Agency law plays a big part in corporate responsibility (and liability). Differe
ID: 2651070 • Letter: A
Question
Agency law plays a big part in corporate responsibility (and liability). Differentiate between an employee and an independent contractor. What is the difference and what are the key factors that must be considered in determining one’s status as an employee or independent contractor? Once status is determined, what affect will it have on the responsibilities of the agent? The principal? Is one status better than another? Why? Explain your answers using a representative example involving a principal, an agent, and a situation that would call the agent’s status into question.
Explanation / Answer
Independent contractor is the one who operates his own business and is self employed. Independent contractor has the ability to carry the business independently with the person who are involved in the contract with him. On the other hand an employee is the one who does not operate any business but works in the business operated by others. Employee has to abide the terms and conditions of the employer for the purpose of securing continued employement.
Thew principal will have a better status then the agent, the agent have to follow the instructions given by the principal and must abide all the conditions to maintain an agent principal relationship. The example of the same could be taken as the contract where the liabilities are ignored by the principal on taking an agent into account. Under such situation an agent status can come into question.