Question

Arnold is the CEO of Beta Corp. Arnold's responsibilities include making decisions on product development, marketing and other significant business directions. Arnold's position is subject to the approval and oversight by Beta's Board of Directors.

Carol is a Beta manager whose responsibilities include directing Beta's day to day hiring, firing, purchasing and selling.

Dave is a Beta salesperson whose daily activities are controlled by Carol, his supervisor. Dave is authorized by Carol to enter into contracts on behalf of Beta.

Fred works from home to edit Beta's technical manuals on a contract- per-manual basis (he is paid for each manual he edits), and is not otherwise subject to Beta's control.

how would you define a principal-agent relationship?

What is the difference between an employee and an independent contractor?

Answer 1

1. Principal agent relationship is the relationship of principal and agent in which the agent is hired by the principal to do a specific task, and the agent is representative of all the actions of the principal and the acts done by agents will make the principal liable for the same, because agent is always acting on the behalf of principal.

This is a relationship of performance of contract in which agent is the representative of principals powers and he is always representative of the principles action and the act done by agent will directly make the principal liable.

2.employee will always be working under a contract of employment but an independent contractor will work for the company under the contract of providing a specific service.

employee would always be responsible towards the company for his acts and he will follow the company code of conduct and ethics but the independent contractor will be independent in nature and he will not follow anything related to the company code of conduct.

employee will always receive a salary where as the independent contractor will always receive a commission.

so it can be said that the employees are always a representative of the company, whereas the independent contractor is working in independent nature and he is not representative of the company and his acts will not make the company liable