In this assignment, you will formulate an enforceable plan to mitigate corporate liability for the tortious actions of its agents.
The principal has the ability to manage its liability to third parties for the tortious acts of employees. You will design a corporate policy that will avoid or mitigate that liability. Specifically, you are to devise a plan by which you can communicate with and exercise control over employees dispatched to service clients outside the corporate office.
Using appropriate legal terminology and the principles of agency law, prepare a memo to the Director of Human Resources establishing the guidelines for employees traveling for business related purposes. Specifically address the following elements:
- Why is a corporate-wide travel policy needed for employees doing business outside the office? Describe two circumstances when the corporation would be liable for injury to a third party due to the actions of an employee to justify the need for the travel policy.
- What specific activities are permitted? Which are prohibited? Why?
- How are these policies to be communicated to the employees? Outline a specific short and long-term communications plan.
- Is the expense of a training program warranted or not? If so, detail the training method. If not warranted, explain why not.
- How will the policy be enforced?
You can’t do it all!
That’s why you or your company hire employees, suppliers, and vendors. They have the expertise, the time, and the ability to get “your” job done. In the eyes of the law, that person is you: the agent is the principal. But, as that agent acts on your behalf a third party might be harmed, and you might be held responsible.
This week, you will explore the agency relationship: the benefits and liabilities of working through another person. Moreover, because the law recognizes different types of agency relationships you have decisions to make: Which type of agent would best serve you? How can you control your agent and, thereby, mitigate their costly mistakes that will be your responsibility?
Upon completion of this week, you should be able to:
- Using appropriate legal terminology, compare the legal duties owed by each party in an agency relationship, the principal and the agent, and the mutual benefits as well as the inherent liabilities and responsibilities to determine the most advantageous strategic use of an agent.
- Using appropriate legal terminology and the principles of agency law, distinguish the legal parameters of the two fundamental types of agents, the employee and the independent contractor, to assess the nature and scope of the principal’s liability.
- Formulate an enforceable plan to mitigate corporate liability for the tortious actions of its agents.