A&P Flashcards
Agency Relationship Exists if there is: (3)
- Assent
- Benefit
- Control
Types of Agents
- Universal
- General
- Special
Express Actual Authority
P explicitly tells A (orally/writing) that he is entitled to act.
Implied Actual Authority
- agent believes he is entitled to act because the ACTION IS NECESSARY to carry out his express duties.
- agent has ACTED SIMILARLY IN PRIOR DEALINGS with P
- CUSTOMARY in industry for agents to act in that way.
Apparent Authority
- 3rdP reasonably beleives that the person/entity has authority to act on behalf of the P.
- AND that belief is traceable to the P’s manifestation (holding out)
Difference between Apparent and Actual Authority
Actual authority is the Agent’s perception….Apparent Authority is the 3rdparty’s perception.
A P is bound to a K even if A acted on his own behalf/in violation of specific instructions UNLESS
3rd party had notice the A was exceeding his authority or contract/transaction was not within the ordinary usages of the business.
Apparent Auth is not applicable if the 3rd party has actual knowledge that the agent did not have authority.
What is the affect of ratification?
P’s ratification of A’s conduct will make the P liable for those Ks entered into by A without authority.
Ratification occurs when
- P has knowledge of all materal facts or contract terms; and
- P manifests assent (approves) of same through words or conduct.
Generally, A has NO K liability to 3rdparty for a K entered into with that party if:
- fully discloses the P he is acting on behalf of
- and the agent has actual authority and apparent authority.
If both elements not met, then A is liable.
Can Agent be liable to 3rdparty if P is partially disclosed?
Yes. Agent will be liable.
Fiduciary duties owed by the A to the P
Care, Loyalty, Obedience
Elements of General Partnership
- two or more ppl
- co-owners
- carry on a business for profit
Is each partner an agent of the partnership?
Yes
Express actual authority to bind partnership
A partner has this upon receiving said authority from partners.
If partnership agreement is silent on scope of partner’s authority, then
a partner has authority to bind the partnership to usual and customary matters.
Differences among the partners as to acts WITHIN the ORDINARY COURSE of the partnership…
need only be approved by a majority of the partners
Acts OUTSIDE the ordinary course of the business must be…
approved unanimously
Are general partners personally liable for obligations of the partnership?
Yes. They are liable for ALL obligations of the partnership unless otherwise agreed by claimant or law.
Are partners jointly and severally liable?
Yes, per 1997 UPA. Claimaints can collect the full amount of the debt from anyone of the partners.
Can partners seek contribution from the other partners?
Yes, if he pays more than his proportionate share of the partnership obligation.
Are incoming partners liable?
NO. they are not liable for obligations incurred PRIOR to their admission into partnership.
Can judgment creditor levy execution of the judgment against a partner’s assets for a partnership debt?
No. Not generally. UNLESS:
1. the judgment has been rendered against the partner and
2. the partnership assets have been exhausted or are insufficient.
LLP Liability partnership liability
Partner in LLP is not liable for partnership obligations. There are Exceptions.
Partners are ALWAYS liable for….
- their own misconduct or when they sign a personal guarantee for the obligation
Even if partner is not personally liable for the debts of the partnership…
he is at risk of losing any capital contributions he made to it.
Obligations incurred before a partnership becomes an LLP are…
treated as obligations of the prior partnership entity
Partner is in breach of duty of care only when
he engages in
1. grossly negligent or reckless conduct
2. intentional conduct
3. or knowing violation of law
Duty of Loyalty
act in the best interest of the partnership
Under RUPA …duty of loyalty
- account for property, profit, benefit derived from partnership
- not have interest adverse to partnership
- not compete w partnership
These duties apply after dissolution during winding up process.
A partnership opportunity is:
- closely related to the entity’s existing or prospective line of business
- that would competitively advantage the partnership,
- that the partnership has the financial ability, knowledge, and experience to pursue.
Partner is not liable for conduct that would otherwise violate duty of loyalty if:
- partner fully discloses info, and
- partnership agreement is amended or all partners consent to transaction.
How may a partnership agreement be amended
Unanimous vote
Dissociation /Withdrawal
- notice of express will,
- occurrence of agreed upon event in agreement
- expulsion pursuant to agreement
- expulsion by unanimous vote
- judicial expulsion
- bankruptcy
- incapacity or death
- appointment of a personal rep or receiver or
- termination of an entity partner
Can partner withdraw at any time?
Yes, by providing notice.
How will a withdrawal be deemed wrongful?
- if it is in breach of express provision of the partnership agreement or
- if the partnership is for a definite term or particular undertaking.
Can a partner who wrongfully dissociates participate in management or winding up process?
NO. in fact, they are liable to the other partners for damages caused by dissociation.
How does dissolution happen?
- notice of partners’ express will to withdraw
- agreed upon event in agreement
- event that makes business unlawful
- judicial dissolution on application of partner
- judicial dissolution of application of transferee
Dissolution may be rescinded by
affirmative vote or consent of remaining partners
Wrongful dissociation allows ALL remaining partners to
waive winding up and termination of the partnership and instead choose to continue partnership by buying out dissociated partner’s interest.
