Case Scenario 1: Walter Does It His Way
Jonathan operated a landscaping business as a sole proprietor. Jonathan's business picked up in the spring and summer, so he asked his friend Walter to help him. After doing some research, Walter determined that he could become an employee or act as an independent contractor. Walter was excited about the opportunity; however, he wanted to reach an agreement that would provide him the best tax benefits. How does an employee differ from an independent contractor? What status should Walter choose? Explain your reasoning.
Case Scenario 2: Cleveland's Conflict
Cleveland really admired Babe Reilly, the new pitcher for the city's professional baseball team. Reilly was just 19 years old, yet he was the team's number-one pick. Cleveland knew that Reilly needed an agent; therefore, Cleveland devised a scheme so that he could be Reilly's agent. Cleveland would just present himself as Reilly's agent to a company that wanted Reilly to advertise its sporting gloves. Cleveland had a friend that worked for the board of that company. Cleveland reasoned that once Reilly became aware of the lucrative deal that Cleveland secured on his behalf, Reilly would officially appoint Cleveland as his agent. Is this proper behavior to establish an agency relationship? Compare authorization of an agent by appointment and by ratification.