Agency and Partnership

Question 1

Creation of Agency Relationship

Answer 1

• When a person (principal) manifests an intent;
• that another person (the agent) act on his behalf; and
• Both parties consent to the agreement

Question 2

Actual Authority

Answer 2

• Can be express or implied (through custom, necessity, or acquiescence)
• Authority that the agent reasonably thinks he possesses based on the principal’s dealings with him

Question 3

Apparent Authority (and when can it be assumed)

Answer 3

• Principal “holds out” the agent as having certain authority
• Causing third parties to reasonably believe the agent has such authority
  
  • Ordinary course of business = third party can assume authority
  • If third party knows agent lacks authority = cannot bind

Question 4

Creation of Partnership

Answer 4

• Two or more people associate to carry on as
• co-owners of a business for profit
• Profit sharing = presumed partner
  
  • Profits to repay loan/debt = not partner

Question 5

Actual Authority to Enter Into Matters Outside the Ordinary Course of Business

Answer 5

• Requires unanimous consent of the partners

Question 6

Partners Personal Liability on Contracts

Answer 6

• Each partner is jointly and severally liable for partnership obligation
• If partner who made the contract had no actual or apparent authority the partnership is not bound
• Plaintiff must secure a judgement against the partnership and individual partners
  
  • Must deplete partnership assets first before personal liability

Question 7

Partner Quitting the Partnership (terminology, when it happens, effect)

Answer 7

• Dissociation - ceasing to be associated with the carrying on of the business
• Partner is dissociated upon notice of express will to withdrawal
• Partnership at will = dissolved and must be wound up upon withdrawal
  
  • If remaining partners and partners who don’t wrongfully withdraw agree to keep partnership alive, they may buyout withdrawing partners interest and stay alive

Question 8

When Will a Partner’s Post Dissolution Act Bind the Partnership

Answer 8

• When it was appropriate for winding up the business; or
• Not appropriate for winding up the business, if third party did not have notice of the dissolution and the act would have bound the partnership before dissolution (through actual or apparent authority)

Question 9

Partner Contribution Claim

Answer 9

• Each partner is jointly and severally liable for partnership obligations
• Where one partner pays the entire amount of a debt, she may require other partners to contribute their pro rata share of the payment
  
  • In the absence of an agreement, partners share profits equally and losses are split the same way as profits

Question 10

Employer Employee Relationship by Estoppel

Answer 10

• Principal creates the appearance that an employer-employee relationship exists; and
• third party relies on that relationship

Question 11

Votes Needed for Ordinary Business Matter

Answer 11

• Simple majority

Question 12

Limited Partnership

Answer 12

• One general and one limited partner
• Proper filing
• Signed by all general partners