BHarvey_Memo_10723 (2)

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Rasmussen College *

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PL216/PLA2

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Law

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Jan 9, 2024

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docx

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MEMORANDUM TO: Supervising Attorney FROM: Breanna Harvey DATE: 10/7/2023 Re: Mr. Arthur Krupke, Liability issues regarding Consultants Facts Mr. Arthur Krupke is seeking legal advice regarding potential liability issues that may arise when operating his business, Krupke’s Consultants, in the State of Colorado. Krupke Consultants plans to employ consultants to provide advisory services to other companies to enhance their client’s operations. Mr. Krupke is seeking legal advice on potential liability issues that may arise from employee conduct and seek potential solutions to limit and safeguard Krupke Consultants from potential legal issues that may arise from contracts that Consultants will enter into on Krupke’s Consultants behalf. Additionally, Mr. Krupke is seeking legal advice with regards to his company's liability for any potential negligence committed by his employees while traveling via motor vehicle on and off company time in the state of Colorado. Issue(s) Presented What are the potential liability does Krupke’s Consultants assume under Colorado law in the following scenarios: Consultants who enter into a bad contract. Consultants who enter into a bad contract outside their authority. Consultants who negligently cause a car accident while en route to a client's worksite. Consultants who negligently cause a car accident during their lunch period. Answer to Issue(s) In the state of Colorado, a relationship is legally created when there is an agreement, whether oral or written, explicit or implicit, between two individuals, designating one of them to represent and operate under the authority of the other. With regards to employee/employer relationships, the individual assuming the role of representation is termed the "agent," while the other individual is recognized as the "principal," as defined in Chapter 8:1 AGENCY RELATIONS. Krupke Consultants assumes “Principal Agency by Employment” once they hire an agent (“Consultant”) to work for them. Consequently, Krupke Consultants will assume varying levels of legal responsibility for the actions of their Consultants who act as agents on Krupke Consultants behalf. The actions of these agents acting on the company's behalf can create liability issues for Krupke Consultants in all of the above mentioned scenarios. Krupke Consultants Liability for Consultants Entering into a Bad Contract

In the state of Colorado, the liability of Mr. Krupke, as the employer, for his consultants entering into a bad contract is contingent on established legal principles. Most notably is the doctrine of "Respondeat Superior" and the "Scope of Employment." Respondeat Superior Under the legal doctrine of Respondeat Superior, employers in Colorado can be held vicariously liable for the actions of their employees, including contractual agreements entered into by their agents, as long as those actions are taken within the scope of employment. Scope of Employment The critical factor in determining Krupke Consultants liability for a bad contract is whether the actions of the consultant(s), specifically entering into a bad contract, fall within the scope of their employment. If they were acting within the scope of their employment when entering the contract, Krupke Consultants may be held liable for any adverse consequences arising from that contract, regardless if they had acted negligently. As a result, a bad contract entered into by an agent could result in potential breach of contract lawsuits and other liability suits against Krupke Consultants. Liability for Consultants Entering into a Bad Contract Outside of Their Authority Exceptions to this rule occur when an agent exceeds their authority, making them personally responsible to the third party. Agent's Authority Colorado agency law recognizes the fundamental principle that an agent, such as a consultant, must act within the scope of their authority when entering into contracts. If an agent exceeds their authority and enters into an unauthorized contract, the consequences may affect both the agent and the principal, in this case, Mr. Krupke. If consultants exceed their authority and enter into a contract on behalf of Krupke's Consultants that was not authorized, Mr. Krupke may still be held liable under Colorado agency principles. However, this liability is less clear cut than in instances where the agent was acting within their authority. Liability for Negligent Car Accidents While on the Way to a Client Worksite The “Going-and-Coming Rule” and “Scope of Work” In, Suydam v. LFI Fort Pierce, Inc. , 2020 COA 144M, the Court of Appeals of Colorado, Division Seven, affirmed the lower court's ruling that LFI Fort Pierce, Inc. assumed vicarious liability when their employee struck a bicyclist who had been acting within the scope of her employment at the time of the collision, as the accident took place while the employee was performing duties related to her employment. The "going-and-coming rule" is a legal doctrine that generally states that an employer is not responsible for the actions of its employees when the employee is commuting to or from work.

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