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Agency and Partnership > Agency and Partnership > Flashcards

Agency and Partnership Flashcards

1
Q

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

A
  1. principal/agent relationship, and

2. within the scope of that relationship

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2
Q

When does a principal-agent relationship exist?

A
  1. assent
  2. benefit
  3. control
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3
Q

what is “assent”?

A

informal agreement between the principal who has capacity and the agent

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4
Q

what is a “benefit”?

A

agent’s conduct for the principal’s benefit

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5
Q

what is “control”?

A

the principal must have the right to control the agent by having the power to supervise and manage the manner of the agent’s performance

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6
Q

will the principal be vicariously liable if its agent gets the help of a “sub-agent” and the sub-agent commits the tort?

A

requires assent, benefit, and control between the principal and the sub-agent tortfeasor

generally, there is no vicarious liability for sub-agent’s tort

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7
Q

will a principal who borrows another principal’s agent be vicariously liable for the borrowed agent’s tort?

A

requires assent, benefit, and control between the principal and the borrowed agent

generally, there is no vicarious liability for the borrowed agent’s tort

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8
Q

what is the key distinction between an agent and an independent contractor?

A

no right to control an independent contractor because there is no power to supervise the manner of its performance

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9
Q

are principals vicariously liable for independent contractors’ torts?

A

generally, there can be no vicariously liability for an independent contractor’s torts because there is no control

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10
Q

what are the exceptions to the general rule concerning vicarious liability and independent contractor’s torts?

A
  1. inherently dangerous activities
  2. estoppel - if you hold out independent contractor with appearance of agency you will be estopped from denying liability
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11
Q

When is a principal estopped from denying the liability for an independent contractor’s tort?

A

when the principal holds out the independent contractor with the appearance of agency

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12
Q

how do you determine if the tort committed by an agent was within the scope of the principal-agent relationship?

A
  1. was conduct “of the kind” agent was hired to perform
  2. did the tort occur “on the job” - frolic vs. detour
  3. did the agent intend to benefit the principal
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13
Q

What is the difference between a frolic and a detour?

A

frolic = a new and independent journey

detour = mere departure from assigned task

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14
Q

What is the rule regarding vicarious liability for the intentional torts of an agent?

A

generally, intentional torts are generally outside the scope of the agent-principal relationship

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15
Q

what are the exceptions to the general rule regarding the intentional torts of an agent?

A
  1. conduct was authorized by the principal; or
  2. natural from nature of employment (bouncer); or
  3. motivated by desire to serve the principal
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16
Q

Is the principal liable for contracts entered into by its agent?

A

principal is liable for contracts entered into by its agent only if the principal authorized the agent to enter the contract

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17
Q

when is “actual express authority” present?

A

principal used words (oral and private ok) to express authority to agent

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18
Q

when must actual express authority be in writing?

A

if the contract itself must be in writing, the express authority must be in writing (e.g. statute of frauds - land contracts)

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19
Q

When is express authority revoked?

A
  1. unilateral act of either the principal or the agent; or

2. death or incapacity of the principal

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20
Q

what is a durable power of attorney?

A

principal gives the agent a written expression of authority to enter into a contract with clear survivable language - narrowly construed

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21
Q

what is “actual implied authority”?

A

authority which the principal gives through conduct or circumstance

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22
Q

what three forms of conduct create actual implied authority?

A
  1. necessity - implied authority to do all tasks which are necessary to accomplish an expressly authorized task
  2. custom - implied authority to do all tasks which by custom are performed by persons in the agent’s title or position
  3. prior acquiescence by the principal
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23
Q

When is “apparent authority” present?

A
  1. principal “cloaked agent with appearance of authority and
  2. third party reasonably relies on appearance of authority
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24
Q

How is authority granted through “ratification”?

A

authority can be granted after the contract has been entered if:

  1. principal has knowledge of all material facts regarding the contract; and
  2. principal accepts its benefits

however - ratification cannot alter the terms of the contract

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25
Q

is an authorized agent liable on its contracts?

A

the principal is liable on its authorized contracts, and therefore as a rule the authorized agent is not liable on its authorized contracts

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26
Q

what is the “undisclosed principal” exception?

A

if the principal is partially disclosed or undisclosed, an authorized agent may nonetheless be liable at the election of the third party

27
Q

What duties do agents owe their principal?

A
  1. care
  2. obey instructions that are reasonable
  3. duty of loyalty
28
Q

What may an agent never do or risk violating the duty of loyalty?

A
  1. self-dealing - receive a benefit to the detriment of the principal
  2. usurping the principal’s opportunity; or
  3. secret profits - making a profit at the principal’s expense without disclosure
29
Q

what remedies does a principal have against a breaching agent?

A
  1. recover losses caused by the breach; and

2. disgorge profits made by the breaching agent

30
Q

what formalities are necessary to form a general partnership?

A

none

31
Q

what is the definition of a general partnership?

A

an association of two or more persons carrying on as co-owners of a business for profit

32
Q

when is a general partnership created?

A

when a person makes a contribution of money capital or services in return for a share of profits

33
Q

are general partners agents of a partnership?

A

yes - for carrying on usual partnership business

34
Q

what are general partners liable for?

A

general partners are personally liable for all the debts of the partnership and for each co-partner’s torts

35
Q

what is an incoming partner’s liability for pre-existing debt?

A

generally not liable for prior debt, but any money paid in to partnership can be used by partnership to satisfy those prior debts

36
Q

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

A

retain liability on all future debts until actual notice of dissociation is given to creditors OR until 90 days from notice of dissociation to the state

37
Q

can a person be estopped from denying general partnership liability because the partnership does not exist?

A

yes - if a person represents to a third party that a general partnership exists she will be liable as if a general partnership existed

38
Q

what duties do general partners owe to each other and the partnership?

A

general partners are fiduciaries of each other and the partnership - duty of loyalty (no self-dealing, usurp partnership opportunities, secret profits)

39
Q

what is an action for accounting?

A

remedy - partnership may recover losses caused by the breach of the duty of loyalty and may disgorge profits made by the breaching partner

40
Q

what rights does a partner have in specific partnership assets?

A

land, leases, equipment owned only by the partnership itself may not be transferred by individual partners without partnership authority

41
Q

can a general partner transfer its interest in a share of profits?

A

personal property owned by individual partners and therefore it may be transferred by individual partners to third parties

42
Q

can a general partner transfer its interest in a share of management?

A

asset owned only by the partnership itself and therefore it may not be transferred by individual partners to third parties

43
Q

absent an agreement, is each partner entitled to control of partnership?

A

yes - each partner is entitled to equal control absent an agreement

44
Q

absent an agreement, is each partner entitled to a salary/

A

no - no salary

45
Q

absent an agreement, how are partnership profits shared?

A

equally

46
Q

absent an agreement, how are partnership losses shared?

A

losses are shared like profits

47
Q

what is “dissolution”?

A

in the absence of an agreement that sets up events of dissolution, a general partnership dissolves upon notice of the express will of any single general partner to dissociate

48
Q

what is the real end of a partnership called?

A

termination

49
Q

what is “winding up”?

A

period between dissolution and termination in which remaining partners liquify the remaining assets to satisfy creditors

50
Q

what is a partnership’s liability to old business when winding up partnership?

A

general partners retain liability on all transactions entered into prior to winding up

51
Q

what is partnership’s liability to new business entered into when winding up partnership?

A

retain liability until notice of dissolution is given to creditors or until 90 days after filing with state a statement of dissolution

52
Q

what are the three levels of partnership priority

A
  1. the partnership must pay all creditors (all outside creditors and inside partners who have loaned money to partnership)
  2. must repay all capital contributions paid into the partnership by partners
  3. profits if any should be shared equally w/out an agreement
53
Q

what is the definition of a limited partnership?

A

partnership where at least one general partner and one limited partner are involved

54
Q

how do you form a limited partnership?

A

file with state a limited partnership certificate including all names of general partners

55
Q

what are general partners in a limited partnership liable for?

A

liable for all limited partnership obligations - absorb all liabilities, but have right to control business

56
Q

what are limited partners in a limited partnership liable for?

A

not liable for debts and obligations of the limited partnership

57
Q

what control do limited partners in a limited partnership have?

A

although law in most states is that limited parter may not manage business, under newly revised ULPA - limited parter may manage business w/out giving up limited liability

58
Q

how do you form a registered limited liability partnership?

A

register with the state by filing statement of qualification and annual reports

59
Q

what are the liabilities in a RLLP?

A

no partner is liable for the debts and obligations of the RLLP, not even generals

60
Q

what is the definition of a limited liability company?

A

hybrid between corporation and partnership in which the owners have the same rights and limited liabilities of shareholders in corporation and benefits of tax treatment of partnership

61
Q

what is required to form a limited liability company?

A

must file articles of organization and may adopt operating agreement

62
Q

what control do members of an LLC have?

A

members may manage the business OR may delegate to team who acts like board of directors

63
Q

what liquidity do members of an LLC have?

A

a full membership interest may not be transferred without unanimous consent of members OR under operating agreement

64
Q

what life-time does an LLC have?

A

company will dissolve upon unanimous consent of members or as set forth in operating agreement

Agency and Partnership (1 decks)

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