Agency and Partnership Flashcards
Requirements for Agency
Consent and Control
Is the principal bound on a contract entered into by the agent?
Yes if the agent had authority to do so
What is Actual Authority?
Expressed: Agent is expressly given authority to act. Implied: based on principal’s conduct
Examples of Implied actual authority?
Based on custom, past buisness, etc.
When does actual authority terminate?
After reasonable time or following change in circumstances, death, or incapacity
What is apparent authority
(1) the person dealing with the agent must do so with a reasonable belief in the agent’s authority and (2) the belief must be generated by some act or neglect on the part of the principal.
What is ratification?
Agent didn’t 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 as long as the principal knew the material facts and had capacity
Is the agent bound to 3P?
Yes if agent had no actual or apparent authority or is the principal is undisclosed (i.e., the third party does not know the agent is acting on another’s behalf) or if the principal
is “partially disclosed” (i.e., the third party knows the agent is acting on behalf of another but does not
know the identity of the principal
What happens when the agent acts beyond his authority?
Breach of contract to prinicpal, can indemnify for damages and liable to 3P
Can a principal be vicariously or directly liable for torts committed by the agent?
Yes. Vicarious libality (scope of employment, detour vs frolic) or Intentional Tort (benefited prinicpal, authorited by principal, or nature of job). Direct liablity = for negligently hiring, failing to fire, etc.
What does the agent owe the principal?
Duty of care and duty of loyalty. Principal can recover losses from/profits made if breached.
What are the requirments of a partnership?
2+ people carry on as co owners of a buinsess for profit. Presumed profit sharing
What does profit sharing create?
A presumption that a person is a partner. Unless profits were for a debt, rent, wages, etc.
Does a partnership need writing?
No
What happens if a limited parternship is improperly formed?
A general partnership is formed
Are partners entitled to separate payments?
No, compensated by profits.
Are partners Agents?
Yes Agents of the partnership.
How many votes do matters need in a partnership?
General matters = Majority Extraordinary = unanimous
What liablitiy do partners have?
They are jointly and severally liable for partnership debts. (If had actual or apparent authority)
Are incoming partneres liable? Outgoing?
Incoming no. Outgoing yes.
What fiduciary duties do partners have?
Owe duty of care, loyalty, and account to each other and the partnership. Must act in good faith.
What are the steps to ending a partnership?
Dissolution: Creditors are entitled to notice. Winding up: Assets are liquidated and creditors paid. Partners are still liable. Termination: Partnership actually over
What happens if a partner dissociates?
By giving notice and withdrawling, this can trigger dissolution.
Can creditors go after partners individually?
Yes, must try to collect from partnership first but then can go after personal assets. Must get a judgement.
