Agency and Partnership Flashcards
When will an employer be vicariously liable for the tortious acts of their employee?
(1) there was an ER - EE relationship,
(2) the EE’s wrongful conduct had to be committed in the scope of employment
How to decide if there is an ER-EE relationship?
Does the ER have the right to control the manner and method by which the person performs his tasks?
How to determine the scope of employment?
(1) whether the conduct in the general nature of those employee was employed to perform;
(2) whether the conduct was substantially removed from the authorized time and space limits of employment
(3) whether the conduct was done to serve the employer
De facto corporation doctine
a business will be trated as a corporation if :
(1) there was a corporate law they could have been incorporated under and;
(2) there was colorable compliance (conduct business in corporate name and exercise corporate privileges)
When will courts pierce the corporate veil?
when (1) corp formalities are ignored
(2) corp is inadequately capitalized at the outset
(3) to prevent fraud.
Corporation by estoppel
persons who treat an entity like a corporation will be estopped from later claiming that the entity was not a corporation
Will court pierce the corporate veil in contract / arms length cases?
They are reluctant to, since the contracting party has the opportunity to inspect financial condition of corp.
This leaves the creditor to only look to the corp for satisfaction of debts
If there is no corporate status officially, what will courts treat associates in a business as?
general partners
What are general partners liable for?
(1) Ks made in the scope of the partnership business
(2) personally and individually liable for the entire amount of all partnership obligations, whether in contract or tort
Can one partner be required to indemnify another partner in a general partnership?
yes. their pro rata shares - losses are shared in the same way as profits unless otherwise agreed.
What is a promoter?
a person who undertakes to form a corporation which often entails serving as an incorporator and entering into contracts on behalf of the corporation to be formed
promotor liability on K
(1) if promoter enters an agreement with a 3d party on behalf of a as of yet unformed corporation they are personally liable on the agreement
(2) promotors liability continues after corp is formed, even if adopted and corp benefits from it
(3) promoter is not released from liability unless the promotor, the corp, and the 3d party agree that the promotor will be released from liability and the corp will be added through novation
Formation of a joint venture / partnership
(1) 2 or more people associate to carry on as co-owners a business for profit
(2) no written agreement or filing necessary to form
(3) if unclear whether parties intended to form a partnership, courts will consider many factors, but an agreement to share profits raises a presumption that a partnership was intended
Are partners agents of a partnership?
yes
Do partners have actual authority to enter into K for the partnership?
yes, as agreed by all the partners
