Agency and Partnerships Flashcards
When is the principal liable for his agent’s torts/general partner liable for general partner’s torts?
1) Principal/Agent Relationship (Assent + Benefit + Control); and
2) Within the scope of his duties.
When is there Assent + Benefit + Control?
1) Assent - informal agreement
2) Benefit - of principal
3) Control - power to supervise the manner of performance.
Are principals liable for sub agents and borrowed agents?
Typically, no because there’s no right to control.
When there’s no control, what is the term for the actor?
An independent contractor.
What is the general rule for vicarious liability with independent contractors?
There is no vicarious liability for independent contractor’s torts unless the activity is inherently dangerous or due to estoppel (holding out ind. con. as agent).
How do we know if the agent’s actions were within the scope of his duties?
1) Conduct “of the kind” hired to do.
2) Tort was done “on the job” or on a “detour” but not when it was on a “frolic”
3) Did agent intend to act for benefit the principal?
Is a principal liable for the intentional torts of his agents?
Generally no; however, intentional torts are within the scope of employment if they are (i) authorized by the principal; (ii) natural from the nature of the employment; or (iii) motivated by a desire to serve the principal.
When is a principal liable for contracts entered by his agents/or a general partner for a contract entered into by other general partners?
Generally, a principal is liable for only its authorized contracts. Authority may be granted in the following ways:
1) Actual Express Auth. - can be oral except for land, revocable unless durable (requires clear survival language) and narrow.
2) Implied Express Auth. - Implied by necessity, custom, or prior acquiescence.
3) Apparent Authority - Cloaked in appearance of auth + third party reasonably relies.
4) Ratification - Knowledge of material facts + accept benefits + complete ratification
When is an agent liable for the contracts he entered into on behalf of the principal?
Generally, an agent is not liable for authorized contracts on behalf of the principal unless the principal is undisclosed. However, the third party can only recover once from either the principal or the agent.
What duties does an agent owe the principal?
1) Duty of Care
2) Duty to Obey (unless asking you to lie or do something illegal)
3) Duty of Loyalty, which includes (i) no self dealing; (ii) no usurping the principal’s opportunity; (iii) no secret profits at principal’s expense.
What is a general partnership, how is it formed?
A general partnership is an association between 2+ persons who are carrying on as co-partners of a business for profit.
Sharing of profits is prima facie evidence of a general partnership.
No formalities are necessary to form a general partnership.
What is the liability of partners within a partnership?
Each partners is personally liable for all debts of the partnership and for each co-partner’s torts.
Notes:
1) Incoming partners are generally not liable for previous debts of the partnership but the money he pays to buy in can be used to by the partnership to satisfy prior debts.
2) Dissociating partner’s retain liability on future debts unless and until actual notice of their dissociation is given to known creditors and until publication is given to all potential creditors.
3) One who represents that she is a general partner to a third party shall be estopped from denying that a general partnership exists.
In a partnership question involving estoppel, how should I answer?
Start w/ General Rules about 1) Formation 2) Liability AND 3) Estoppel
Then apply the facts to the rules.
What duties do general partners owe one another? What are the remedies?
Fiduciary duty of loyalty so no
1) self dealing;
2) usurping the partnership’s opportunities; or
3) making a secret profit at the expense of the partnership.
Partnership may recover the damages caused by the breach and may disgorge the secret profits.
What rights do general partners have in partnership property?
Assets and shares in management are partnership property and cannot be transferred by individual partners without the partnership’s authority.
Share of profits are individual property and may be transferred by individual partners to third parties.
If it’s unclear, ask, whose money was used to buy the property. If partnership $, then partnership property. If individual’s $, then individual property.