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Bar Prep > Agency and Partnership > Flashcards

Agency and Partnership Flashcards

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1
Q

When will a principal be liable for torts committed by its agent?

A

When there is (1) a principal-agent relationship and (2) the tort was committed by the agent w/in the scope of that relationship.

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2
Q

When is there a principal agent relationship?

A

ABCs: assent, benefit and control.

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3
Q

What is assent?

A

Informal agreement between principal who has capacity and agent.

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4
Q

What is benefit?

A

Agent’s conduct is for principal’s benefit.

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5
Q

What is control?

A

Principal must have the right to control agent by having power to supervise agent’s performance.

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6
Q

When will principal be liable for sub-agent’s torts?

A

Assent, benefit and control between sub-A and P. Assent and the right to control are usually problems under this analysis.

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7
Q

When will principal be liable for a borrowed agent’s torts?

A

Assent, benefit and control between borrowed A and P. Usually the problem is the right to control.

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8
Q

What is the distinction between an agent and an independent contractor?

A

No right to control IC because no power to supervise manner of performance. Therefore, no vicarious liability for independent contractor torts.

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9
Q

What are the exceptions causing principal to be liable for independent contractor’s torts?

A

(1) Inherently dangerous activity OR (2) estoppel bc P holds out IC w/ appearance of agency, causing P to be estopped from denying liability.

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10
Q

What is the three factor test for the scope of the principal-agent relationship?

A

(1) Was conduct “of the kind” agent was hired to perform (i.e. w/in job description)? (2) Did the tort occur on the job (frolic v. detour)? (3) Did the agent intend (even in part counts) to benefit principal?

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11
Q

What is frolic v. detour?

A

Frolic = new and independent journey outside the scope of agency. Detour = mere departure from assigned task still w/in scope of agency.

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12
Q

Is principal ever liable for A’s intentional torts?

A

NO unless intentional torts are w/in the scope i.e. (1) authorized by P, (2) natural from nature of employment, OR (3) motivated by desire to serve P.

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13
Q

When is principal liable for the contracts entered by agents?

A

P liable only if P authorized the A to enter the K.

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14
Q

What are the four types of authority A can act under to bind P in K?

A

Actual express, actual implied, apparent, and ratification.

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15
Q

What is actual express authority?

A

P used words to express authority to agent. It can be oral and even private unless K must be in writing (sale of land that would violate SOF, in which case express authority must also be in writing).

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16
Q

How may express authority be revoked?

A

Unilateral act of P or A OR death or incapacity of P.

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17
Q

When does death/incapacity not revoke express authority?

A

P gives A durable power of attorney i.e. written expression of authorization to enter a transaction w/ conspicuous survival language.

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18
Q

How do we construe actual express authority?

A

Narrowly to actual words contained in the grant.

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19
Q

What is actual implied authority?

A

Authority P gives A through conduct or circumstance i.e. necessity, custom, or prior acquiescence by P.

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20
Q

What is necessity for actual implied authority?

A

Implied authority to do all tasks necessary to accomplish an expressly authorized task.

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21
Q

What is custom for actual implied authority?

A

Implied authority to do all tasks which by custom are performed by person w/ A’s title or position.

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22
Q

What is prior acquiescence by P for actual implied authority?

A

Implied authority to do all tasks A believes to be authorized to do from prior acquiescence by P.

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23
Q

What is apparent authority?

A

(1) P cloaked A with appearance of authority AND (2) 3d party reasonably relies on appearance of authority.

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24
Q

What is ratification?

A

Authority can be granted after K entered if 1) P has knowledge of all material facts regarding K AND 2) P accepts K’s benefit BUT 3) ratification cannot alter the terms of the K in VA.

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25
Q

What is the general rule of liability on the K?

A

P is liable on its authorized Ks and therefore authorized agents aren’t liable on authorized contracts.

26
Q

What is the exception making agents liable on the contracts they enter on behalf of P?

A

Undisclosed principal. If P is partially disclosed or undisclosed, the authorized agent may be liable at the election of 3d party.

27
Q

What duties to agents owe principals?

A

In exchange for compensation and reimbursement of expenses, they owe a duty of care, duty to obey reasonable instructions, and duty of loyalty.

28
Q

What does duty of loyalty entail?

A

A may never (1) self- deal i.e. receive a benefit to detriment of P, (2) usurp P’s opportunity, or (3) make secret profits at P’s expense w/o disclosure.

29
Q

What remedies are available for violations of the duty of loyalty?

A

P may recover losses caused by breach and P may disgorge profits made by the breaching A.

30
Q

What formalities are required to form a general partnership?

A

None.

31
Q

What is a general partnership?

A

An association of 2+ people carrying on as co-owners of a business for profit.

32
Q

What is the key factor in a general partnership?

A

Sharing profits. Contribution of money or services in return for share of profits creates a presumption that a general partnership exists.

33
Q

Do the principles of agency law apply to general partnerships?

A

Yes. Partners are agents of the partnership for apparently carrying on usual partnership business. GP is liable for each partner’s torts in the scope of the partnership business and for each partner’s authorized contracts.

34
Q

What is each partner in a general partnership liable for?

A

All debts of the partnership and each co-partner’s torts.

35
Q

What is an incoming partner’s liability for preexisting debts?

A

Not liable for prior debts but any money paid into partnership by new partner can be used to satisfy prior debts.

36
Q

What is a dissociating partner’s liability for subsequent debts?

A

Retain liability on future debts until actual notice of dissociation given to Cs or until 90 days after filing notice of dissociation with the state.

37
Q

What is general partnership liability by estoppel?

A

One who represents to a 3d party that a general partnership exists will be liable as if a general partnership exists.

38
Q

What are general partners’ obligations as fiduciaries?

A

GPs owe each other and the partnership the duty of loyalty i.e. may never engage in self-dealing, may never usurp partnership opportunities, and may never make a secret profit at the partnership’s expense.

39
Q

What may general partnership do if DOL is violated?

A

Bring an action for accounting to recover losses caused by breach and disgorge profits.

40
Q

What are the three areas of partners’ rights in partnership property and liquidity?

A

Specific partnership assets, share of profits, and share in management.

41
Q

What are partners’ rights in specific partnership assets?

A

Land, leases, and EQU owned only be partnership and therefore may not be transferred by individual partners w/o partnership authority.

42
Q

What are partners’ rights in share of profits?

A

Personal property owned by individual partners and therefore may be transferred by the individual partner to 3d parties.

43
Q

What are partners’ rights in share in management?

A

Asset owned only by partnership itself so individual partners may not transfer to 3d parties.

44
Q

What is the test to determine whether a fact pattern involves property owned by the partnership or personal property owned by an individual partner?

A

Whose money was used to buy the property.

45
Q

What is the gap filler for who controls the management of the general partnership?

A

Absent agreement, each partner is entitled to EQUAL control (vote). It doesn’t matter how money contributions and profits are allocated.

46
Q

What salary do general partners receive?

A

Absent an agreement, none. The exception is that partners receive compensation for helping wind up business.

47
Q

What are the defaults for partners’ shares of profits and losses?

A

Absent agreement, profits are shared equally. Absent agreement, losses shared like profits.

48
Q

What is the real end of a general partnership called?

A

Termination.

49
Q

How can a general partnership be dissolved?

A

W/o agreement that sets forth events of dissolution or defines partnership’s length and undertaking, a general partnership dissolves upon notice of express will of any one single general partner to dissolve.

50
Q

What is the winding up period?

A

The period between dissolution and termination in which remaining Ps sell assets to satisfy general partnership’s creditors.

51
Q

What is the partnership’s liability on old business during dissolution?

A

Partnership and general partners retain liability on all transactions entered into to wind up old biz by satisfying all creditors existing when winding up began.

52
Q

What is the partnership’s liability on new business during dissolution?

A

Partnership and general partners retain liability on brand new transactions during winding up UNTIL actual notice of dissolution given to creditors or until 90 days after filing statement of dissolution with the state.

53
Q

What is the priority of distribution of a general partnership’s assets?

A

First, MUST pay all outside non-partner trade creditors and all partners who loaned money to the general partnership (and become creditors thereby). Second, MUST repay all capital contributions paid into the partnership by partners. Third, profits if any are shared equally w/o agreement to contrary.

54
Q

In distribution, what are a general partner’s rights and exposure?

A

Each partner must be repaid his or her loans and capital contributions, plus that partner’s share of any profits or minus that partner’s share of any losses.

55
Q

What is a limited partnership?

A

Partnership with at least 1 general partner and at least 1 limited partner.

56
Q

How may a limited partnership be formed?

A

File w/ state a limited partnership certification including the name of partnership and names of general partners.

57
Q

What is the liability of general partners in a limited partnership?

A

Liable for all limited partnership obligations. Hold the right to control business.

58
Q

What is the liability of limited partners in a limited partnership?

A

Not liable for obligations of limited partnership. However, limited partners who manage the business are liable to 3d parties who believe they are just like general partners.

59
Q

How is a registered limited liability partnership (RLLP) formed?

A

Register with the state by filing statement and annual reports.

60
Q

What is the liability of a RLLP?

A

No partner is liable for obligations of the LLP. Only liable for personal wrongdoing.

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