Unit 4 case study

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University of Texas, Rio Grande Valley *

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110

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Law

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Feb 20, 2024

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docx

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Unit 4 – Case Study Assignment Respond to the following scenario: Lance Nail hired Jimmie Limon to sell insurance for Texas Insurance Co. (“TICO”). Their contract stated, “Nothing in this contract shall be construed as creating the relationship of employer and employee.” The contract was terminable at will by either party. Limon financed his own office and staff, was paid according to performance, had no taxes withheld from his checks, and could legally sell the products of TICO’s competitors. When Nail learned that Limon was simultaneously selling insurance for Louisiana Insurance Corp., one of TICO’s fiercest competitors, Nail withheld client contact information from Limon that would have assisted his sales for TICO. Limon complained to Nail that withholding information was inhibiting his ability to sell insurance for TICO. Nail subsequently terminated their contract. Limon filed a suit in Texas state court against Nail and TICO. Limon claimed that he had lost sales for TICO and the resulting commissions as a result of Nail’s withholding contact information from him. Using the information presented in Chapter 32, answer the following questions: 1. Who is the principal and who is the agent in this scenario? What type of agency relationship was formed? How was it formed? In this scenario, the principal would be Lance Nail or TICO, while the agent would be Jimmie Limon. The type of agency relationship that was formed is that of an employer and independent contractor. The agency agreement was formed through a written contract. 2. What fact or set of facts would a court consider most important in determining whether Limon was an employee or an independent contractor? A couple facts that a court could consider important are the section of the contract clearly expressing that the relationship would not be that of an employer-employee. Also, the fact that Limon financed his own office and staff, all while not having taxes withheld from is checks. And lastly it was stated that he could legally sell products of TICO’s competitors.

3. Is the court more likely to find Limon was an employee or an independent contractor? Why? Personally, I don’t see any indication at all of Limon ever having an employee relationship for TICO. While on the other hand there are many indications throughout the scenario that Limon was an independent contractor which was completely agreed to by TICO. 4. One of the four duties that an agent is owed by virtue of an agency relationship was likely breached by the principal. Which duty was it and how was it breached? Explain your response. TICO as the principal in this scenario broke the duty of cooperation towards the agent Jimmie Limon. The duty of cooperation states that a principal has the responsibilities to fully cooperate with the agent to help them complete his or her duties. TICO breached this duty by retaining client information that Limon required to complete his sales which clearly is not cooperation on TICO’s end.

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