BHarvey_Memo_10723 (2)

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Rasmussen College *

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PL216/PLA2

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Jan 9, 2024

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MEMORANDUM TO: Supervising Attorney FROM: Breanna Harvey DATE: 10/7/2023 Re: Mr. Arthur Krupke, Liability issues regarding Consultants 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 plans to employ consultants to provide advisory services to other companies to enhance their client’s 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. As a result, a bad contract entered into by an agent could result in potential breach of contract lawsuits and other liability suits against Krupke Consultants. 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. 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. 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. (Vicarious Liability, Colorado Legal Defense Group) Discussion Principal agents always assume some legal risk when it comes to their employees despite their best attempts at reducing liability. Below are recommendations to reduce these liabilities. Conclusion Some precautionary measures to minimize potential liabilities for Krupke Consultants operating in the state of Colorado include: Contract Review: By thoroughly reviewing contracts before they are executed can greatly reduce liability simply by avoiding liability issues such as bad contracts and/or agents acting outside their authority. This would allow Krupke Consultants to ensure that the terms and conditions are. Legal review can help identify potential risks and issues

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Hire an Attorney with Experience in Agency/Contract Law One way Krupke Consultants can proactively mitigate potential liabilities in the state of Colorado is to engage the services of a qualified attorney with expertise in agency law, contract law. Attorneys can provide helpful guidance and counsel to ensure agents are acting within the scope of their duties and minimize risk. Insurance Policies Maintaining adequate insurance coverage for various forms of liability can protect Krupke Consultants from suffering financial loss if an agent acts negligently. Consider insurance policies that protect against various forms of liability, such as professional liability insurance, general liability insurance, and workers' compensation insurance. Training and Compliance Ensuring compliance through training procedures can help mitigate liability by providing guidance to agents. Consultants should be educated in matters of legal and ethical standards within their profession to lessen the risk of negligence.

BHarvey_Memo_10723 (2)

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