Agency and Partnership

Question 1

Agency

Answer 1

An agency relationship exists when a principal authorizes an agent to act on her behalf and represent the the principal in dealings with third parties

Question 2

Agents power to bind the principal to the contract

Answer 2

A principal is subject to liability on a contract that the agent enters into on the principal’s behalf if the agent has the power to bind the principal to the contract. An agent has the power to bind the principal to the contract when the agent has actual or apparent authority

Question 3

Actual Authority

Answer 3

Express: specifically granted to the agent by the principal via oral or written words

Implied: agent reasonably believed the principal have him the authority because of necessity, custom, or prior dealings.

Question 4

Termination of Agency

Answer 4

May be terminated by:
- breach of agent’s fiduciary duties
- lapse of a stated period or reasonable time if none is stated
- operation of law: by death or incapacity of either party
- change in circumstances where it is clear the agent’s services are no longer needed
- unilateral termination by either party

Question 5

Apparent Authority

Answer 5

When a principal causes a third party to reasonably believe that the agent has the authority to act

Question 6

Principal’s tort liability

Answer 6

A principal may be vicariously liable and directly liable to a third party who is harmed by a tort committed by an agent

Question 7

Respondeat Superior

Answer 7

A principal may be vicariously liable for a tort committed by an agent acting within the scope of the employment

(a) agent

(b) Scope of employment: performing work assigned by the employer
-frolic vs detour : P is not liable for torts committed by an agent while the agent is substantially deviating from the planned conduct

(c) intentional torts: P may be liable in the scope of duty if they are during work hours, the agent was motivated to act on the principals behalf, and the act was within her assigned duties

Question 8

Principal’s direct liability

Answer 8

A principal may also be directly liable to a third party harmed by an agent’s conduct if the principal authorizes or ratifies the agent’s conduct, is negligent in hiring/ supervising the agent, or delegates a non-delegable duty to the agent

Question 9

Agent’s Duties

Answer 9

1. Duty of care
2. Duty of loyalty
3. Duty of obedience
4. Duty to communicate

Question 10

Principal’s Duties

Answer 10

The principal owes the agent all duties imposed by their contract

Question 11

General Partnership

Answer 11

A partnership is an association of two or more persons who are carrying on as co-owners of a business for profits, whether the parties intend to form a partnership or not

Question 12

General Partnership Formation

Answer 12

There are no formalities required to form a general partnership. The contribution of money or services in exchange for a share of a profit creates a presumption that a general partnership exists

Question 13

Limited partnership

Answer 13

A partnership that has at least one general partner and at least one limited partner, which creates a two-tiered partnership structure with differing rights, duties, and liabilities and limited partners. The main difference is that a limited partner is liable for the obligations of the partnership only to the extent of his capital contribution and is not entitled to manage or control the partnership business

Question 14

Limited Partner Formation

Answer 14

To form a limited partnership, the partners must:
a. file a limited partnership certificate of formation, signed by all general partners, with the state
b. identify the name of the partnership, which includes the words ‘limited partnership’
c. provide the names and addresses of the agent for service of process and of each general partner; and
d. maintain records

Question 15

Partner Liabilities

Answer 15

General partners:

Joint and severally liable for all obligation

Limited: not liable for the obligations of the partnership itself beyond their capital contributions and generally have no right to manage the business, though they be found liable is a thrid party has reason to believe the limited partner is actually a general partner

Question 16

Dissolution

Answer 16

A partnership at will is an open-ended partnership that does not have a fixed termination date or event. It is dissolved when a partner chooses to dissociate from the partnership by giving notice

Question 17

Wind Up

Answer 17

A partnership that is dissovled only continues to exists to “wind up” it business

Question 18

Corporation

Answer 18

A corporation is formed when articles of association are filed with the Secretary of State. The articles need to have the name of the corporation, the names and addresses of the incorporators and registered agent, the authorized stock of the company and associated rights,
and the purpose of the corporation which can be any lawful purpose. A de jure corporation comes into existence only when the secretary accepts the articles. There can also be a de facto corporation if the state has an incorporation statute, the persons make a good faith colorable
attempt to comply with the formalities for forming a corporation (but fail to do so), and such persons assert the privileges of a corporation.