C HAPTER 9 – C ONTRACTUAL P ERFORMANCE AND A GENCY by Jeffrey Pittman

R EVIEW OF M ATERIALS COVERED FOR D R. R OBERTSON ’ S CLASS – W EDNESDAY, O CTOBER 24, 2012 To begin Chapter 9 Wednesday, we examined a sample mall lease agreement and a hypothetical problem: You leased a store in The Mall at Turtle Creek. Recently, the mall allowed a popcorn shop to operate. The shop produced a pervasive popcorn “odor” that bothered your customers and possibly reduced your store sales. sample mall lease agreement Using the rules of interpretation (textbook pages ), we analyzed lease clause and the “quiet enjoyment” language and clause (which helps the mall regarding odors, but not our store). Regarding the parol evidence rule (268-69), we examined lease clause Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

R EVIEW OF M ATERIALS COVERED FOR D R. R OBERTSON ’ S CLASS – W EDNESDAY, O CTOBER 24, 2012 Regarding conditions (269-71), we looked at clauses such as 2.3 and 7.7. Regarding conditions, we also used a separate question: You present an engagement ring to your prospective spouse. Later, she changes her mind and decides not to marry you. Do you have a legal right to return of the ring? The answer depends on a possible express or implied condition attaching to the delivery of the ring. 3 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

R EVIEW OF M ATERIALS COVERED FOR D R. R OBERTSON ’ S CLASS – W EDNESDAY, O CTOBER 24, 2012 Other topics we discussed Wednesday: Common law rules apply to contracts for the sale of land or services; UCC rules apply to the sale of “goods”. The Citibank case presents a contract interpretation and the plain meaning rule. I find the Citibank excerpt difficult to follow, so do not become discouraged reading the case. The Venture Media case presents contract performance. Venture Media is even more complicated than Citibank. I left the materials on pages as open for questions at the beginning of class, October Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

C LASS M ATERIALS – F RIDAY, O CTOBER 26 We begin today with impossibility of performance. For a typical example, see clause 22 in our sample mall lease agreement.sample mall lease agreement Note the concept of commercial impracticability. In a related problem, see the business discussion problem on textbook page 285. We will use Marlins fire manager Ozzie Guillen to discuss breach of contractMarlins fire manager Ozzie Guillen Specifically, the Guillen firing illustrates the measure of contract damages and the duty of mitigation. 5 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

A GENCY L AW Agency law is critically important to businesses and individuals. Agency law allows individuals and businesses to use representatives to act for the “principal”. From the Arkansas Bar Association, we used a “Living Will and Durable Power of Attorney for Health Care” to introduce the concept of representation and agency.Living Will and Durable Power of Attorney for Health Care 6 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

T YPES OF E MPLOYMENT R ELATIONSHIPS Employers hire individuals (or other firms) to allow the employer to accomplish its mission. The primary hiring relationships utilized by an employer include: Principal/agent. Employer/employee. Employer/independent contractor. 7 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

T YPES OF E MPLOYMENT R ELATIONSHIPS An individual may fit into more than one hiring category. For example, an employer could hire one individual as an agent, an employee, and an independent contractor. 8 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

A N A GENT Agent – A person authorized by another (the principal) to represent and act for the principal; one authorized to transact business for a principal. 9 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

A N E MPLOYEE Employee – A person in the service of an employer, where the employer has the power to control and direct the employee in the details of how the work is to be done. An employee does not represent an employer. 10 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

A N I NDEPENDENT C ONTRACTOR Independent Contractor – A person who contracts to do a piece of work according to the independent contractor’s own methods, subject to the employer’s control only as to the end product or final result of the work. An independent contractor does not represent an employer. 11 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

E MPLOYER L IABILITY FOR C ONTRACTS The employer is liable for contracts entered into by a gents, if the agents have actual or apparent authority, or if the employer ratifies the contract. Actual authority includes express authority (exact wording when agent hired) and implied authority (inferred from express authority). 12 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

E MPLOYER L IABILITY FOR C ONTRACTS Apparent authority is present where actual authority is lacking, but the principal has misled third parties into believing that actual authority exists. 13 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

E MPLOYER L IABILITY FOR C ONTRACTS The employer is not liable for contracts entered into outside of the granted authority, unless the employer ratifies the contracts. 14 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

E MPLOYER L IABILITY FOR T ORTS Under the doctrine of respondeat superior, an employer is liable for the torts of agents or employees where the torts are committed within the scope of employment. An employer is generally not liable for the torts of independent contractors. 15 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business

“S COPE OF THE J OB ” A simplified approach to determining if an agent or employee has committed a tort within the scope of the job is to ask: How much potential control did the employer have over the situation, and How closely connected was the tort to the job duties? As an example problem, we used a lawsuit where the law firm I was affiliated with represented a nursing home in a case of sexual assault by a nurses’ aid. 16 Jeffrey Pittman - For Dr. Robertson, Legal Environment of Business