Agencies and Partnerships Flashcards
Who is an agent?
Principals are employers and agents are the employees.
What duties do agents owe to their principals?
Fiduciary Duties.
When is an agent disloyal? What is the remedy?
If he takes advantage of the position he was in and could not have gained personally otherwise.
Disgorgement of the profits to the principal.
What obligation does an agent owe its principal?
Obligation to pursue utmost good faith and loyalty, and not act adversely to the principal–disgorgement is the remedy.
When does an employee violate his fiduciary duties?
When he is engaged in competitive activities; unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.
What are the basic duties of an agent?
- Account for profits arising out of employment
- Not act as an adverse party without consent
- Not compete in matters relating to the subject matter of the agency
- Deal fairly in transactions between fiduciary and principal
- Deal openly with employer; fully disclose information on matters affecting company’s business.
What are the characteristics of Partnerships?
- Personal liability of partners
- Limited duration
- Dissolution on exit of one partner
- Limited transferability of ownership interests
- Pass through taxation (not double taxation)
What are the fiduciary obligations of partners? Remedy?
Duty of undivided loyalty; members of a partnership owe a duty of loyalty to each other and therefore must disclose opportunities that arise in order for both to have an equal chance to take advantage of it.
– Since you didn’t disclose for both to compete, you have to give the other partner an option to join in.
