Agency and Partnerships

Question 1

Agency

Answer 1

Relationship between an agent and principal where A acts on principal’s behalf and its subject to the principal’s control

Question 2

Agent duties

Answer 2

Agent owes duties of loyalty, obedience, and reasonable care to principal

Question 3

How is an agency created

Answer 3

Can be created by an agreement between the parties, apparent authority, or ratification

Question 4

Principal liability

Answer 4

Principal is legally bound to the acts of the agent if the agent acted with actual or apparent authority, or if the principal ratifies the act

Question 5

Actual authority

Answer 5

Based on the agent’s reasonable belief based on principal’s express manifestation of authority or implied from previous dealings with the principal

Question 6

Apparent authority

Answer 6

Occurs when the principal holds out the agent as having certain authority, causing third parties to have a reasonable belief that the agent has authority (must not know of lack of authority)

Question 7

Agent Liability

Answer 7

the agent remains liable if the principal is undisclosed or unidentified, or if parties agree so in K

Question 8

Inherent authority

Answer 8

Principal is liable for A’s conduct solely from agency relationship. Can be:
- Respondeat superior – liability for acts within the scope of employment, or
- Estoppel – PR creates the appearance of employee-employer relationship + third party relied

Question 9

Termination of agency

Answer 9

Agency can be terminated by parties (notice, expiration of Agency agreement, or purpose fulfilled) or operation of law (death, loss of capacity, material breach of fiduciary duties)

Agency + interest cannot be unilaterally terminated if supported by consideration

Question 10

Independent contractor vs employee

Answer 10

Depends on the right to control the method / manner of work

Question 11

Partner authority / liability

Answer 11

Partners are agents to the partnership for the purpose of the business and can bind the partnership in K.
Their authority is limited to acts in the ordinary course of business

Question 12

Partnership by Estoppel

Answer 12

Parties may still be held liable as a partnership to third parties if they actively held themselves out / consented to be held out as partners

Question 13

limited liability PS vs limited PS

Answer 13

Limited PS - general partners manage PS and are jointly liable, while limited partners contribute capital and are not liable.
Limited liability PS - limited all of partner’s personal liabilities

Question 14

ratification

Answer 14

Principal must
(1) know all materials facts
(2) accept the entire transaction, and
(3) have capacity