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CHAPTER 9: AGENCY LIABILITY TO THIRD PARTIES AND TERMINATION 11
whole or in part.
whole or in part.
4. Employee Travel Time
Commutes to and from work or meals is normally outside the scope of employment unless traveling
is part of the job.
master’s servant (employee) first appeared in Lord Holt’s opinion in Jones v. Hart (1698).a By the early
nineteenth century, this maxim had been adopted by most courts and was referred to as the doctrine of
respondeat superior.
THEORIES OF LIABILITY
The control theory is clearly recognized in the Restatement (Second) of Agency, which defines a master as “a
principal who employs an agent to perform service in his [or her] affairs and who controls, or has the right to
control, the physical conduct of the other in the performance of the service.” Accordingly, a servant is defined
as “an agent employed by a master to perform service in his [or her] affairs whose physical conduct in his [or
The criteria used by the courts in determining whether an employee is acting within the scope of employment
are set forth in the Restatement (Second) of Agency and will be discussed shortly. Generally, the act must be
of a kind the servant was employed to do; must have occurred within “authorized time and space limits”; and
must have been “activated, at least in part, by a purpose to serve the master.”
respond.”
a. K.B. 642, 90 Eng. Reprint 1255 (1698).
whole or in part.
14 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
ENHANCING YOUR LECTURE—
ISLAMIC LAW AND RESPONDEAT SUPERIOR
FOR CRITICAL ANALYSIS
How would U.S. society be affected if employers could not be held vicariously liable for their
employees’ torts?
The phrase scope of employment is used for determining the liability of an employer for employees’
acts. Acts within the scope of employment include only acts of a kind authorized by an employer, done within
the time and at the place of employment. An employee is authorized to do anything that is reasonably
regarded as incidental to the work or that is ordinarily done with the work. Not all acts of the kind authorized
whether or not it is just that harm resulting from an employee’s acts should be considered as a normal risk to
be borne by the business in which the employee is employed. The factors to be considered in determining
whether an unauthorized act is within the scope of employment are listed in the Restatement (Second) of
Agency, Section 229. The following hypotheticals accompany the Restatement (Second) of Agency, Sections
229, 230, and 231, and illustrate the factors.
whole or in part.
1. P directs his woodchoppers to cut down specific trees, his directions being such that A, a woodchopper,
mistakenly cuts an unspecified tree. While cutting, A negligently injures T. P is subject to liability to T.
3. A has been employed by P as a general assistant in a machine shop to do odd jobs around the place. As
he develops more skill, he is assigned to a particular lathe. A assists another operative in this shop upon a
difficult piece of work. The fact that A has not been directed to assist the other operative does not prevent his
act in doing so from being within the scope of the employment.
bicycle. The act was not within the scope of employment.
6. P is the owner of an apartment house in a district in which the boys constantly annoy the janitor and
interfere with his work. P discharges one janitor who had punished a neighbor’s boy for such interference and
directs A, the new janitor, to leave boys alone. A does not touch the boys but puts broken glass at the place
scope of employment.
8. P, an engraver, requires all [employees] employed in finishing work to wash their hands in his wash room
before beginning work. The washing of the hands by the employees as part of their daily work is within the
scope of employment.
hands after hours and fails to turn it off. This act is not within the scope of employment.
11. P employs A as a chauffeur, requesting him to drive the car to A’s own garage for the night at the
termination of the day’s work, in order that A can arrive early in the morning. In driving to and from the garage
to P’s place of business, A is within the scope of employment.
he persuades P to allow him to use an old car belonging to P. In driving to the office in this car A is not in the
scope of employment.
13. P employs men to do logging five miles from the nearest habitation. In order to be certain that they arrive
does so. This act is within the scope of employment.
15. A, P’s chauffeur, to avoid a rough spot in the road while upon an errand for P, unlawfully drives upon the
sidewalk. This conduct is within the scope of employment.
F. LIABILITY FOR INDEPENDENT CONTRACTOR’S TORTS
A principal is generally not responsible for an independent contractor’s torts (unless exceptionally
hazardous activities are involved, in which case strict liability is imposed.
A. TERMINATION BY ACT OF THE PARTIES
An agency relationship may be terminated by—
• Lapse of time. An agency may terminate if it is limited to a specific time and the time passes.
• Purpose achieved. An agency may terminate if it is limited to a particular purpose and the purpose
possess the right.
1. Wrongful Termination
Wrongful termination may subject an agent or principal to a suit for damages for breach.
whole or in part.
An agency that a principal may not revoke is an agency created for the agent’s benefit, or an
agency coupled with an interest.
3. Notice of Termination
If the parties terminate an agency, the principal must directly inform any third parties who the
An agency relationship may be terminated by—
• Death or insanity. Either party’s death or insanity terminates an agency. Some states require the
agent’s knowledge of the principal’s death to terminate the agency.
• Impossibility. When the specific subject matter of an agency is destroyed or lost, the agency termi-
TEACHING SUGGESTIONS
actual authority to buy grain for Mark? Does Tom have apparent authority to buy grain for Mark
from Jane? The answer to the first question is no; the answer to the second question is yes. The
Restatement (Second) of Agency, Section 8, Comment a, says, “Apparent authority results from a
manifestation by a person that another is his agent, the manifestation being made to a third person and
not, as when authority is created, to the agent. It is entirely distinct from authority, either express or
the previous problem, for the same reasons. It is what a person manifests to a third person that results in
apparent authority.
2. The different policy considerations involved in contract and tort law may be underscored to explain the
