Business Liabilities
One of the most fundamental issues in business law involves the question of when a company can be held liable for the acts of an individual person, whether this involves a contractual obligation or a personal injury (meaning a tort).
Choose one of the scenarios below and explain whether you think the business is liable for the acts under the principles of agency law.
A real estate agent hires a handful of local kids to do the landscaping of homes that he is trying to sell. In addition to the general payment, he reimburses them for the cost of gasoline for lawn mowers and other equipment. While mowing a lawn, one of the kids loses control of a lawn mower and it mows down a neighbor's very expensive collection of lawn gnomes.
In a hurry to get his apartment complex painted, a homeowner hires three people he meets at the local home improvement store to do the work. Since they're not professional painters, he provides all the equipment and paint needed to do the work. While at the apartment complex, one of them breaks into an apartment, assaulting the resident and stealing a wallet.
An entrepreneur decides to open up his own car-for-hire business and creates an app allowing anyone to connect with people who need a ride. The passengers pay the entrepreneur, who in turn pays a percentage to the driver. Other than the app, the entrepreneur has no involvement between the driver and the passenger. One night, a driver who is intoxicated picks up a passenger and then gets into an accident, resulting in the passenger being severely injured.
Part 2
Provide a substantive response to one of your classmates posts (Natalie All.).
Howdy all,
I chose the scenario where a real estate agent hires some local kids to do landscaping. While mowing, one of the kids loses control of the mower, which damages some personal property.
Under these circumstances, the real estate agent could be liable for the damage. This is because of the agency that applies in this situation. The real estate agent is the principal, and the local kids act as his agents. The agreement for landscaping services, with the real estate agent as the payer, further solidifies this liability.
As the real estate agent is hired by the sellers of the properties being mowed by the local kids, the seller trusts the real estate agent. When choosing to hire local kids who may or may not have experience with landscaping instead of hiring professional landscapers, the real estate agent took the risks upon themself.
Since the kid who lost control of the mower was acting on behalf of the real estate agent, the agent is liable for the damage.
Sample Solution
Scenario: Entrepreneur and Ride-Sharing App
Analysis of Liability
In this scenario, the entrepreneur who created the ride-sharing app likely would not be held liable for the actions of the intoxicated driver who caused the accident. This is because the relationship between the entrepreneur and the driver does not constitute a traditional employer-employee relationship.
The key factor here is the degree of control the entrepreneur exercises over the drivers. Unlike a traditional taxi service where the company owns the vehicles and assigns drivers to specific routes, this model presents a more independent
Full Answer Section
passengers with drivers, but does not control the drivers' schedules, routes, or the manner in which they operate their vehicles. While the entrepreneur may have some contractual obligations to ensure the safety of passengers, this typically involves background checks and licensing requirements for drivers. However, the day-to-day operations and control over the drivers remain with the individual drivers themselves. Therefore, the intoxicated driver would likely be held personally liable for the accident, and the entrepreneur's liability would be limited. Factors Affecting Liability Several factors could potentially affect this analysis:- Level of control: If the entrepreneur exercised a higher degree of control over the drivers, such as assigning shifts or routes, it could strengthen the argument for vicarious liability.
- Nature of the app: If the app provided tools for real-time monitoring of driver behavior or location, it could introduce additional complexities.
- Contractual agreements: The terms of the agreement between the entrepreneur and the drivers could impact liability.