Agency/Part Flashcards
Creation of Agency Relationship
Both parties manifest assent Agent acts on principal’s behalf Agent’s actions subject to principal’s control Consideration not required and Need not be in writing
Agent Requirements
Any person can serve as agent
So long as has minimal capacity
Principal Requirements
Must have capacity to consent to
Agency relationship and
To enter into transaction to which
Agent will bind principal
Emp/Emp Agency Rel
Factors:
Principal exercises significant control over
Details of day-to-day activities
Principal supplies tools
Principal pays work on structured pay period
Worker’s skill level specialized, and
Principal directs work to completion
Indep Contractor Agency Rel
Bears risk and benefits from management Maintains high level of independence Free to work for others Agrees to be paid fixed fee Receives payment based on results Liable for work performed, and Accepts responsibility to remedy at own expense Principal less likely to be liable here
Liab of Prin to 3rd Parties
Principal subject to liability when agent acts on behalf of
Principal if agent has authority to bind
Tort or K
Types of Authority
Express Actual
Implied Actual
Apparent
Express Actual Auth
Created by oral or written words By clear, direct, and definite language, or Specific detailed terms and instructions Principal’s manifestation must cause Agent to reasonably believe agent Doing what principal wants
Implied Actual Auth
Allows agent to take whatever actions
Necessary to achieve principal’s objectives
Based upon agent’s reasonable
Understanding of objectives
May be determined by customary
Business practices within trade or by
Position that customarily has certain authority
Acquiescence Implied Auth
If principal accepts agent’s acts or Fails to object to unauthorized action Affirms agent’s belief those actions Further principal’s objections and Support authority for future
Apparent Auth
Reasonable reliance by 3rd party
Agent has authority
Perception based upon principal’s
Actions to third party
Reas Belief of Apparent Auth
Past dealings between principal and agent
And 3rd party aware
Trade customs regarding similar transaction
Relevant industry standards
Principal’s written statement of authority, or
Transactions that do not benefit principal
Term of Agency Rel
Principal’s revocation Principal’s agreement with agent Change of circumstances Passage of time Principal or agent’s death Principal’s loss of capacity or Statutorily mandated termination
Ratification by Prinicipal
Principal must ratify entire act
Principal must have legal capacity to ratify
Must be timely and
Principal must have knowledge of material facts
Vicarious Liability
Principal liable for acts of agent
Even though principal innocent of fault and
Not directly guilty of any tort or crime
Respondeat Superior
Tort committed by agent acting within Scope of Employment Performing work assigned by employer OR Engaging in course of conduct Subject to employer’s control
Types of Work Travel
Direct
Frolic
Detour
Direct Work Travel
Employee traveling during workday and
Does not deviate
Frolic Work Travel
Takes significant deviation from path
Outside scope of employment
Detour Work Travel
Takes de minimis departure from route
Within scope of employment
Direct Liability of Princ
Principal authorizes or ratifies conduct
Principal negligent in selecting, supervising, or controlling
Principal delegates performance of non-delegable duty
Liability of Agents for K
May become party to k
Depending on terms and
Degree to which agent disclosed principal
How to Avoid Agent Becoming Party to K
Enter into k on behalf of principal
Disclose both existence and identity and
Not agree to become party to k
Disclosed Principal
3rd party has notice of both
Existence and identity of principal
Partially Disclosed Principal
3rd party has notice of existence
But not identity
Unless agreed to
Agent becomes party to agreement
Undisclosed Principal
3rd party has no notice of principal’s existence
Both the principal and the agent are liable
Election of remedies applies
Hold either principal OR agent not both
Duties of Agent
Duty of care to perform with reasonable diligence and skill
Duty to provide info regarding matters relating to relationship
Duty of loyalty to work only for principal
Duty of obedience
Duty to not usurp
Formation of Partnership
Association of two or more persons to
Carry on for-profit business as co-owners
No writing necessary and
Intent need not be to form a partnership
Test to Determine if Partnership formed
Whether sharing of profits
Exceptions to Test of Whether Partnership Formed
Debt payments, including installments Interest or other loan charges Rent Wages or other compensation Goodwill pmts stemming from sale of business Annuities or other retirement benefits
Relationship of Partner to Partnership
Partner is Agent
Partner Duty of Loyalty
Refrain from competing with business
Advancing interest adverse AND
Usurping a partnership opportunity or using partnership prop for personal benefit
Without first notifying partnership
Limitations of Duty of Loyalty of Partner
Partnership agreement may not eliminate but may identify specific activities that do not violate
Duty of Loyalty Partner Safe Harbor
Certain number of partners could authorize or ratify transaction with full disclosure
Duty of Care Partner
Refrain from engaging in grossly negligent or
Reckless conduct
Intentional misconduct or
Knowing violation of law
Limitations of Duty of Care Partner
May not reduce duty unreasonably
Profits/Losses Partnership
Partnership agreement controls
Not required to share on per capita basis
If no agreement or the agreement is silent, then equal share of profits and losses
If only profits decided, losses follow profits
Management Rights Partnership
Equal rights in management and conduct
Ordinary Business, majority of partners can make decisions
Special Business, unanimous vote can make decisions
Power to Bind Partnerships to K
Partner as agent can contractually bind
Liability for Partner’s Tortious Acts
Liable for partner’s tortious acts committed in
Ordinary course of business with authority
Liability of Partner to 3rd Parties
Partner jointly and severally liable for all partnership obligations
To collect from a partner directly, must obtain judgment against the partner
Must exhaust partnership assets first if both partner and partnership named
Types of Dissolution
At Will
Term or Undertaking
Dissolution of Partnership
Happening of event triggers dissolution
Will dissolve any partnership
Dissolving event in partnership agreement
Event that makes it unlawful to continue, or
There is judicial determination
Dissolution of At Will Partnership
Open-ended partnership
With no fixed termination
Dissolved when partner chooses to dissociate
Modernly not automatically trigger dissolution
Dissolution of Term or Undertaking Partnership
Term expires or undertaking complete
All partners agree to dissolve
Partner is dissociated due to death, bankruptcy, or
Other circumstance, and within 90 days
Majority of remaining partners agree to dissolve
Winding Up Partnership
Continues only to wind up business
Any person not wrongfully dissociated may
Participate in winding up partnership’s business
Including legal representative of last surviving partner
Distribution fo Winding Up Partnership
Outside creditors
Internal creditors
Remaining to the partners
Limited Liability Partnership (“LLP”)
Partner’s personal liability eliminated
Formation of LLP
Filing statement of qualification with state
Must be approved by vote necessary to
Amend partnership agreement
If silent, requires approval of all partners
Limited Partnership (“LP”)
Formed by two or more persons
Has at least 1 general partner and 1 limited partner
Formation of LP
Certificate filed with state and must list all general partners
Creation of Limited Parter After Creation
By written consent of all partners unless partnership agreement states otherwise
Generally not personally liable for obligations of LP unless also serving as GP or participates in control
Transfer of Partnership Interest
Partner has transferable partnership interest
May transfer right to share in profits/losses and distributions
Transfer creates in transferee right to receive distributions
DOES NOT make them partner unless other partner(s) consent.
Dissociation
Can withdraw or dissociate from partnership at any time, even if wrongful like violates agreement
Partner who wrongfully dissociates liable to partnership Other partners for damages caused by dissociation
Generally no right to participate in management or
Conduct of partnership business and
Cannot participate in winding up
2001 uniform limited partnership act
Renders control rule extinct
If limited partners participate in
Control then shielded
Transferee of Interest Dissolution
May seek dissolution if
Partnership at will
Term or undertaking completed
