16 UNIT SEVEN: AGENCY AND EMPLOYMENT
10. Are there situations in which the duty of loyalty to one’s employer could come into conflict with other
duties? The duty of loyalty is a fundamental duty in an agency relationship (like the duty to act in good faith), and it is
11. What are some advantages to being an independent contractor? What might be some disadvantages?
The principal advantage of being an independent contractor is probably the degree to which the independent
ACTIVITY AND RESEARCH ASSIGNMENT
Divide students into groups (four to five students per group) and have them compile lists of the jobs held by
members of the group. Ask them to discuss with each other the rights and responsibilities of each job to determine
whether the student is an agent and an employee or an independent contractor, or only an agent, an employee, or an
independent contractor. Have each group share its conclusions with the class. Discuss with the class the difference
between employees and independent contractors. Are there students with jobs in which they are referred to as
“independent contractors,” when in fact they are employees?
EXPLANATION OF A SELECTED FOOTNOTE IN THE TEXT
Footnote 4: Gilbert Bishop was admitted to Laurel Creek Health Care Center. He indicated to Laurel Creek
that he was physically incapable of signing admission documents but was of sound mental capacity and wanted his
wife to sign the documents on his behalf. When he told this to his sister, she brought Anna in to sign the documents,
In Laurel Creek Health Care Center v. Bishop, a state intermediate appellate court reversed and remanded.
There are three steps to the creation of an agency relationship. First, “the principal manifests assent to be affected by
the agent's action. In the instant case, Gilbert asked that Anna come to the hospital to sign the papers for him.
Second, the agent's actions establish the agent's consent to act on the principal's behalf. Here, Anna signed all the
contractual capacity to be a principal. Those who cannot legally enter into contracts directly cannot do so through an
agent. A lack of sound mental capacity is a lack of mental capacity. In that circumstance, Gilbert could not have
authorized his spouse to sign admission papers on his behalf. Thus there would have been no principal-agent
relationship. The hospital’s policy was to have a person’s spouse sign the papers if the person could not, however, so