A & P Flashcards
When is an agency relationship formed?
When the parties consent that the agent will act for the principals benefit and subject to the principals control.
What types of authority may the principal be bound to contract by the A in?
Implied actual authority
Express actual authority
Apparent authority
What is actual express authority?
Principal directly tells the A that he has the authority to take certain actions
What is actual implied authority?
Results when the Ps words or action cause the A to reasonably believe in their authority to act for the P
What is apparent authority?
When the P causes a 3rd party to reasonably believe that the agent has the authority to act, then A can bind P.
What should you look for to determine apparent authority?
The principals behavior did they do something which made a 3rd party think the agent was authorized.
What factors should you look at on test to find reasonable belief?
Past dealings between the P and the A to which the 3rd party is aware
Trade customs
Relevant industry standards
Ps written statements
What is ratification?
The P may affirm the prior act of the A
What is estoppel?
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.
When might a P be vicariously liable to a third party harmed by the A?
If acting within the scope of employment.
When does a P have liability for torts committed by the A?
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)
When is driving home from work within the scope of employment?
If the P provides the vehicle and asserts control over how the employee uses the vehicle
What is a frolic?
Significant deviation from the path take to perform work.
What is a detour?
A small deviation from the assigned path and within the scope of employment
What duties does an agent own to the principal?
Duty of Care (exercise reasonable care, skill, caution)
Duty to obey reasonable instructions
Duty of Loyalty
What is included in the duty of loyalty?
Usurp a business opportunity
A cannot take secret profits
Cannot compete with the P
How does a partnership form?
The association of two or more persons to carry on a for profit business as co owners
How are parters liable?
Personally liable for the partnerships obligations
What fiduciary duties are owed to partners?
Duty of loyalty (not compete with the partnership business)
Duty of care (not engage in negligent or reckless conduct)
What is special about the duty of loyalty in partnerships?
Cannot eliminate the duty but can limit by describing it differently
What is the safe harbor rule under the duty of loyalty?
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
Every partner has equal rights in the management and control of the business
How may a partner dissociate?
Voluntarily by giving notice or
Involuntary by agreement, court order etc.
What happens upon the dissociation of a partner?
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
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
How are partners liable for torts?
Personally liable for torts committed by partners acting within the scope of their partnership
Parters are jointly and severally liable
Dissolution and winding up. Dissolution is the beginning NOT END
What is winding up?
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
What is the liability under an LLP? Limited liability partnership
Partners are NOT personally liable
What is the liability in a limited partnership?
At least one general partner and one limited partner.
Gen is personally liable
Lim is not
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What does profit sharing do?
Creates the presumption of a partnership
Step 1: Dissociation
Step 2: Winding Up
Step 3: Termination
What happens if a creditor has a claim against the partnership?
Can obtain an interest in the partnership.
This includes profits but NOT management or voting rights.
Partnerships other than general partnerships MUST file a certificate with the state to be properly formed.
