Corporations only exist in our minds (intangible) which means it can’t conduct business.
It must do it through humans
● Agency – “The law of” – covers relationship between people and intangible corporations,
LLC, partnerships, etc.
● Vicarious Liability Examples
○ Principle/Agent Relationship – Principle = Corp, Agent = Employee (human)
■ Human has been given the power to create Contracts (because of agents)
■ Creates Vicarious Liability (“Through something else”) Based on
“Respondent Superior” – Latin
● Agents bring liability back to the principle
○ Ex: IBM Sales person negotiating/creating contracts
Employee runs a red light (negligent tort) Pedestrian
wants to sue the employee and IBM too $$$
■ Designates who has liability to create contracts
○ Master/Servant – Employment relationship
● Explanation: Blacksmith/Apprentice relationship: apprentice trying
to learn
■ No power to create contracts
■ Creates Vicarious Liability
Ex: IBM at football on Saturday, runs red light, hits pedestrian he’s liable for his own
negligence pedestrian wants to sue IBM and him when is an employer liable?
○ “On the job” vs. “Frolic” – brings some separation of liability between principle
and agent
● “Frolic” supposed to be on the job but they’re doing something
for themselves instead
■ Ex: Crain Driver driving through neighborhood, caught some powerlines,
and poles got pulled down started fire (lots of damage) Utility
company wants to sue operator who IS negligent is crane company also
liable? Court asks operator why driving crane in that neighborhood;
because of girlfriend. He is blamed. On the job or frolic?
○ “Apparent Authority” – concept: it is apparent you have the authority to complete
a task
■ Ex: bank’s apparent teller takes $5K cash deposit and gives receipt but
doesn’t deposit it but that teller wasn’t actually employed and took all
Document Summary
Introduction to business associations (business entities) (macro law) Corporations only exist in our minds (intangible) which means it can"t conduct business. Agency the law of covers relationship between people and intangible corporations, Principle/agent relationship principle = corp, agent = employee (human) Human has been given the power to create contracts (because of agents) Creates vicarious liability ( through something else ) based on. Agents bring liability back to the principle. Ex: ibm sales person negotiating/creating contracts . Employee runs a red light (negligent tort) pedestrian wants to sue the employee and ibm too 18333$ Designates who has liability to create contracts. Explanation: blacksmith/apprentice relationship: apprentice trying to learn. On the job vs. frolic brings some separation of liability between principle and agent. Frolic supposed to be on the job but they"re doing something for themselves instead. Court asks operator why driving crane in that neighborhood; because of girlfriend.
