Civil Engineering Chapter 2 This Addresses Fundamental Concepts Necessary For Understanding The Remainder The

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Chapter 2

This chapter addresses fundamental concepts necessary for understanding

the remainder of the book.

One concept is the different forms of business organizations. Other than in the

case of a sole proprietorship, the organization and the individuals within it have

separate identities. Ask the student: What is the difference between a contract

entered into by a business entity that is a sole proprietorship and a business

entity that is a corporation? Would they prefer to sign that contract as the sole

proprietor or as a corporate officer?

The legal status of a business organization as a separate legal entity becomes

relevant again in Chapter 8 on licensing.

The second basic concept is the distinction between an agent and an

independent contractor. Ask the student: If you own a business, what would be

the advantages or disadvantages of hiring only employees (i.e., agents) or only

independent contractors? When would a mix of the two types of hires be

1.) Which type of organization is the simplest form of business and is used by many

private practicing design professionals and contractors?

2.) In the court case of Christopher v. Sinyard, what were the factors that the court noted

that lead to the ruling of piercing the corporate shield and holding the principals

personal liable?

with that of the corporation, the corporation had no assets, and they

promised the homeowners that certain repairs would be done while

knowing that the company was out of money.

3.) Which form of business organization is a hybrid of the corporate and partnership

forms, containing the pass–through income tax benefits of a partnership with the

limited liability protections of a corporation?

4.) What type of authority exists when the principal’s conduct reasonably–but

erroneously-leads a third party to believe that the principal consents to acts done on

its behalf by the person purporting to act for it?

5.) What is the essence of an employment relationship?

6.) What is an employee guaranteed under workers’ compensation laws?

7.) If a construction company needs a flexible workforce and finds it may be more

economical to maintain a minimum permanent staff of employees and supplement

its labor pool only when awarded a large project, what type of company would that

contractor utilize?

8.) What is a Project Labor Agreement (PLA)?

9.) What are the elements developed by the courts of the multi–factor test to determine

whether a hired person or business is an agent or independent contractor?

10.) What is the difference between an arm’s–length transaction and a fiduciary

relationship?