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See also Agency (actual: right to control test). A description of an agency relationship where the agent is in fact employed by a principal or the principal has the right to control the methods under which the party actually performs its obligations. 

An actual agency relationship requires that defendant have the right to control the method by which another party performs its obligations under an Agreement. The common context for that test is a normal master-servant (or employer-employee) relationship. See, e.g., Jenkins v. AAA Heating, 245 Ore. 382, 386, 421 P.2d 971 (1966); Chard v. Beauty-N-Beast Salon, 148 Ore. App. 623, 628, 941 P.2d 611 (1997). The relationship between two business entities is not precisely an employment relationship, but the Oregon Supreme Court, in common with most if not all other courts that have considered the issue, has applied the right to control test for vicarious liability in that context as well. See Peeples v. Kawasaki Heavy Indust.. Ltd., 288 Ore. 143, 603 P.2d 765 (1979). 

Under the right to control test it does not matter whether the putative principal actually exercises control; what is important is that it has the right to ...

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