Agency + Corporation Flashcards
Disclosure of Principals
If 3rd party knows both that agent has principal and identiy of principal = third party can sue just principal
If 3rd party knows agent has prinicpal but doesnt know idenity of principal = 3rd party can sue both agent and principal
If 3rd party doesnt know agent has principal or principals idenity = 3rd party can only sue agent
Agency Relationship
If agency relationship at issue, then determine consent and control.
Relationship = Principals manifestation of assent, A acts on behalf of agent, A’s actions show she is subject to P’s control, and Agent manifests assent
Actual Apparent Authority
Actual Express Authority = Express agent authority by oral, written words, clear direction and specific terms from P.
Actual Implied Authority
Actual Implied Authority = P’s conduct manifests belief in A’s authority through custom, past course of conduct, etc.
Apparent Authority
Apparent Authority = 3rd party reasonably believes A’s authority + P’s actions manifest belief of authority.
Ratified Authority
Ratification = If P affirms or accepts goods + P has knowledge of contract contents, then P ratifies A’s authority.
Liability of A if no actual or apparent authority
If A has no actual or apparent authority, then A is liable.
Undisclosed P - A liability
If P is undisclosed, then A liable.
Partially Disclosed P - A Liability
If P partially disclosed, then A liable.
Disclosed P - A Liability
If P disclosed, A not liable.
Respodiat Superior - Tort liability
If e in scope of employment, E liable for tort
If e detours (minor deviation), then E liable
If e frolics, then E not liable
If e’s conduct BANs (benefits, authorization, or nature of employment), then E liable for intentional tort
e = employee E = employer
Duty of Care
Each partner owes to the partnership and the other partners a fiduciary duty of care. A partner’s duty of care and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
Business Judgment Rule
The BJR is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interest of the company. Bad business decisions are protected as long as they are “well informed”. Gross negligence is used as a proper standard for determining whether a business judgment reached by a BOD was an informed one.
Under the business judgment rule, a court will not find an absence of care simply because the director or officer made a bad decision. There is no breach of duty of care and the rule will protect a business decision if: the director or officer had no (1) conflicting self-interest in the matter; (2) the director or officer was adequately informed about facts relevant to decision; and (3) the director’s or officer’s decision was “rationally” in the corporation’s best interest at the time made
Duty of Loyalty
Each partner owes to the partnership and the other partners a fiduciary duty of loyalty, as limited to the following:
(1) To account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and wounding up of the partnership business or derived from a use by the partner or partnership property, including the appropriation of a partnership opportunity
(2) To refrain from dealing with the partnership in the conduct…of the partnership business as or on behalf of a party having an interest in adverse to the partnership
(3) To refrain from competing with the partnership in the conduct of the partnership business the dissolution of the partnership.
Termination of Partnership
On dissolution the p’ship is not terminated, but continues until the winding up of the partnership affairs is completed. UPA §30
Liquidation is the process of reducing the corporations assets to cash or liquid assets, after which the corp becomes a holding shell
Winding Up is the whole process of liquidating the assets, paying off creditors, and distributing what remains to shareholders. Corp law protects creditor is a dissolution. But in winding up process, corp must pay all known claims. All partners owe fiduciary duties to one another during the winding up process until the partnership is terminated.
