CHAPTER 9 – CONTRACTUAL
PERFORMANCE AND AGENCY
by Jeffrey Pittman
REVIEW OF MATERIALS COVERED FOR DR.
ROBERTSON’S CLASS – WEDNESDAY, OCTOBER
24, 2012

Using the rules of interpretation (textbook pages 26668), we analyzed lease clause 28.12 and the “quiet
enjoyment” language and clause 11.12 (which helps
the mall regarding odors, but not our store).
 Regarding the parol evidence rule (268-69), we
examined lease clause 28.8.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
To begin Chapter 9 Wednesday, we examined a
sample mall lease agreement and a hypothetical
problem: You leased a store in The Mall at Turtle
Creek. Recently, the mall allowed a popcorn
shop to operate. The shop produced a pervasive
popcorn “odor” that bothered your customers and
possibly reduced your store sales.
2
REVIEW OF MATERIALS COVERED FOR DR.
ROBERTSON’S CLASS – WEDNESDAY, OCTOBER
24, 2012
Regarding conditions (269-71), we looked at
clauses such as 2.3 and 7.7.
 Regarding conditions, we also used a separate
question: You present an engagement ring to
your prospective spouse. Later, she changes her
mind and decides not to marry you. Do you have
a legal right to return of the ring? The answer
depends on a possible express or implied
condition attaching to the delivery of the ring.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
3
REVIEW OF MATERIALS COVERED FOR DR.
ROBERTSON’S CLASS – WEDNESDAY, OCTOBER
24, 2012

Other topics we discussed Wednesday:
Common law rules apply to contracts for the sale of
land or services; UCC rules apply to the sale of
“goods”.
 The Citibank case presents a contract interpretation
and the plain meaning rule.


The Venture Media case presents contract
performance.


I find the Citibank excerpt difficult to follow, so do not
become discouraged reading the case.
Venture Media is even more complicated than Citibank.
I left the materials on pages 271-276 as open for
questions at the beginning of class, October 26.
Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business

4
CLASS MATERIALS – FRIDAY, OCTOBER 26

Note the concept of commercial impracticability.
 In a related problem, see the business discussion
problem on textbook page 285.


We will use Marlins fire manager Ozzie Guillen
to discuss breach of contract

Specifically, the Guillen firing illustrates the
measure of contract damages and the duty of
mitigation.
Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
We begin today with impossibility of
performance. For a typical example, see clause
22 in our sample mall lease agreement.
5
AGENCY LAW
Agency law is critically important to businesses
and individuals.
 Agency law allows individuals and businesses to
use representatives to act for the “principal”.
 From the Arkansas Bar Association, we used a
“Living Will and Durable Power of Attorney for
Health Care” to introduce the concept of
representation and agency.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
6
TYPES OF EMPLOYMENT RELATIONSHIPS
Employers hire individuals (or other firms) to
allow the employer to accomplish its mission.
 The primary hiring relationships utilized by an
employer include:

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
Principal/agent.
 Employer/employee.
 Employer/independent contractor.

7
TYPES OF EMPLOYMENT
RELATIONSHIPS

An individual may fit into more than one hiring
category.
For example, an employer could hire one individual
as an agent, an employee, and an independent
contractor.
Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business

8
AN AGENT

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
Agent – A person authorized by another (the
principal) to represent and act for the principal;
one authorized to transact business for a
principal.
9
AN EMPLOYEE
Employee – A person in the service of an
employer, where the employer has the power to
control and direct the employee in the details of
how the work is to be done.
 An employee does not represent an employer.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
10
AN INDEPENDENT CONTRACTOR
Independent Contractor – A person who contracts
to do a piece of work according to the
independent contractor’s own methods, subject to
the employer’s control only as to the end product
or final result of the work.
 An independent contractor does not represent an
employer.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
11
EMPLOYER LIABILITY FOR CONTRACTS
The employer is liable for contracts entered into
by agents, if the agents have actual or apparent
authority, or if the employer ratifies the contract.
 Actual authority includes express authority
(exact wording when agent hired) and implied
authority (inferred from express authority).

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
12
EMPLOYER LIABILITY FOR CONTRACTS

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
Apparent authority is present where actual
authority is lacking, but the principal has misled
third parties into believing that actual authority
exists.
13
EMPLOYER LIABILITY FOR CONTRACTS

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
The employer is not liable for contracts entered
into outside of the granted authority, unless the
employer ratifies the contracts.
14
EMPLOYER LIABILITY FOR TORTS
Under the doctrine of respondeat superior, an
employer is liable for the torts of agents or
employees where the torts are committed within
the scope of employment.
 An employer is generally not liable for the torts
of independent contractors.

Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
15
“SCOPE OF THE JOB”

How much potential control did the employer have
over the situation, and
 How closely connected was the tort to the job duties?


As an example problem, we used a lawsuit where
the law firm I was affiliated with represented a
nursing home in a case of sexual assault by a
nurses’ aid.
Jeffrey Pittman - For Dr. Robertson, Legal
Environment of Business
A simplified approach to determining if an agent
or employee has committed a tort within the
scope of the job is to ask:
16