A & P

Question 1

When is an agency relationship formed?

Answer 1

When the parties consent that the agent will act for the principals benefit and subject to the principals control.

Question 2

What types of authority may the principal be bound to contract by the A in?

Answer 2

Implied actual authority
Express actual authority
Apparent authority

Question 3

What is actual express authority?

Answer 3

Principal directly tells the A that he has the authority to take certain actions

Question 4

What is actual implied authority?

Answer 4

Results when the Ps words or action cause the A to reasonably believe in their authority to act for the P

Question 5

What is apparent authority?

Answer 5

When the P causes a 3rd party to reasonably believe that the agent has the authority to act, then A can bind P.

Question 6

What should you look for to determine apparent authority?

Answer 6

The principals behavior did they do something which made a 3rd party think the agent was authorized.

Question 7

What factors should you look at on test to find reasonable belief?

Answer 7

Past dealings between the P and the A to which the 3rd party is aware

Trade customs

Relevant industry standards

Ps written statements

Question 8

What is ratification?

Answer 8

The P may affirm the prior act of the A

Question 9

What is estoppel?

Answer 9

The P might be prevented from denying liability if he failed to take reasonable steps and use ordinary care to inform a 3rd party of the lack of authority.

Question 10

When might a P be vicariously liable to a third party harmed by the A?

Answer 10

If acting within the scope of employment.

Question 11

When does a P have liability for torts committed by the A?

Answer 11

Task is inherently dangerous

P was negligent in hiring

Or A motivated on some part to benefit the P

Agent is hired to before this act (bouncer)

Question 12

When is driving home from work within the scope of employment?

Answer 12

If the P provides the vehicle and asserts control over how the employee uses the vehicle

Question 13

What is a frolic?

Answer 13

Significant deviation from the path take to perform work.

Question 14

What is a detour?

Answer 14

A small deviation from the assigned path and within the scope of employment

Question 15

What duties does an agent own to the principal?

Answer 15

Duty of Care (exercise reasonable care, skill, caution)
Duty to obey reasonable instructions
Duty of Loyalty

Question 16

What is included in the duty of loyalty?

Answer 16

Usurp a business opportunity
A cannot take secret profits
Cannot compete with the P

Question 17

How does a partnership form?

Answer 17

The association of two or more persons to carry on a for profit business as co owners

Question 18

How are parters liable?

Answer 18

Personally liable for the partnerships obligations

Question 19

What fiduciary duties are owed to partners?

Answer 19

Duty of loyalty (not compete with the partnership business)

Duty of care (not engage in negligent or reckless conduct)

Question 20

What is special about the duty of loyalty in partnerships?

Answer 20

Cannot eliminate the duty but can limit by describing it differently

Question 21

What is the safe harbor rule under the duty of loyalty?

Answer 21

If a partner makes a full disclosure of all material facts then a certain percentage of the other partners may authorize or ratify the transaction

Question 22

Every partner has equal rights in the management and control of the business

Question 23

How may a partner dissociate?

Answer 23

Voluntarily by giving notice or
Involuntary by agreement, court order etc.

Question 24

What happens upon the dissociation of a partner?

Answer 24

A former partner has no right to participate in the management and no duties to the partnership.

IF the partnership continues, they must buy out the dissociated partners interest

Question 25

Every partner is an agent of the partnership and may be liable for other partners contract or tort liabilities. The same agency rules apply for authority. Actual express, actual implied, apparent

Question 26

How are partners liable for torts?

Answer 26

Personally liable for torts committed by partners acting within the scope of their partnership

Question 27

Parters are jointly and severally liable

Question 28

Dissolution and winding up. Dissolution is the beginning NOT END

Question 29

What is winding up?

Answer 29

Any partner not wrongfully dissociated can wind up and sell partnership property etc.

Can maximize value as going concern and

File a notice of dissolution giving 3rd parties notice

Question 30

What is the liability under an LLP? Limited liability partnership

Answer 30

Partners are NOT personally liable

Question 31

What is the liability in a limited partnership?

Answer 31

At least one general partner and one limited partner.

Gen is personally liable
Lim is not

Question 32

I

Question 33

What does profit sharing do?

Answer 33

Creates the presumption of a partnership

Question 34

Step 1: Dissociation
Step 2: Winding Up
Step 3: Termination

Question 35

What happens if a creditor has a claim against the partnership?

Answer 35

Can obtain an interest in the partnership.

This includes profits but NOT management or voting rights.

Question 36

Partnerships other than general partnerships MUST file a certificate with the state to be properly formed.