Business Law/Accounting 1. Formation of Agency Matt was on a business trip, stay
ID: 442449 • Letter: B
Question
Business Law/Accounting
1. Formation of Agency
Matt was on a business trip, staying at a Motel 7. He fell on his way to free breakfast, alleging that his fall was caused by negligence in maintaining the premises. At that time, Motel 7 was under a license agreement with Super 9, Inc. The license allowed for Super 9 to take care of the style of architecture, the equipment, and the furnishings,
The contract did not grant Super 9 the power to control the day-to-day operations of Motel 7’s motel, to fix customer rates, or to demand a share of the profits. Motel 7 could hire and fire its employees, determine wages and working conditions, supervise the employee work routine, and discipline its employees. In return, Motel 7 used the trade name “Super 9” and paid a fee for use of the license and Super 9’s national advertising. Matt sued Super 9, claiming Motel 7 was its agent. Is Matt correct?
Explanation / Answer
Issue
Matt fell while going for breakfast. The Motel where Matt was staying was Motel 7 which was working under a license agreement with Super 9. Matt sued Super 9 for negligence in maintaining the premises.
Is matt correct in suing Super 9?
Rule
Contract through agency would be used in the present case. In case of principal-agent relationship the principal legally appoints an agent in order to act on its behalf.
Analysis
In the present case Super 9 was responsible for maintaining the architecture, furnishings and equipment at Motel 7. Motel 7 was also working under the trade name of Super 9 and was also using its national advertisement. In return Super 9 was being paid a fee.
Thus, the above fact establishes a relationship of principal and agent between Super 9, which is principal in the present case and Motel 7, which is agent.
Conclusion
Matt rightly sued Super 9 as it was the principal and Motel 7 was an agent and the rule in case of agency relationship is that the principal is held liable in case of any injury caused to any person by the agent while working under principal.
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