agency and partnership Flashcards
What does RUPA stand for?
Revised Uniform Partnership Act (RUPA) provides a default set of rules that provide guidance on the governing of a partnership.
Partners are generally considered agents and can bind a partnership. However, a partner with apparent authority will not bind the partnership when:
1) the partner lacked authority; and 2) the third party knew or had notice that the partner lacked authority.
Can an undisclosed principal ratify the act of an agent?
It depends. Under the Second Restatement, an undisclosed principal cannot ratify the act of an agent. Under the Third Restatement, an undisclosed principal may ratify the unauthorized act of an agent.
In a sentence (or two), what is a basic definition for a limited partnership?
A limited partnership is composed of one or more general partners and one or more limited partners. The rights, duties and liability between general partners and limited partners differs.
When may a principal be liable for the acts of an independent contractor?
Principal may be liable where:
- Acts performed by independent contractor are inherently dangerous;
- Principal selected an incompetent contractor, or
- Where there is a nondelegable duty to act.
All general partners have the right to manage and control the general partnership. This includes voting on decisions. What is the difference between the voting requirements for decisions made in versus outside the ordinary course of business?
Decisions made in ordinary course of business are controlled by a majority vote; whereas matters outside the ordinary course of business require a unanimous vote.
When does dissolution of a partnership for a definite term occur?
1) within 90 days of a partner’s dissociation by death or wrongful dissociation;
2) upon the express will of all the partners to wind up the business; or
3) upon the expiration of the term or completion of purpose.
What does UPA stand for?
The Uniform Partnership Act (UPA), which includes revisions called RUPA, is a uniform act for the governance of business partnerships by U.S. States. There are several versions of the UPA, the earliest were promulagated in 1914, and the most recent in 1997.
It’s a Trick: Apparent Authority and the MEE
With regard to establishing apparent authority, the principal must, in some manner, indicate to the third party that the agent has authority. This may be done expressly through an announcement or impliedly be providing a uniform or company van (Think a UPS delivery person. These individuals are clearly agents of the company.). However, if a fact pattern ONLY indicates that the agent held themselves out to the third party as having such authority, without an indication that the principal indicated this, apparent authority will not be established to bind the principal.
Even after dissolution, a partner has apparent authority to bind the partnership if:
1) the partner’s acts would normally bind the partnership; and 2) the third party did not have notice of the dissolution.
May a partner transfer his share of profits or losses to a third person?
Yes, while a partner may not transfer his interest in management and other rights, he may transfer his interest in profits, losses, and distribution to a third party. Such a conveyance does not dissolve the partnership. Nor does the transferee automatically become a partner.
What is the doctrine of respondaet superior?
Under the doctrine of respondaet superior, an employer (principal) may be vicariously liable for the torts committed by the employee (agent) if: 1) An employer-employee relationship exists; and 2) The employee committed tortious action during the scope of employment.
How is a limited partnership formed?
A limited partnership is formed when: 1) Written certificate of limited partnership is executed in substantial compliance with state law; 2) Must file certificate with the secretary of state; 3) Must maintain an office with records (e.g., certificate of limited partnership) in its state of organization; and 4) Must maintain an agent in the state for service of process.
What does ULPA stand for?
Uniform Limited Partnership Act (ULPA) governs limited partnerships.
The relationship between an agent and a principal is a fiduciary one. What duties does an agent owe the principal?
An agent owes the principal the following fiduciary duties: 1. Duty of Loyalty 2. Duty of Obedience 3. Duty of Reasonable Care
When can a creditor recover from the one of the partners personally, and what procedural steps must be taken to satisfy debt?
1) Where there is an obligation, a claimant should obtain a judgment against all partners personally and against the partnership. 2) Prior to levying a judgment against the individual partner’s personal assets, claimant should first attempt to satisfy the obligation through the partnership’s assets.
A tip for Actual Authority and the MEE
In discussing actual authority on the MEE, analyze the relationship and communication beteeen the principal and the agent. Determine whether actual authority exists. If this does not exist, then discuss apparent authority.
What does RULLCA stand for?
Revised Uniform Limited Liability Act of 2006 (RULLCA) is a uniform act for the governance of limited liability companies.
Partners owe the partnership and other partners a number of fiduciary duties including the duty of care. What does the duty of care require?
The duty of care requires a partner to refrain from engaging in: 1) Grossly negligent or reckless conduct; 2) Intentional misconduct; or 3) A knowing violation of law. A partner must discharge duties with good faith and fair dealing.
To form a limited partnership, a certificate of limited partnership must be filed. What does this require?
The Certificate of Limited Partnership must include: 1) the name of the partnership; 2) the address of the partnership; 3) name and address of each partner; 4) whether the partnership is a Limited Liability Partnership; and 5) it must be signed by a general partner.
What fiduciary duties does the principal owe an agent?
A principal owes the agent the following fiduciary duties: 1. Duties Imposed by Operation of Law: Compensation and Reimbursement 2. Duties Imposed by Contract 3. Duty to Cooperate
Under respondaet superior, when is an employee acting within the scope of this authority?
An employee may be acting within the scope of his employment when: 1) performing work assigned by the employer; or 2) is engaging in conduct that is subject to the employer’s control.
There are three types of partnerships. Name them.
1) General Partnership 2) Limited Liability Partnership 3) Limited Partnership
Can a partner bring a direct or derivative action against another partner or the partnership?
Direct Action: A partner can maintain a direct action against another partner (with or without an accounting) to enforce the partner’s rights, including an action for violation of a fiduciary duty. Derivative Action: A partner cannot maintain a derivative action on behalf of the partnership because they are not permitted under RUPA.
In a sentence, what is the basic definition for a limited liability partnership.
A limited liability partnership is one where all partners have limited liability.
Another fiduciary duty required by all partners is the duty of loyalty. What does the duty of loyalty require?
The duty of loyalty requires a partner to: 1. Account for property, profits, opportunities, or benefit derived by the partner in conjunction with the partnership business; 2. Refrain from acting adverse to the partnership; and 3. Refrain competing with the partnership. A partner must discharge duties in good faith and with fair dealing.
An agency relationship exists if there is:
1) Consent; 2) Benefit; and 3) Control
An agency relationship can be terminated (i.e., the agent no longer has authority to act) by:
act or agreement of the parties or by operation of law.
Describe how an agency relationship may be terminated by the parties?
An agency relationship may be terminated by the parties when: 1) The principal and/or agent manifests to the other that the relationship is terminated; 2) A specific term of the agent’s authority expired; or 3) The purpose of the agency relationship has been fulfilled.
Describe how an agency relationship may be terminated by operation of law?
An agency relationship may be terminated by operation of law upon: 1) The death of the principal or agent; 2) Incapacity of the principal or agent; or 3) The agent materially breaches a fiduciary duty owed to the principal.
There universal, general, and special agents. What are the differences between the three?
1) A universal agent has broad authority, and is authorized to transact all the business of his/ her principal of every kind. 2) A general agent is authorized to conduct a series of transactions. 3) A special agent has limited authority for a specific act, transaction or a specific period of time.
Define the characteristics of a principal in a sentence.
A principal is a person or entity that manifest an intent that an agent acts on his behalf and under his control.
Define the characteristics of an agent in a sentence.
An agent is a person or entity that acts on behalf of the principal.
Actual authority is authority that the agent reasonably thinks she possesses based on the principal’s dealings with her. Actual authority may be express or implied. When does actual express authority exist?”
Actual express authority exists when the agent acts in accordance with the agency agreement (i.e., the explicit communication (written or oral) from the principal to the agent).
When does actual implied authority exist?
Actual Implied Authority is authority arises when: 1) the agent believes he is entitled to act because the action is necessary to carry out expressly authorized duties; 2) the agent has acted similarly in prior dealing and through the principal’s actions the agent reasonably believes he has such authority in the future; 3) it is customary for agents in that position to act that way.
