Agency And Partnership Flashcards
Requirements for an agency relationship include:
Consent: by both the principle and the agent that the agent will act for the principal’s benefit
Control: the agent is subject to the principal control.
Termination
authority to act for the principal can terminate in several ways, including the principal manifesting a desire to the agent to discontinue the relationship.
Actual authority
express: where the agent is expressly given authority to act for the principal.
Implied: authority is present when the principal’s conduct leads the agent to believe it has authority. This authority can be implied by custom, past course of conduct by the principal, necessity, or an emergency circumstance
Apparent Authority
the elements of apparent authority are:
The person dealing with the agent must do so with a reasonable belief in the agent’s authority
The belief must be generated by some act neglect on the part of the principal.
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 act
3rd party rights
The agent is bound to a 3rd party on a contract he enters into with the 3rd party if the agent had no actual or apparent authority to enter into the breach of contract
Vicarious liability of employer (respondeat superior):
the employer is liable in tort for the acts of an agent or employee if the agent or employee (SMI)
o Acting in the scope of employment
o Madeaminordeviation(adetour)from
employment (rather than a frolic) or;
o Committed an intentional tort only if it was for
the principal’s benefit because the principal authorized it, or one that arose naturally due to the nature of employment.
The agent is liable too under a theory of joint and several liability
Indemnification
the principal can recover against the agent for indemnification if the agent acts beyond his authority.
Direct Liability of principal
the principal is directly liable for his own negligence if he negligently hired the agent, failed to fire the agent, or failed to properly supervise the agent.
Duties for agents
The agent owes a duty of care and duty of loyalty (not to engage in self- dealing, not to profit without disclosure, and a duty to follow instructions).
The principal may recover losses from, and profits made by the breaching agent.
Partnership formation
A partnership is the association of two or more persons to carry on as co-owners, a business for profit… whether or not the persons intended to for the partnership
Partners are _______ and _________ of the partnership.
Agents and co-managers
Partners have equal rights to comanage ordinary affairs (e.g., signing a lease) (even if profits are not shared equally). A majority vote wins if there’s disagreement.
Extraordinary matters require a unanimous vote (e.g., admitting a new partner or selling land).
In a general partnership, partners are…
are jointly and severally liable for partnership debts.
Fiduciary duties owed in a partnership
Loyalty
Care
Account
Dissolution of a partnership
Step one—dissociation
Step two—winding up
Step three—termination
Limited Liability Partnership (LLP)
no partner is personally liable for the obligations of the partnership (but partners are liable for their personal torts).
Limited partnership (LP):
at least one general partner must be listed on the certificate filed with the state. Limited partners have limited liability (limited to their capital contributions). General partners are liable for all partnership obligations and manage control of the business.
