Agency, bailments, and principal-agent liability in employment law

¶ … person gives another person some property for safekeeping, that results in a bailment (Sullivan & Sheffrin, 2003). The bailor transfers the property to the bailee, and physical possession of the property must be taken for this legal relationship to occur. This is a common law relationship, and is not a gift or a contract for sale (Sullivan & Sheffrin, 2003). In other words, the bailor is not giving the item away on a permanent basis, and he or she is also not selling the item to the bailee. The only thing that takes place is the transfer of property on a temporary basis (Sullivan & Sheffrin, 2003). The bailment takes place when the bailee both intends to possess and actually possesses the property. Another important aspect of the bailment is that the bailee generally is only allowed to hold the property. He or she does not have any use of the property while it is in his or her possession (Sullivan & Sheffrin, 2003). Leaving a car with a valet at a restaurant is one example of a bailment. The person leaving the car is not giving up any ownership or rights, nor is he or she giving the valet or anyone at the restaurant permission to use the car. There are, of course, other ways to create a bailment (Coggs, 1704; Sullivan & Sheffrin, 2003).

There are three different purposes of bailments. A person can have a bailment that benefits both the bailor and the bailee, one that only benefits the bailee, or one that benefits only the bailor. When there is an exchange of the good for a service, both parties benefit from the bailment. When a bailee provides something free of charge to the bailor, only the bailor benefits. Conversely, when a bailor loans or provides something to a bailee, only the bailee benefits. There are also five types of bailments. These are: gratuitous agency, deposit, possessory, loan for hire, and loan for use (Franklin, 2001). There are bailments that arise in all different ways and circumstances, but there is no way that the bailee will avoid liability completely. That is something the bailee should be careful of in a bailment.

Depending on the laws of the jurisdiction in which the bailment occurred, the bailee could have a great deal of liability or virtually none at all. Anyone who is going to be involved in a bailment must be aware of the issues that he or she can face with it (Sullivan & Sheffrin, 2003). Legal issues can crop up and can be very difficult to deal with, especially if the person does not know the ins and outs of bailments. If a person has been asked to be a bailee, he or she should not just automatically accept that request. Instead, it is very important that the person considers legal ramifications and asks questions of a knowledgeable party so there are no surprises at a later date. Understanding the rights and responsibilities of both the bailor and the bailee is the only way to have a safe and successful bailment transaction.

2. There are many different business forms. All of them are important, because they can provide information to those who want to have legal and complete transactions with other people. Sole proprietorships, partnerships, LLCs, and other types of corporations are all vital entities in daily life, but they are all structured differently and they all have their places in business and industry (Wiening, et al., 2002; Berger, Cummins, & Weiss, 1997). Sole proprietorships are designed to be owned by one person. That is the basis of that type of legal entity, and does not leave room for interpretation or adjustments. That does not mean that the person cannot hire others to help him or her, but only that there are no other owners of the company. Many people who have small businesses are sole proprietors, and many just use their name as a "company name." Some do not actually have a company, but because they are freelancers who are selling goods or performing services, they are deemed sole proprietors from the standpoint of government regulation and taxation issues on federal, state, and local levels (Berger, Cummins, & Weiss, 1997).

In partnerships, there is more than one owner. Usually, two people go in as partners, but it is possible to have a partnership with more than two people. In both partnerships and sole proprietorships, the liability for any lawsuits or other problems rests solely with the owners (Berger, Cummins, & Weiss, 1997; Vaughan, 1997). That is part of the reason that people with sole proprietorships and partnerships often choose to do something different with their business structure - especially as they grow. For example, LLCs and other kinds of corporations can have large numbers of owners, but those people also work for the corporation. Because of that, they are not as liable for problems that the corporation encounters (Berger, Cummins, & Weiss, 1997). The liability issue is a significant one, and most people who work for corporations in high-level roles respect and appreciate the fact that they do not have liability for the mistakes of that corporation.

That is important, since the corporation can be sued and can lose its assets, but the people who own the corporation are limited in how much liability they can incur in business dealings (Franklin, 2001). When determining which form a business should take, the person who is creating the business (or people if there is to be more than one owner) must carefully consider the structure that will be right for him or her. Most people who work with small companies stay with the sole proprietorship form of business, or they may move up toward a partnership at a later date as the business expands. Corporations are generally not formed right away, but that is not always the case. Sometimes a person thinks that a corporation will provide him or her with the best choice for liability protection, and even a single person can form a corporation if he or she chooses to do so.

3. One of the most tenuous of relationships is seen between a landlord and a tenant (Sullivan & Sheffrin, 2003; Vaughan, 1997). If the two parties are getting along and there are no problems, everything is good. However, it does not take long before something goes wrong and the people who were previously doing well are left struggling to work out their differences. If a landlord does not make necessary repairs, that can leave a tenant living in unsafe conditions and can even be quite dangerous for the tenant. There are, fortunately, remedies that the tenant can use in order to be sure that the landlord makes the repairs (Sullivan & Sheffrin, 2003). However, one thing the tenant cannot do is withhold the rent because the repairs have not been made. This is akin to a parent withholding child support because he or she is not being allowed to see the child. According to the law, the two issues have nothing to do with one another (Sullivan & Sheffrin, 2003).

That does not mean that the tenant should just ignore the problem, though, or feel as though he or she has to just "live with it" when it comes to getting repairs made. A landlord is required to keep the rental property in safe and habitable condition, and the tenant should work to make sure that the landlord fulfills the requirements of the rental agreement. One of the best ways to ensure that the landlord fulfills his or her duties is to get everything signed and in writing (Sullivan & Sheffrin, 2003). That way there is proof of the agreement if the tenant must pursue legal action against the landlord. This often does not end well, because the landlord will generally be very upset with a tenant who has resorted to court proceedings to get something fixed. Still, the tenant has the right to have a safe place to live, and the landlord is legally obligated to provide that. Working it out with the landlord first is the best idea, but it is not always something that is possible in all cases (Vaughan, 1997).

When a tenant does decide to work things out with a landlord, that tenant should get everything in writing and send any correspondence by certified mail. This shows that the tenant is serious about the issue, and also shows that the tenant is keeping proper records of the dispute and its (hopeful) resolution. Without getting things in writing, it can be very difficult for a tenant to build a case as to what the landlord is legally obligated for and what was agreed to at the time the tenancy began (Sullivan & Sheffrin, 2003). Tenants who do not have good written agreements with their landlords have a more difficult time obtaining any kind of remedy when there are problems that arise. Being a proactive renter is the best way to ensure that the landlord will make proper repairs and keep the rental in good condition.

4. Insurance is designed to protect people from financial harm and also from liability (Berger, Cummins, & Weiss, 1997). When it comes to a business, the goal is to ensure that the business and the owners of that business are protected and that they will not be ruined if someone sues the business. There are different types of business insurance, of course, and what the business needs depends on what kind of business it is. Some companies need more than others where insurance is concerned, and that is based on both dollar amount and type of insurance product. Working with a good insurance agency is a must for any business that is concerned about what its insurance needs really are (Berger, Cummins, & Weiss, 1997). Just picking and choosing a company and a coverage amount over the internet or even over the phone is a poor choice, and will not provide a business owner with all he or she needs in order to be properly protected.

When a business decides to focus on its true needs, insurance should be at the top of the list. The employees have to be protected, and the owner also needs protection (Berger, Cummins, & Weiss, 1997). Additionally, if a customer gets injured at the business there should be compensation for that customer - and that is where insurance can really be useful. No matter what the situation, there is an insurance plan to cover it. Any business that is buying any kind of insurance plan should be very careful to read the "fine print" and see exactly what is being covered. Sometimes a business owner can be taken by surprise, and not in a good way, because his or her insurance did not cover what that business owner expected the policy to cover. At that point, it is too late to do anything about the issue. The owner must simply live with the consequences. It is a terrible feeling, and one that can generally be avoided by diligence in selecting the proper insurance for the business and its specific needs (Berger, Cummins, & Weiss, 1997).

As a business grows, its insurance needs may also grow. With a good agent, each and every company owner can have peace of mind and protection for his or her business. Sadly, too many companies fail to get this kind of protection. Then they end up in trouble financially because they get sued or have some other type of issue come up and are not able to handle it appropriately. Business insurance gives them the financial backing to defend themselves if they need it, and also provides them with a way to pay claims for slips, falls, and other customer-related problems (Berger, Cummins, & Weiss, 1997). Insurance is one of the best investments any business owner will ever make, and should be considered vitally important. The business, though, must determine what kind of insurance it needs by working with a trusted advisor in the industry.