Agency and Partnerships Flashcards
When is an agency relationship created?
An agency relationship is created when both parties assent, the agent acts to benefit the principal, and the agent is subject to the principal’s control. (ABC)
What three types of authority might an agent have?
The agent may have express actual authority, implied actual authority, or apparent authority.
What is express actual authority?
Express actual authority is determined by clear written or oral words with specific instructions.
What is implied actual authority?
Implied actual authority is determined by looking at what the agent believes is reasonably necessary to achieve the principal’s objectives.
What is apparent authority?
Apparent authority is determined by looking at the the objective believe of a third-party. If the third-party reasonably believes the agent has authority to act, the principal will be bound by the contract.
When might an agent be liable on the contract?
An agent may be liable in contract depending on the third-party’s knowledge of the existence or identity of a principal. An agent is not liable in contract when there is a disclosed principal, but the agent will likely be liable if there is a partially disclosed principal or an undisclosed principal.
When is a partnership formed?
A partnership is formed when two or more persons carry on for profit.
What duties do partners have?
Partners owe the partnership and other partners duties of care and loyalty.
What kind of liability do partners have?
Partnerships do not limit liability – A partner is jointly and severally liable for all partnership obligations
What is a Limited Liability Partnership? (LLP)
A Limited Liability Partnership (LLP) provides partners with limited liability and is formed by filing a statement of qualification with the state.
What is a Limited Partnership? (LP)
A Limited Partnership, consisting of general and limited partners, may be formed by filing a certificate of limited partnership with the state. The certificate must contain the name of the LP, address, name and address of its in-state agent for service of process, name and address of each general partner, and a statement about the duration of the LP.
