Who is the principal and who is the agent in this scenario? By which method was an agency relationship formed between Scott and Blatt? What facts would the court consider most important in determining whether Scott was an employee or an inde- pendent contractor?

Agency Relationships

James Blatt hired Marilyn Scott to sell insurance for the Massachusetts Mutual Life Insurance Company. Their contract
stated, “Nothing in this contract shall be construed as creating the relationship of employer and employee.” The con–
tract was terminable at will by either party. Scott financed her own office and staff, was paid according to performance,
had no taxes withheld from her checks, and could legally sell products of Massachusetts Mutual’s competitors. Blatt
learned that Scott was simultaneously selling insurance for Perpetual Life Insurance Corporation, one of Massachusetts
Mutual’s fiercest competitors. Blatt therefore withheld client contact information from Scott. Scott complained to
Blatt that he was inhibiting her ability to sell insurance for Massachusetts Mutual. Blatt subsequently terminated their
contract. Scott filed a suit in a New York state court against Blatt and Massachusetts Mutual. Scott claimed that she had
lost sales for Massachusetts Mutual—and commissions—as a result of Blatt’s withholding contact information from
her. Using the information presented in the chapter, answer the following questions.

1. Who is the principal and who is the agent in this scenario? By which method was an agency relationship formed
between Scott and Blatt?

2. What facts would the court consider most important in determining whether Scott was an employee or an inde–
pendent contractor?

3. How would the court most likely rule on Scott’s employee status? Why?

4. Which of the four duties that Blatt owed Scott in their agency relationship has probably been breached?