Agency and Partnership Flashcards
Agency
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
Agents power to bind the principal to the contract
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
Actual Authority
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.
Termination of Agency
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
Apparent Authority
When a principal causes a third party to reasonably believe that the agent has the authority to act
Principal’s tort liability
A principal may be vicariously liable and directly liable to a third party who is harmed by a tort committed by an agent
Respondeat Superior
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
Principal’s direct liability
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
Agent’s Duties
- Duty of care
- Duty of loyalty
- Duty of obedience
- Duty to communicate
Principal’s Duties
The principal owes the agent all duties imposed by their contract
General Partnership
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
General Partnership Formation
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
Limited partnership
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
Limited Partner Formation
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
Partner Liabilities
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
Dissolution
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
Wind Up
A partnership that is dissovled only continues to exists to “wind up” it business
Corporation
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.
