Reference no: EM131110133

OVERVIEW

For this activity, submit a response describing the legal relationship between a principal and agent and the legal relationship of the principal and agent to third parties.

OBJECTIVES

• Develop an understanding of the legal implications of a principal-agent business relationship.

• Apply this understanding to a hypothetical business situation where the agent enters into a contract and causes an injury to a third party.

FACT PATTERN

Henry recently opened an organic ice cream shop in Champaign. He hires Nora to serve as the general manager of the ice cream shop and expressly authorizes her to run the day-to-day operations of the ice cream shop. Henry is heavily involved in obtaining all supplies for the ice cream shop and for creating new ice cream flavors. While Henry is on a vacation celebrating his wedding anniversary, Nora realizes that the ice cream shop is running out of milk and, because she has not generally been involved in the process, is unaware of the normal supplier that Henry utilizes for milk. Nora conducts extensive research and learns that one of the most highly respected milk suppliers in the area is Jim. She drives to Jim's dairy farm, informs Jim that she works as a general manager of an ice cream shop (but does not give Jim any other information about the shop), and enters into a contract with Jim to deliver 100 gallons of milk the following day (a total contract value of $5,000). Unfortunately, unbeknownst to Nora, although Jim is a highly respected milk supplier, his farm recently failed to meet the standards for organic certification and, therefore, his milk no longer qualified as organic.
While Nora is driving back to the ice cream shop after entering into the contract with Jim, she decides to drive across town to pick up her favorite pizza to take back to the ice cream shop to share with all employees on duty that evening. As she is leaving the parking lot where she picked up the pizza, she negligently hits and injures a pedestrian.

INSTRUCTIONS

Please explain who is liable on the contract to purchase purchase 100 gallons of milk from Jim (e.g., Nora, Henry, both). If you believe both Nora and Henry might be liable, please describe the type of shared liability rules applicable to them. Your response to this question should be between 100 and 250 words.

Please explain who is liable for the injuries suffered by the pedestrian (e.g., Nora, Henry, both). Your response to this question should be between 100 and 250 words.