>> Business Law and Ethics
1. Why can apparent agency be created only by representations of the principal, but not the supposed agent?
2. Explain briefly the importance of the fiduciary relationship in agency, what it means for the agent/employee, and why it is not a legal requirement for the principal/employer.
Facts: Cold Case Trucking (CCT) specializes in transportation of products that require refrigeration or freezing while being transported from the product's manufacturer to a wholesaler's warehouse. In an effort to improve its shipping logistics operations, CCT hired Crusoe, who had experience in operations logistics, as a consultant. CCT and Crusoe agree that Crusoe will study CCT's operations by conducting interviews with employees and customers, then design a new logistics plan and oversee its implementation. The recommendations are now in. You are a CCT manager and Crusoe has just presented his plan for operations improvement at a management meeting. Part of Crusoe's plan involves converting the delivery truck drivers from employees to independent contractors. Crusoe claims this will save employment taxes and limit CCT's liability for driver negligence. Crusoe recommends having the drivers sign Independent Contractor Agreements and paying them based on a monthly fee rather than as hourly employees. After the meeting, you receive the following e-mail from the vice president of operations:
TO: All managers
RE: Crusoe's Plan
Please give me any feedback or concerns you have about Crusoe's recommendations presented at today's management meeting. I will be drafting a summary memorandum for top-level management next week and we will be moving to implementation of some or all of Crusoe's recommendations shortly.
Your task is to draft a three- to five- paragraph e-mail memo to your vice president concerning the proposal to convert drivers to independent contractors. Using your knowledge of agency law, be sure to raise any pertinent legal issues and discuss potential liability in explaining your concerns. Conclude the e-mail with a brief recommendation on how best to proceed.