Agency and Partnership Flashcards
Rule: Liability of Principal for Tort of the Agent
The Principal will be liable for torts committed by the agent if (1) the principal-agent relationship exists and
(2) the tort was committed by the agent within the scope of the relationship
principal/agent relationship: (ABC)
-A
Assent: voluntary, informal agreement; the principal must have capacity
-B
Benefit: the agent’s conduct must be for the principal’s benefit
-C
-subagents
-borrowed agent
-independent contractor
Control: the Principal has the right to control the agent by having supervisory power
-subagents: no vicarious liability unless ABC
-borrowed agent: no vicarious liability unless ABC
-independent contractor: no vicarious liability bc no power to supervise performance, except great ultra-hazardous activity and estoppel (hold out the independent contract as an agent)
scope
-frolic v. detour
scope: was the conduct of the kind the agent was hired to perform? Did the tort occur on the job? Did the agent intend to benefit the principal?
-frolic v. detour: whether the tort occured on the job
–frolic: new and independent journey -> outside the scope
–detour: mere departure from the assigned task -> within the scope
Intentional tort
generally outside the scope of vicarious liability, except:
(i) specifically authorized by principal;
(ii) natural from type of employment;
(iii) motivated by a desire to serve the principal
Rule: Liability of Principal for Contracts Entered into by Agent
principal liable for contracts entered into by agent if the principal authorized the agent to enter into the contract
authority: actual express
-definition; equal dignity doctrine; revocation
-the principal used words (including oral or private) to express authority to agent
-equal dignity doctrine: if the contract must be in writing, then express author must be in writing
—revocation: revoked by unilateral act OR death or incapacity of principal, unless principal gives the agent a durable power of attny (a written expression of authority with conspicuous survival language)
actual implied authority
authority which agent resonably believes principal has given bc of necessity in order to accomplish the assigned task; custom; or prior dealings
apparent authority: definition
the principal “cloaked” the agent with the appearance of authority AND 3rd party reasonably relies on the appearance of authority.
secret limiting instruction
the agent has actual authority, but the principal secretly limited the authority, and agent goes beyond the scope. The principal is still liable.
lingering authority
actual authority has terminated, but the agent continues to act on the principal’s behalf. The principal is still liable until the customer receives notice of termination.
ratification
authority granted after contract entered if: principal has knowledge of all material facts re: the contract and principal has accepted benefits.
-Ratification must be complete as is, no alterations to terms
extent of liability
-no authority: the principal is not liable, agent is liable
-authority: the principal is liable, the agent is not. BUT if the principal is partially disclosed OR undisclosed, the authorized agent may be liable at the election of a 3rd party
duties the agent owes to the principal:
-reasonable care; obey reasonable instructions; loyalty
-loyalty: no self-dealing (benefit to the detriment of the principal); no usurpation of principal’s opportunities; no secret profits
-remedy: losses caused by breach & disgorge profits
general partnership formation
-NO formalities: can arise from conduct
-definition: GP is an association of 2 or more people carrying on as co-owners of business for profit
-sharing profit creates the presumption of GP. But not lending agreements, wages, or commissions.
liabilities of partners to 3rd parites
-general partnership: agency
agency: principles apply with regard to torts and contracts
general partnership: personal liability for debts of the Partnership
incoming partners are not liable for pre-existing debt. But, funds from incoming payments can be used to satisfy prior debt.
-disassociating Partner does retain liability for future debts until actual notice given to creditors OR 90 days acter filing notice of disassociation to state.
general partnership: liability by estoppel
person who represents to 3rd party that a Gen Partnership exists is liable as if one does exist
Other Forms: Limited Partnership
Limited Partnership: one General Partner and one Limited Partner: requires limited partnership certificate with the names of all general partners
-general partner: liable personally for all limited partnership obligations, including torts and contracts. Right to manage limited Partnership.
registered limited liability partnership
required to register Statement of Qualification and annual reports
-no liability for underlying obligations of Partnership, but liability for own wrongdoing
LLC
the members are owners with limited liability for debts and obligations of the business + benefits of personal taxation.
-requirements: Articles of Organization and Operating Agreement
-the members control, but Art can delegate to managers
-limited liquidity (the members can’t freely transfer interests)
-limited life
rights and libailities between partners: fiduciaries
fiduciaries: Duty of Loyalty (no self-dealing; usurping opportunities; secret profits)
between partners: remedies
action for accounting: recover losses caused by breach AND disgorge profits