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Principal, agent, employee, independent contractor

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Arnold is Chief Executive Officer of Beta Corp.His responsibilities include decisions on product develop-ment, marketing, and other significant business directions. Arnold is subject to the approval and oversight of Beta's board of directors. Carol is a Beta manager whose duties include the firm's day to day hiring, firing, purchasing and selling. Dave is a Beta salesperson, whose daily activities are controlled by Carol. Erin writes technical manuals for Beta products according to Arnold's instructions and has no dealings with Beta customers or suppliers. Fred edits the manuals on a contract-per manual basis and is not otherwise subject to Beta's control. Who is a principal; who is an agent; who is an employee; who is an independent contractor? please explain.

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Principal and Agent:

An "agent", broadly defined, is a person who affects the legal relations of another person, called the "principal". The agent can affect the legal relations of the principal in several ways but does so primarily through entering into contractual relationships on behalf of the principal. Agency is the relationship of a person (called the agent) who acts on behalf of another person, company, or government, known as the principal.

Principal: Here the principal is the company, Beta which means the owners of the company (shareholders) exercising control over the company through Beta's board of directors.

Agent: Arnold (CEO), Carol ...

Solution Summary

The solution identifies who is a principal, who is an agent, who is an employee and who is an independent contractor.

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