Agency & PartnershipAgency & PartnershipProfessor Donald J. KochanProfessor Donald J. Kochan

Class 8Class 8

Today’s MaterialsToday’s Materials

Pages 137-173Pages 137-173

Vicarious Tort LiabilityVicarious Tort Liability

Vicarious Liability – BasicsVicarious Liability – Basics Generally, Generally, “It is accepted doctrine that one “It is accepted doctrine that one

is liable for the damages caused when is liable for the damages caused when directing or participating in the directing or participating in the

commission of a tort by someone else.”commission of a tort by someone else.”

BUT note that is Imprecise: Vicarious BUT note that is Imprecise: Vicarious Liability is Liability is “liability “liability in additionin addition to the to the

liability of the employee . . .”liability of the employee . . .”

Agent May Be Liable AloneAgent May Be Liable Alone Principal May Be Liable AlonePrincipal May Be Liable Alone

Both Agent and Principle May Be LiableBoth Agent and Principle May Be Liable

Jones v. HartJones v. Hart Pawn Broker 1698 English CasePawn Broker 1698 English Case

Master-Servant Case – Master-Servant Case – See definitions in Notes and GlossarySee definitions in Notes and Glossary

How is an Independent Contractor Different?How is an Independent Contractor Different?

Respondeat SuperiorRespondeat Superior – – Know What it MeansKnow What it Means

Importance of Trier of Fact and Level of Control – Importance of Trier of Fact and Level of Control – see note 5 on page 140, for examplesee note 5 on page 140, for example

Employee/Agent LiabilityEmployee/Agent Liability

Note 8 on Page 141Note 8 on Page 141

Personal liability issues for agent Personal liability issues for agent actionsactions

Duties of Agent to Principal: “ought not Duties of Agent to Principal: “ought not to have done” v. “ought to have done”to have done” v. “ought to have done”

Holmes and Wigmore onHolmes and Wigmore onRespondeat SuperiorRespondeat Superior

Understand the historical development Understand the historical development in the common lawin the common law

Command IssuesCommand Issues

Scope IssuesScope Issues

Employer-Employee Relationship NOT Employer-Employee Relationship NOT necessary for Proving Vicarious Liabilitynecessary for Proving Vicarious Liability

Heims v. HankeHeims v. Hanke Slip and Fall on a Sidewalk Case; Spilling of Water Slip and Fall on a Sidewalk Case; Spilling of Water

After Car Wash CaseAfter Car Wash Case

Is the Uncle a Principal? Is the Nephew an Agent?Is the Uncle a Principal? Is the Nephew an Agent?

Imputation of Negligence to Uncle?Imputation of Negligence to Uncle? Exercise of Ordinary CareExercise of Ordinary Care

ForseeabilityForseeability

Does Volunteering Establish a M/S or P/A Does Volunteering Establish a M/S or P/A relationship?relationship?

Sandrock v. TaylorSandrock v. Taylor Guest Passenger in Intersection CollisionGuest Passenger in Intersection Collision

Was the transportation gratuitous or under demand Was the transportation gratuitous or under demand and control?and control?

Imputability of the negligence of a driver to a Imputability of the negligence of a driver to a passengerpassenger

Purely Social Relationship Distinction – i.e. A/P never Purely Social Relationship Distinction – i.e. A/P never existed existed

(REMEMBER that is always the first question – (REMEMBER that is always the first question – Was there and Agnecy/Principal Relationship)Was there and Agnecy/Principal Relationship)

The Notes following the case are instructiveThe Notes following the case are instructive

Rationale for Rationale for Respondeat SuperiorRespondeat Superior

Direction, Control, and CommandDirection, Control, and Command

Indemnification – Always Remember the Principal Indemnification – Always Remember the Principal Can Sue the Agent Can Sue the Agent

So That All Are Made WholeSo That All Are Made Whole

Understand the Discussions on pages 129-152 of:Understand the Discussions on pages 129-152 of: HolmesHolmes

BatyBaty Posner Posner

Imputed Contributory NegligienceImputed Contributory Negligience

““Both Ways” TestBoth Ways” Test

Just Understand the Basic Concept Just Understand the Basic Concept regarding Liabilityregarding Liability

Direct Tort Liability of an Direct Tort Liability of an Employer/PrincipalEmployer/Principal

Main Issue is the Exercise of Main Issue is the Exercise of Due Due CareCare in Hiring and Choosing Your in Hiring and Choosing Your

Agents/Employees – Agents/Employees – Be Careful Who You Trust to Do Your Be Careful Who You Trust to Do Your

BiddingBidding

Kane Furniture Corp. v. MirandaKane Furniture Corp. v. Miranda

Carpet Installer Case/Car Accident After DrinkingCarpet Installer Case/Car Accident After Drinking

Distinction Between Agents and Independent Distinction Between Agents and Independent ContractorsContractors

Definition of Relationship Key Definition of Relationship Key to Decide Vicarious Liabilityto Decide Vicarious Liability

““It has been said that the level of control is the It has been said that the level of control is the most important factor in determining whether a most important factor in determining whether a

person is an independent contractor or an person is an independent contractor or an employee.”employee.”

Restatement (Second) of Agency Restatement (Second) of Agency Sec. 220Sec. 220

““(1) A servant is a person employed to perform services in the affairs of another and who with respect (1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject tothe other's control or right to the physical conduct in the performance of the services is subject tothe other's control or right

to control.to control.

(2) In determining whether one acting for another is a servant or an independent contractor, the (2) In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered:following matters of fact, among others, are considered:

(a) the extent of control which, by the agreement, the master may exercise over the details of the (a) the extent of control which, by the agreement, the master may exercise over the details of the work;work;

(b) whether or not the one employed is engaged in a distinct occupation or business;(b) whether or not the one employed is engaged in a distinct occupation or business;

(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;the direction of the employer or by a specialist without supervision;

(d) the skill required in the particular occupation;(d) the skill required in the particular occupation;

(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;for the person doing the work;

(f) the length of time for which the person is employed;(f) the length of time for which the person is employed;

(g) the method of payment, whether by the time or by the job;(g) the method of payment, whether by the time or by the job;

(h) whether or not the work is a part of the regular business of the employer;(h) whether or not the work is a part of the regular business of the employer;

(i) whether or not the parties believe they are creating the relation of master and servant; and(i) whether or not the parties believe they are creating the relation of master and servant; and

(j) whether the principal is or is not in business.”(j) whether the principal is or is not in business.”

Restatement (Third) of Agency Restatement (Third) of Agency Sec. 7.07Sec. 7.07

““(1) An employer is subject to vicarious liability for a tort (1) An employer is subject to vicarious liability for a tort committed by its employee acting within the scope of committed by its employee acting within the scope of

employment.employment.

(2) An employee acts within the scope of employment when (2) An employee acts within the scope of employment when performing work assigned by the employer or engaging in performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. An a course of conduct subject to the employer's control. An

employee's act is not within the scope of employment employee's act is not within the scope of employment when it occurs within an independent course of conduct when it occurs within an independent course of conduct

not intended by the employee to serve any purpose of the not intended by the employee to serve any purpose of the employer.employer.

(3) For purposes of this section,(3) For purposes of this section,(a) an employee is an agent whose principal controls or has (a) an employee is an agent whose principal controls or has

the right to control the manner and means of the agent's the right to control the manner and means of the agent's performance of work, andperformance of work, and

(b) the fact that work is performed gratuitously does not (b) the fact that work is performed gratuitously does not relieve a principal of liability.”relieve a principal of liability.”

Restatement (Third) of Agency Restatement (Third) of Agency Sec. 7.07 comment fSec. 7.07 comment f

““f. Definition of employee.f. Definition of employee. For purposes of respondeat superior, an agent is an employee only For purposes of respondeat superior, an agent is an employee only when the principal controls or has the right to control the manner and means through when the principal controls or has the right to control the manner and means through which the agent performs work. The definition has the consequence of distinguishing which the agent performs work. The definition has the consequence of distinguishing

between employees and agents who are not employees because they retain the right to between employees and agents who are not employees because they retain the right to control how they perform their work. If a person has no right to control an actor and control how they perform their work. If a person has no right to control an actor and

exercises no control over the actor, the actor is not an agent. See § 1.01, Comment exercises no control over the actor, the actor is not an agent. See § 1.01, Comment f(1)f(1)..The fact that an agent performs work gratuitously does not relieve a principal of vicarious The fact that an agent performs work gratuitously does not relieve a principal of vicarious

liability when the principal controls or has the right to control the manner and means of liability when the principal controls or has the right to control the manner and means of the agent's performance of work.the agent's performance of work.

A person who causes a third party to believe that an actor is the person's employee may be A person who causes a third party to believe that an actor is the person's employee may be subject to liability to the third party for harm caused by the actor when the third party subject to liability to the third party for harm caused by the actor when the third party

justifiably relies on the actor's skill or care and the actor's conduct, if that of an employee, justifiably relies on the actor's skill or care and the actor's conduct, if that of an employee, would be within the scope of employment. For the general principle of estoppel . . . would be within the scope of employment. For the general principle of estoppel . . .

Numerous factual indicia are relevant to whether an agent is an employee. These include: the Numerous factual indicia are relevant to whether an agent is an employee. These include: the extent of control that the agent and the principal have agreed the principal may exercise extent of control that the agent and the principal have agreed the principal may exercise

over details of the work; whether the agent is engaged in a distinct occupation or over details of the work; whether the agent is engaged in a distinct occupation or business; whether the type of work done by the agent is customarily done under a business; whether the type of work done by the agent is customarily done under a

principal's direction or without supervision; the skill required in the agent's occupation; principal's direction or without supervision; the skill required in the agent's occupation; whether the agent or the principal supplies the tools and other instrumentalities required whether the agent or the principal supplies the tools and other instrumentalities required

for the work and the place in which to perform it; the length of time during which the for the work and the place in which to perform it; the length of time during which the agent is engaged by a principal; whether the agent is paid by the job or by the time agent is engaged by a principal; whether the agent is paid by the job or by the time

worked; whether the agent's work is part of the principal's regular business; whether the worked; whether the agent's work is part of the principal's regular business; whether the principal and the agent believe that they are creating an employment relationship; and principal and the agent believe that they are creating an employment relationship; and

whether the principal is or is not in business. Also relevant is the extent of control that the whether the principal is or is not in business. Also relevant is the extent of control that the principal has exercised in practice over the details of the agent's work.principal has exercised in practice over the details of the agent's work.

. . .”. . .”

Lazo v. Mak’s Trading Co.Lazo v. Mak’s Trading Co.

Rice Unloader Assault Case/Odd-Jobbers/Day-WorkersRice Unloader Assault Case/Odd-Jobbers/Day-Workers

Home Depot Example?Home Depot Example?

Distinction Between Employees and Independent ContractorsDistinction Between Employees and Independent Contractors

From the Concurrence: From the Concurrence: “an employer cannot be held liable for an “an employer cannot be held liable for an employee’s assaultive acts where the tortious conduct was not taken employee’s assaultive acts where the tortious conduct was not taken within the within the scope of employmentscope of employment, the employer , the employer did not authorizedid not authorize the the violence and the use of force is violence and the use of force is not within the discretionary authoritynot within the discretionary authority

afford the employee . . .”afford the employee . . .” (emphasis added) (emphasis added)

From the Concurrence: From the Concurrence: “… no connection between the assualy and “… no connection between the assualy and the tortfeasor’s duty as a day laborer . . .”the tortfeasor’s duty as a day laborer . . .”

Read Notes re fact-specific nature and difficulty of application of Read Notes re fact-specific nature and difficulty of application of doctrinesdoctrines

Soderback v. TownsendSoderback v. Townsend Negotiation of Gas Leases CaseNegotiation of Gas Leases Case

Level of Responsibility/Level of Control IssuesLevel of Responsibility/Level of Control Issues

Representation of “Working For” Issue – difference between such Representation of “Working For” Issue – difference between such representation and authority to so representrepresentation and authority to so represent

““However, all principals and agents are not also masters and servants. The However, all principals and agents are not also masters and servants. The Comment to § 250, 1 Restatement 2d 549-550, Agency, states the distinction Comment to § 250, 1 Restatement 2d 549-550, Agency, states the distinction as follows:as follows:

‘‘A principal employing another to achieve a result but not controlling A principal employing another to achieve a result but not controlling or having the right to control the details of his physical movements is not or having the right to control the details of his physical movements is not responsible for incidental negligence while such person is conducting the responsible for incidental negligence while such person is conducting the

authorized transaction. Thus, the principal is not liable for the negligent authorized transaction. Thus, the principal is not liable for the negligent physical conduct of an attorney, a broker, a factor, or a rental agent, as such. physical conduct of an attorney, a broker, a factor, or a rental agent, as such.

In their movements and their control of physical forces, they are in the In their movements and their control of physical forces, they are in the relation of independent contractors to the principal. It is only when to the relation of independent contractors to the principal. It is only when to the

relation of principal and agent there is added that right to control physical relation of principal and agent there is added that right to control physical details as to the manner of performance which is characteristic of the relation details as to the manner of performance which is characteristic of the relation

of master and servant that the person in whose service the act is done of master and servant that the person in whose service the act is done becomes subject to liability for the physical conduct of the actor. . . .’”becomes subject to liability for the physical conduct of the actor. . . .’”

Kowaleski v. KowaleskiKowaleski v. Kowaleski, 385 P.2d 611, 612-613 (Or. 1983)., 385 P.2d 611, 612-613 (Or. 1983).

Hunter v. R.G. Watkins & Son, Inc.Hunter v. R.G. Watkins & Son, Inc.

Employee in Personal Automobile CaseEmployee in Personal Automobile Case

What is the distinction between “control” and What is the distinction between “control” and “right to control” in terms of vicarious “right to control” in terms of vicarious

liability?liability?

Notice the court thinks the control test is Notice the court thinks the control test is “overemphasized”“overemphasized”

Read the Notes following the case (esp. re Read the Notes following the case (esp. re issues of choice, skill, licenses, and discretion)issues of choice, skill, licenses, and discretion)

Sandrock v. TaylorSandrock v. Taylor See earlier discussion of caseSee earlier discussion of case

Whether there is an existence of a master-servant Whether there is an existence of a master-servant relationshiprelationship

This excerpt focuses on fact of contract with This excerpt focuses on fact of contract with “complete “complete libertyliberty to use his own to use his own discretion and discretion and

judgmentjudgment as to the method and manner of as to the method and manner of performance without any right on the part of the performance without any right on the part of the

Co-Op to Co-Op to direct or control his performancedirect or control his performance.”.” (emphasis added)(emphasis added)

Importance of Classification for Vicarious LiabilityImportance of Classification for Vicarious Liability

Concluding ThoughtsConcluding Thoughts

It is all about who is liable and when It is all about who is liable and when and for what actions and for whose and for what actions and for whose

actions ...actions ...