Murphy, while a guest at a motel operated by the Betsy-Len Motor Hotel Corporation, sustained injuries from a fall allegedly caused by negligence in maintaining the premises. At that time, Betsy-Len was under a license agreement with Holiday Inns, Inc. The license contained provisions permitting Holiday Inns to regulate the architectural style of the buildings as well as the type and style of the furnishings and equipment. The contract, however, did not grant Holiday Inns the power to control the day-to-day operations of Betsy-Len’s motel, to fix customer rates, or to demand a share of the profits. Betsy-Len could hire and fire its employees, determine wages and working conditions, supervise the employee work routine, and discipline its employees. In return, Betsy-Len used the trade name “Holiday Inns” and paid a fee for use of the license and Holiday Inns’s national advertising. Murphy sued Holiday Inns, claiming Betsy-Len was its agent. Is Murphy correct? Explain.
The agent and principal relationship are defined by the power to control the work of agent by principal. An agent works for or on the behalf of its principal. So, principal can be held liable for the agent's work. However, in this case, Corporation B has limited the control exerted by Company H only to the extent of regulation on the design of building and furnishing and the equipment to be used. Corporation B does not give its control for daily operational activities or management of employees to the Company H. So, Corporation B cannot be considered as an agent of Company H.
In this case,Individual M's claim cannot be considered valid as Corporation B is not the agent of Company H because Company H does not hold any control over the daily operational functions of Corporation B.
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