Agency and Partnership

Question 1

Principal Liability for Torts of Agent

Answer 1

(1) Must be P-A relationship and

(2) Tort committed in scope of relationship

Question 2

Principal Agent Relationship (ABC)

Answer 2

Assent - agreement
Benefit - conduct must be for principal’s benefit
Control - principal must have right to control agent by power to surpervise
Sub-agent and borrowed-agents must have same ABC

Question 3

Independent Contractor

Answer 3

No P-A relationship b/c no right to control

CAN BE VL for torts if (1) Inherently dangerous acitivity or (2) Estoppel (hold out ind. k w/ appearance of agent)

Question 4

Scope of PA Relationship Factors

Answer 4

Conduct w/in job description
Frolic (new ind. journey) v. Detour (mere departure)
Benefit to principal
IT normally outside scope unless authorized, natural nature, motivated to serve principal

Question 5

Liability of Principal for Contracts Entered into by Agent

Answer 5

Liable only if agent authorized (Actual, Implied, Apparent, Ratification)

Question 6

Agency Authority

Answer 6

ACTUAL EXPRESS - oral except must be in writing if K must be in writing (i.e. land) - revoked unilaterally or death of P unless durable power of attorney
IMPLIED - necessity (to complete expressly authorized task); Custom (normally performed by agent’s w/ title); Prior acquiescence by P (agent believes okay)
APPARENT - P cloaked agent w/ appearance of authority and 3rd party reasonably relies
RATIFICATION - P has knowledge of material facts and accepts unless ratification alters terms of K (undisclosed P cannot ratify contract)

Question 7

Duties Agent Owes to Principal

Answer 7

Duty of Care
Duty to Obey
Duty of Loyalty (self-dealing, usurping, secret profits)

Question 8

Partnership Formation

Answer 8

No formalities
Association of 2 or more people carrying on as co-owners of a business for profits (contribute money or services for share of profit raises presumption)
**SAME AGENCY RULES APPLY FOR LIABILITY

Question 9

Rights and Liabilities Between Partners (Duties and Remedies)

Answer 9

Fiduciaries to each other and partnership
Owe duty of loyalty (no self-dealing, usupring (take away) or secret profit)
Remedy - recover losses caused by breach/disgorge profits

Question 10

Rights in Partnership Property and Liquidity

Answer 10

Land, leases, equipment owed by p-ship
Share of profits
Share in management 
Equal control/vote
NO SALARY
Profits and losses shared equally (losses shared like profits ***W/out agreement on profits, shared equally)

Question 11

Partnership Dissolution

Answer 11

Dissolves upon notice of the express will on any single partner (winding up - prior to termination liquidate assets)
P-ship/partners retain liability on all old business and new business until notice of dissolution

Question 12

Priority of Distribution of Partnership

Answer 12

(1) Creditors
(2) Capital contributions paid into the partnership by partners
(3) Profits (equally absent agreement)

Question 13

Partner Distribution

Answer 13

Each partner MUST be repaid (1) his loans and (2) capital contributions plus share of profits

Question 14

Exception to Principal Liability on Authorized Contracts

Answer 14

Undisclosed principal - identity and existence of P unknown to 3rd party - if no agent authority, agent liable
Partially disclosed - existence, but not identity of P known - if no agent authority agent liable; or both liable