Answer to Question 1
A QUESTION OF ETHICS
1. One of the factors that a court will consider in determining whether agency by estoppel can be found is whether the plaintiff had an independent relationship with the physician prior to entering the hospital. Brackens stated in an affidavit that she had never met Dr. Taras or Dr. Tobes before she was admitted to the hospital. Also, as this question indicated, Brackens stated that she had no reason to believe that the doctors were not employed by the hospital and assumed that they were hospital physicians. Given the facts of this case, you would be justified in finding agency by estoppel. In determining the fairness of this conclusion, you would need to evaluate the implications of your decision for the hospital-physician relationship and hospital policies. If hospitals could be held liable under agency law for the malpractice of independent contractors (physicians), they would likely try to avoid this liability by informing patients in advance that certain doctors were not employees, and so on. Administrative procedures would need to be enacted under which such information could be distributed, and the hospital would have to pay additional wages to cover the additional time hospital employees would have to spend in distributing this information. In short, to avoid the cost of liability judgments, hospitals would incur other costs. In view of the financial difficulties facing many hospitals today, you may find that that being fair to Brackens may mean being unfair to those who would suffer if more hospitals had to close their doors.
2. A basic ethical precept underlying the law is that persons should be held responsible for their actions (or lack of action). In regard to agency law, this precept is expressed in the concept of agency by estoppel. If a party has reason to believe from the principal's conduct that he or she is dealing with an agent or that an agent is acting within the scope of his or her authority when in fact the agent is not so doing, the principal or ostensible principal is under an obligation to dispel the belief. If the principal fails to do so and the third party suffers detriment as a result of the apparent agency, a court may find agency by estoppel and thus hold the principal liablein other words, responsible for his or her own inaction.
3. The same reasoning applies here as in the answer to question 2 above. It would be unfair to hold a person liable for an action if that person was in no way responsible for the action. For example, Becky represents to Inga that she is the agent of Andrea, a dress designer. Inga believes Becky and gives Becky a check for 1,000 as a deposit on a dress to be designed and created by Andrea. Becky absconds with the check, and Inga seeks to hold Andrea liable under a theory of agency by estoppel. Andrea knows neither Inga nor Becky, has no knowledge of the transaction, and therefore could in no way have been responsible foror preventedthe fraud. Obviously, to hold Andrea liable in this situation would be totally unfair.
Answer to Question 2
FALSE