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Global business organizations sometimes have very complex structures with a large number of subsidiaries, officers, and...

Global business organizations sometimes have very complex structures with a large number of subsidiaries, officers, and owners. If something goes wrong, it can be very difficult to sort out the duties and liabilities of these organizations. The multinational bank, BCCI, is an example of how these complicated business structures can make it difficult to monitor criminal activity. BCCI had banks in nearly 70 countries and was staffed by residents of those countries. When BCCI collapsed, the complex structure meant the principals and agents of the company could evade the laws of the United States, United Kingdom, and any other country that tried to determine what specific parties were responsible.

Using the BCCI case or another example that you have researched, discuss the issues that arise when trying to determine responsibilities and liabilities of the principals and agents of these kinds of large multinational organizations. What are some of the lessons learned from this type of problem? What kinds of proposals have there been to try to avoid these kinds of problems?

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Agent: The agent in the relationship is the party that represents the principal in conducting business transactions on the principals behalf. It is important to note that the language in a contract does not determine employment relationship status. Instead, courts rely on the conduct of the parties to determine agency or independent contractor standing Apparent Authority: Apparent authority occurs where the principaľs utterances or behavior would lead a reasonable person (third party) to believe that the agent had legal authority to act, even if the principal did not have an association with the supposed agent. Agency Relationships: Agency relationships arise through the following: 1. Arrangement - through express permission either oral or written or by implied behavior 2. Ratification the principal either through conduct or through arrangement authorizes the conduct of a person who is not an agent. 3. Estoppel a third party believes that, and reasonably relies on, the agency relation ships existence by the principals conduct, and the third party acts to his/her disadvantage 4. Operation of law - a social duty or emergency imposes an agency relationship upon a person and failure to act outside the authority of the agent would cause the principal substantial loss Liability for Contracts: In order for the principal to be liable to contracts formed by the agent with third parties the following must occur: 1. The principals identity is fully or partially revealed at contract formation. 2. The agent acted within the scope of authority The agent is personally liable if the principals identity is undisclosed at the time of contract formation. However, if the agent acted within the scope of authority, the principal may also be bound by the contract. Employee: Employees who deal with third parties are agents and act on the principals behalf. Agency law is based on common law and most have been replaced by employment law, which only covers employer-employee relationships. inde An independent contractor is not an employee and employers who hire independent contractors do not have control over the detail of their physical performance, so employment law does not apply. An independent contractor is hired through a contract for specific performance on a per job basis and may or may not be an agent. Respondeat Superior: Under respondeat superior the employer is liable for the negligent acts or omissions by an employee working within the scope of employment. An agent will also bear responsibility for tortious conduct even though s/he was acting for her/his principal. When one party acts as an agent for another party, parties liability is joint and several Liability for Independent Contractors Torts: Under the doctrine of respondeat superior the employer is liable for the negligent acts or omissions of the employee that are committed within the scope of employment. When one party was acting as an agent or servant of another party, parties liability is joint and several

Determining Employee Status: The following is a list of elements that a court will consider when determining the employment status of a worker: 1. The amount of control an employer may exercise over the details of the work a. More employee; lessindependent contractor. 2. Whether the worker has his/her own business or engaged in an occupation. a. Occupation employee; self-employed independent contractor. Whether the workeri cisr th employers drection a. Employers direction - employee, specialist- independent contractor. 4. Whether the worker or employer supplies the tools. a. Employer supplied - employee, worker supplied - independent contractor. 5. Period of employment. a. Long period of time employee; short term-independent contractor. 6. Whether the worker is paid at the end of the job or by time period. a. Time period- employee; end of job - independent contractor. 7. Degree of skill required of the worker. a. Low skill - employee; high skill- independent contractor

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