Agency and Partnership Flashcards
What is agency?
Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent consent so to act.
What binds a principal to a contract made by an agent?
A principal is bound to a contract made by an agent if the agent acted with actual or apparent authority.
Define actual authority.
Actual authority may be express or implied.
What is actual express authority?
Actual express authority arises where a principal expressly causes an agent to believe that she has been empowered to act on the principal’s behalf.
What is actual implied authority?
Actual implied authority is the authority that an agent has to take actions that are reasonably necessary to carry out the principal’s express instructions.
Define apparent authority.
Apparent authority exists when a principal’s communications to a third party cause the third party to reasonably believe that an agent is authorized to act, even if the principal and the purported agent never so agreed.
What is ratification in agency law?
Ratification is the affirmance of a prior, nonbinding act done by another, whereby the act is given effect as if done by an agent acting with actual authority.
What determines if a person is an employee?
The test is whether the person’s physical conduct in the performance of the services is subject to the employer’s control or right to control.
What factors are relevant in determining employment status?
Factors include:
* Level of skill required
* Who supplies the instrumentalities used
* Duration of the relationship
* Whether the work is part of the principal’s regular business
What defines the scope of employment?
An employee’s conduct is within the scope of employment if:
* It is of the kind the employee is employed to perform
* It occurs substantially within the authorized time and space limits
* It is motivated, at least in part, by a purpose to serve the employer.
Define a partnership.
A partnership is the association of two or more persons to carry on as co-owners a business for profit whether or not the persons intend to form a partnership.
What is a general partnership?
A general partnership is formed without the formalities required of other types of partnership, where each person receives a share of the net profits.
What is a partner’s transferable interest?
A partner has a transferable interest in the profits and losses of the partnership and in the right to receive distributions.
What is the liability of partners in a general partnership?
Partners in a general partnership are jointly and severally liable for all obligations of the partnership unless otherwise agreed by the claimant or provided by law.
What constitutes partnership property?
Partnership property is property acquired in the name of the partnership and is property of the partnership, not of the partners individually.
What is partnership dissociation?
A partner can dissociate from the partnership at any time by giving notice, and must be paid their capital account and share of profits.
What is wrongful dissociation?
Dissociation is wrongful if it is done in contravention of the terms of the partnership agreement.
What happens upon the dissolution of a partnership?
Dissolution is caused by any partner ceasing to be associated in the carrying on of the business, and must be wound up.
What is a limited partnership (LP)?
A limited partnership must include a general partner and a certificate of limited partnership must be filed with the state.
What is a limited liability partnership (LLP)?
An LLP continues to be the same entity that existed prior to the filing of a statement of qualification as an LLP.
What is the liability structure in a limited liability partnership?
When a partnership qualifies as an LLP, obligations incurred while as an LLP are solely the obligation of the LLP.
What happens to a partner’s liability when admitted to a partnership?
A person admitted as a partner is not personally liable for any partnership obligation incurred prior to their admission.
