CorpateLaw#1
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Rasmussen College *
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PL216/PLA2
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
5
Uploaded by MajorDuckMaster194
Facts
Mr. Arthur Krupke is seeking legal advice regarding potential liability issues that may arise when operating his business, Krupke’s Consultants, in the State of Colorado. Krupke Consultants will employ management consultants to provide advisory services to other companies which aim to enhance their client operations. Mr. Krupke is seeking legal advice on potential liability issues that may arise from employee conduct and seek potential solutions to limit and safeguard Krupke Consultants from potential legal issues that may arise from contracts that Consultants will enter into on Krupke’s Consultants behalf. Additionally, Mr. Krupke is seeking legal advice with regards to his company's liability for any potential negligence committed by his employees while traveling via motor vehicle on and off company time in the state of Colorado. Issue(s) Presented
What are the potential liability does Krupke’s Consultants assume under Colorado law in the following scenarios:
Consultants who enter into a bad contract.
Consultants who enter into a bad contract outside their authority.
Consultants who negligently cause a car accident while en route to a client's worksite.
Consultants who negligently cause a car accident during their lunch period.
Answer to Issue(s)
In the state of Colorado, a relationship is legally created when there is an agreement, whether oral or written, explicit or implicit, between two individuals, designating one of them to represent and operate under the authority of the other. With regards to employee/employer relationships, the individual assuming the role of representation is termed the "agent," while the other individual is recognized as the "principal," as defined in Chapter 8:1 AGENCY RELATIONS.
Krupke Consultants assumes “Principal Agency by Employment” once they hire an agent (“Consultant”) to work for them. Consequently, Krupke Consultants will assume varying levels of legal responsibility for
the actions of their Consultants who act as agents on Krupke Consultants behalf. The actions of these agents acting on the company's behalf can create liability issues for Krupke Consultants in all of the above mentioned scenarios. Krupke Consultants Liability for Consultants Entering into a Bad Contract
In the state of Colorado, the liability of Mr. Krupke, as the employer, for his consultants entering into a bad contract is contingent on established legal principles. Most notably is the doctrine of "Respondeat Superior" and the "Scope of Employment." Respondeat Superior Under the legal doctrine of Respondeat Superior, employers in Colorado can be held vicariously liable for
the actions of their employees, including contractual agreements entered into by their agents, as long as those actions are taken within the scope of employment.
Scope of Employment The critical factor in determining Krupke Consultants liability for a bad contract is whether the actions of
the consultant(s), specifically entering into a bad contract, fall within the scope of their employment. If they were acting within the scope of their employment when entering the contract, Krupke Consultants may be held liable for any adverse consequences arising from that contract, regardless if they had acted negligently. When an agent acts with proper authority on behalf of a fully disclosed principal, the agent is not personally liable for any contracts entered into. In this case, all legal liability rests with the principal, and the third party is limited to seeking remedies from the principal. As a result, a bad contract could result in breach of contract lawsuits for which Krupke Consultants would be liable for. II. Liability for Consultants Entering into a Bad Contract Outside of Their Authority
Exceptions to this rule occur when an agent exceeds their authority, making them personally responsible to the third party.
Agent's Authority
Colorado agency law recognizes the fundamental principle that an agent, such as a consultant, must act within the scope of their authority when entering into contracts. If an agent exceeds their authority and enters into an unauthorized contract, the consequences may affect both the agent and the principal, in this case, Mr. Krupke.
If consultants exceed their authority and enter into a contract on behalf of Krupke's Consultants that was not authorized, Mr. Krupke may still be held liable under Colorado agency principles. However, this liability is less clear cut than in instances where the agent was acting within their authority.
III. Liability for Negligent Car Accidents While on the Way to a Client Worksite
The “Going-and-Coming Rule” and “Scope of Work”
In, Suydam v. LFI Fort Pierce, Inc.
, 2020 COA 144M, the Court of Appeals of Colorado, Division Seven, affirmed the lower court's ruling that LFI Fort Pierce, Inc. assumed vicarious liability when their employee
struck a bicyclist who had been acting within the scope of her employment at the time of the collision, as the accident took place while the employee was performing duties related to her employment.
The "going-and-coming rule" is a legal doctrine that generally states that an employer is not responsible for the actions of its employees when the employee is commuting to or from work. The "scope of work instruction" was found to be appropriate using the “Going-and-Coming Rule” as the motorist had been acting within the scope of her employment when the collision took place.
If a consultant negligently causes a car accident while traveling to a client's worksite in Colorado, Krupke Consultants would likely be held vicariously liable for the actions of their agents while performing work-related duties.
IV. Liability for Negligent Car Accidents During Lunch
Exceptions to the the “Scope of Work” When assessing vicarious Liability to the respondeat superior with regards to car accidents, the courts commonly make a distinction between two key categories: detour and frolic. Detour
Detour refers to a minor departure from an employee's job responsibilities, such as a quick coffee run or grabbing lunch. Frolic
Frolic implies a significant departure from work related duties for personal reasons, such as personal shopping for groceries or going to a movie. Cases that involve a detour from the scope of work in Colorado may still result in liability for the employer. Instances of frolic typically eliminate this liability for the Respondeat Superior. Liability for accidents occurring during lunch hours in Colorado are more complex than instances of employees engaging in frolic. For example, if the consultant is on a personal lunch break and not conducting any company business, Krupke Consultants may have a stronger defense against liability.
https://www.shouselaw.com/co/personal-injury/vicarious-liability/#3.3
Reasoning or Discussion
Colorado state laws and regulations must be followed closely to ensure that Mr. Krupke's business operates within the legal framework of the state. He should take proactive steps to reduce his potential liability, such as creating clear policies, training programs, and requiring consultants to carry appropriate insurance coverage, all in accordance with Colorado regulations.
Conclusion
In summary, Mr. Arthur Krupke should take precautionary measures to minimize potential liabilities in his business operating in the State of Colorado. These protective measures include:
2. **Training and Compliance**: To mitigate liability, Mr. Krupke should proactively ensure that his consultants are well-trained and understand the significance of diligent contract review and negotiation. This includes compliance with Colorado contract law, which emphasizes the importance of legal elements, enforceability, and the obligations created by contracts.
3. **Clear Guidelines and Oversight**: Mr. Krupke should establish clear guidelines for his consultants regarding their authority to enter into contracts on behalf of the company. These guidelines should help prevent consultants from exceeding their authority and entering into contracts that are detrimental to the
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company's interests.
4. **Contract Review**: It is advisable for Mr. Krupke to implement a comprehensive contract review process that may involve legal counsel to ensure the contracts entered into by the consultants align with the company's objectives and interests.
implementing clear policies, employee training, and proper insurance coverage for consultants, all while ensuring compliance with Colorado law. By doing so, he can significantly reduce the risks associated with
each of the scenarios presented.
[Supervising Attorney's Signature]
[Supervising Attorney's Name]
[Supervising Attorney's Title]
The provided information discusses liability scenarios involving agents, principals, and third parties, with a specific focus on contractual and tort liability. The liability dynamics in these situations are based on the
principles of agency law and legal precedents:
**Contractual Liability**:
- When an agent acts with proper authority on behalf of a fully disclosed principal, the agent is not personally liable for any contracts entered into. In this case, all legal liability rests with the principal, and the third party is limited to seeking remedies from the principal.
-. Additionally, if the agent initially lacked authority but the principal later ratifies the contract, the principal becomes liable for it.
- For partially disclosed principals, both the principal and agent can be held jointly and severally liable, allowing the third party to recover damages from either or both parties. However, the third party cannot seek double damages beyond the total amount owed for a contractual breach.
- In cases involving undisclosed principals, the agent's liability is determined by the actual authority granted by the principal. An undisclosed principal can be liable for contracts entered into by agents with actual authority, but not when the agent exceeds the authority or the contract is for personal services.
**Tort Liability**:
- In tort liability cases, agents, employees, and independent contractors are personally responsible for their own torts. Each individual committing a tort is personally accountable for the damages.
- Agents, employees, and independent contractors are generally not liable for the torts of their principals or employers. This means that the principal or employer cannot transfer their tort liability to their agents or employees.
- Employers are liable for the torts of their employees when the employee is acting within the scope of employment, a principle known as "respondeat superior." This doctrine places vicarious liability on employers as a matter of public policy.
- Principals are usually not liable for the torts of independent contractors. Exceptions may exist when the work is inherently dangerous or illegal, as public policy aims to prevent principals from avoiding liability in such situations.
This information outlines the legal principles governing contractual and tort liability in agency relationships and provides clarity on when liability falls on agents, principals, or third parties.