Agency Flashcards
requirements for an agency relationship
1) consent by both the principal and the agent that the agent will act for the principal’s benefit, and
2) that the agent is subject to the principal’s control
scope of agent’s authority
A principal is not liable on a k entered into by an agent unless the agent had actual or apparent authority
apparent authority
exists when a principal’s communications to a third party cause the third party to reasonably believe that an agent is authorized to act, even if the principal and the purported agent never so agreed.
third party with whom the agent acts reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestation
actual authority
reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act
express: agent is given authority to act for the principal
implied: the authority that an agent has to take actions that are reasonably necessary to carry out the principal’s express instructions
Ratification
even if the agent did not have authority to enter into a transaction, the principal can ratify the acts (and thus become liable) by expressly or impliedly affirming or accepting the benefit of the acts, so long as the principal knew that material facts and had capacity
A person who purports to make a k with a third party on behalf of another person, lacking power to bind that person, gives
an implied warranty of authority to the third party and,
is subject to liability to the third party for damages for loss caused by the breach of that warranty, including loss of the benefit expected from performance by the principal.
An agent who purports to act on his own account, but in fact is making a k on behalf of an undisclosed principal, is
also a party to the k
rationale for this rule is that the third party has every reason in the case of an undisclosed principal and agency to
assume that the person with whom it contracts expects to be liable on the contract
When a third party contracts with a person that the third party knows is acting in an agency capacity for another but the third party is unaware of the identity of the principal, the principal for whom the agent acts is called a
partially disclosed principal
A partially disclosed principal can be liable on a contract entered into by an agent who
had actual or apparent authority
There can be no apparent authority in the case of an undisclosed principal bc
there are no manifestations from the principal to the third person
partnership liablity - UPA (1997) § 306(a)
partners of a general partnership are liable jointly and severally for all obligations of the partnership
partnership could become
obligated for the loss caused if partner was acting in the ordinary course of the partnership business.
UPA (1997) § 306(b) - partner liability for persons admitted to an exissting partnership
not personally liable for any partnership obligations
incurred before the person’s admission
UPA (1997) § 1001, a general partnership can make an election and become a LLP if
the partners approve the conversion by a vote equivalent to that necessary to amend the partnership agreement and,
the partnership then files a statement of qualification that specifies the name of the partnership, its principal office, and its election to be
an LLP
can also effectuate a conversion from partnership to LLP by
forming a new LLP and transfer the assets of the
old general partnership to the new LLP
UPA (1997) § 306(c), an obligation incurred while a partnership is an LLP
is solely a partnership obligation
To create a valid limited partnership, statutory requirements must be met
must include a general partner who has signed the initial Certificate of Limited Partnership filed with the Secretary of State
responsibilities of members in limited partnership
limited partners have limited liablity (limited to their capital contributions)
general partners are liable for all partnership obligations and manage control of the business.
Respondeat Superior
employers are liable for the actions of an employee when the employee is acting within the scope of his employment
Employee acting within the scope of his employment
physical conduct in the
performance of the services is subject to the employer’s control or right to control
An employee’s act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer
factors for independent contractor vs. employee
1) the level of skill required
to perform the work,
2) who supplies the instrumentalities used,
3) the duration of the relationship,
4) and whether the work is part of the principal’s regular business.
No single factor is
determinative.
An employee’s conduct is within the scope of his employment if
(1) it is of the kind that the
employee is employed to perform;
(2) it occurs substantially within the authorized time and
space limits; and
(3) it is motivated, at least in part, by a purpose to serve the employer.
The fact that the act was not authorized is not determinative
Employer employee liability for torts
Generally, an employer is subject to vicarious liability for torts committed by an employee acting within the scope of employment
or where third party reasonably believes that the agent or other actor has
authority to act on behalf of the principal and that belief is traceable to manifestations made by the principal.
Whether or not a principal is vicariously liable for actions of an agent, a principal who conducts an activity through an agent is subject to liability for harm to a third party caused by the agent’s conduct if the harm was caused by the principal’s negligence in
selecting, training, retaining,
supervising, or otherwise controlling the agent
Although a principal generally is not vicariously liable for the physical torts of non-employee agents, a principal can be
vicariously liable under some circumstances to a third person for torts committed by a non-employee agent where
the agent acts wtih apparent authority
partnership
an association of two or more persons to carry on as co-owners a business for profit whether or not the persons intend to form a partnership
a person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment for services as an independent contractor or of wages or other compensation of an employee
Partnership authority to act
Even if a partner lacks actual authority, a limited liability partnership can be bound by the acts of a partner, including the execution of an instrument in the partnership name, if the partner was apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership
a partner does not have actual authority to take
unusual or non-customary actions that will have a substantial effect on the partnership
Partnership liability for wrongful acts of another partner
Generally, a partnership is liable for loss or injury caused to a third party because of the wrongful act of a partner acting in the ordinary course of partnership business
Partners are personally liable for the obligations of a general partnership.
Partnership liability for own wrongful acts
Partners can become liable, however, for partnership obligations based on their own personal misconduct.
Parntership reimbursement to a partner for purchases
A partnership must reimburse a partner for any payment made by the partner in the course of the partner’s activities on behalf of the partnership.
Rights to management in a partnership - RUPA §401(h)
each partner has equal rights in the management and conduct of the partnership’s business
RUPA 401(k) - Matters outside of the general course of the partnership business
must be unanimously approved by the partners
A difference arising as to a matter in the ordinary course of business of a partnership may be decided by a majority of the partners.
An act outside the ordinary course of business of a partnership and an amendment to the partnership agreement may be undertaken only with the affirmative vote or consent of all the partners (new member or selling land)
RUPA § 401(h) - scope of a partner’s authority is governed by
agency law principles
If the partnership agreement is silent on the scope of the agent-partner’s authority, a partner has actual authority to commit the partnership to usual and customary matters, unless the partner has reason to know that (i) other partners might disagree, or (ii) for some other reason consultation with fellow partners is appropriate
Disassociation from the partnership
A partner is dissociated from a partnership when the partnership has notice of the partner’s will to withdraw as a partner.
can dissociate at any time
notice doesnt need to be in writing
dissociation is rightful when
when the partnership is at will and the dissociation breaches no express provision in the partnership agreement
rightful = dissociating partner has no obligations to the other partners
cannot cause a buyout of dissociating partner’s interest or seek damages
dissociation is wrongful when
it is done in contravention of the terms of the partnership agreement
wrongful dissociating partner can be liable to the partnership & partners for any damages caused by the dissociation
cannot participate in the winding up of the business
partnership at will
a partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking
under UPA a partnership agreement cannot modify the right to
dissociate except to require that a dissociation notice be in writing
a partner’s dissociation in an at-will partnership results in
its dissolution, and the business must be wound up
such dissolution can be rescinded by the affirmative vote or consent of all remaining partners to continue partnership
then the dissociating partner is no longer considered a partner and does not participate in this decision to continue the partnership
When a partnership is continued and not dissolved, the dissociating partner is entitled to
value of his interest less damages he caused if wrongfully causing the dissoultion
if the withdrawing partner makes a written demand for payment and no agreement is reached within 120 days after the demand, the partnership must pay in cash the amount it estimates to be the buyout price, including accrued interest
if after dissociating other partners chose to not continue the business, the dissociating partner
would have the same rights to the partnership property as other partners would have minus any damages he would owe them if wrongful dissociation
During the winding-up process, partners who participate in the winding up of partnership business continue to have a
fiduciary relationship to the partnership and the other partners
partner must perform his duties during the winding up of the partnership business consistently with the contractual obligation of good faith and fair dealing
A partner who learns of a business opportunity during the term of a partnership may not
appropriate that opportunity (without sharing with his
co-partners) during the winding-up process or after the partnership term ends
Partnership obligations appropriately incurred during the winding up process are
obligations of all partners including a dissociating partner
Duties in a partnership
Under RUPA, a partner owes to the partnership and the other partners the duties of loyalty and care.
liable for damages for breach of these duties
fiduciary duty of loyalty in partnership
includes the obligation to refrain from appropriating partnership assets for personal use
duty of care in partnership
includes a duty not to engage in intentional misconduct and knowing violations of law
duties of loyalty and care run both to
partnership and the other partners
creditor vs partner
presumption of partnership does not apply where those profits are received in payment of a debt by installment or otherwise
a partner has a ___ interest in the profits and losses of the partnership and in her tight to receive distributions
transferable
transfer of that interest is permissible and creates in the transferee a right to receive distributions to which the
transferor would otherwise be entitled
a transfer of the partnership interest does not make the transferee a partner unless
the other partner or partners consent to making the transferee a partner.
Property is partnership property if
it is acquired in the name of the partnership
Partnership property is property of the partnership and not of the partners individually
for someone to collect a debt against a partnership from the partners personally, he must
obtain judgment against the partners individually and against the partnership
negligence per se
An actor is negligent if, without excuse, the actor violates a statute that is designed to protect against the type of accident the actor’s conduct causes, and if the accident victim is within the class of persons the statute is designed to protect.
Indemnification (full reimbursement for damages paid to the plaintiff) is available to a tort defendant who has
paid the plaintiff’s damage award when, as between the paying and nonpaying defendants, the paying defendant was not at fault in causing the plaintiff’s injuries
and the non- paying defendant was at fault.
joint tortfeasor who was at fault in causing the plaintiff’s injuries is entitled only to contribution, i.e., partial reimbursement for damages paid to the plaintiff
