Agency & Partnership Flashcards
Warrant of authority
If A makes K w/o authority, K is binding but A is liable for damages resulting from breach
Apparent Authority
Turns on 3rd party’s reasonable and good faith beliefs *focus is on what P has said/done not what A says/does
Undisclosed P (effect)
3rd party can back out if: - A falsely rep’d that A was acting for himself - P or A knew 3rd party would not have entered into K
Partnership dissolution
W at will partnership Expiration of term M mutual consent E expulsion of a partner B bankruptcy A activities illegal D death
Accounting as of right
- Partner wrongfully excluded from partnership business 2. wrongfully excluded from possession/use of partnership property 3. Partnership agreement says so 4. another partner wrongfully obtains secret profits 5. just and reasonable under the circumstances
Transferring partnership rights
- can transfer econ rights - NOT managerial or voting rights
Apparent authority factors
- past dealings btw P and A of which 3rd party is aware 2. Trade customs 3. Industry standards 4. P’s written statement of authority 5. Nature of transaction
Partnership Actual Authority
Ordinary business: actual authority exists Special business: actual authority does not exist! - assignment of property - disposition of the goodwill of partnership - action that would make partnership impossible - confess a judgment - claim or arbitration
Dissolution and partner liablity
Generally, dissolution does not absolve partners of liability, unless: 1. Dissolution due to - illegality - bankruptcy 2. Partner in question lacked even authority to wind up affairs
A capacity
minimal capacity = ability to consent to act on P’s behalf
Partnership (losses and profits)
- each partner entitled to equal share of profits and losses
Terminating Agency
- unilateral right - by P or A at any time - must provide notice
A’s duties to P
- duty of loyalty - cant use agent rel for personal gain - cannot usurp a biz opp - cannot compete w/ P during agency rel 2. duty of care - commensurate w/ skills - duty of notice
Partnership by Estoppel
- some representative action that person is a partner - by the person or w/ her consent - reasonable reliance on the representation - damage as a result of reliance
Partner indemnificatoin
Partnership must indemnify partner if sued due to conduct in pursuit of partnership business
Continuing partnership after dissolution
- If dissolution due to death or bankruptcy, remaining partners can agree to continue - disassociating partner is paid a fair share of her partnership stake
P capacity
Must have legal capacity to possess rights and incur responsibility - unincorporated orgs lack capacity
Partnership property
- cannot unilaterally assign away partnership property - cannot use partnership property for personal benefit
LLP
Only available to licensed professionals - ease of partnership w/ protection of limited liability w/ the exception of tortious acts
Durable power of attorney
- created in writing - intent to create durable power of atty
Agent K liability
only if P is undisclosed or partially-undisclosed
P tort liability for A’s acts
- Control (day-to-day) 2. Scope of employment - closely connected - common - history - frolic - foreseeability
Partnership
Association of 2+ for purposes of carrying on a for-profit business as co-owners - specific intent not required - shared profit = prima facie proof
Partnership (J&S)
If partnership has insufficient assets to pay debt, each partner is J&S liable
Court ordered partnerhsip dissolution
BIG IPO - B: breaches of partnership agreement - I: incompetence declared - G: guilt of partner such that prejudicially effects partnership continuing - I: oncapable of fulfilling duties - P: profit no longer - O: other circumstances
General vs. limited partners
Limited get - limited management rights - limited liability
Partnership Accounting
All partners joined and court determines liabilities btw each partner and partnership as a whole. - partners normally not allowed to sue each other
Binding the partnership
Each partner is an A of the partnership and can bind the partnership
General partner in LP withdrawal as operation of law
- Assignment of partnership interest 2. Removal in accordance w/ pship agmt 3. Bankruptcy 4. Death/incompetency
Ordinary vs special partnership decisions
- Ordinary - majority 2. Special - unanimous
P’s duties to A
- Deal fairly and in good faith - abide by K obligations - reasonable compensation - Indemnify A w/r/t losses incurred during scope fo employment
Agent authority
- Apparent - Actual - Inherent
Factors of ratification
- K of material facts - Comprehensive: all of the agmt not part - Timeliness - Capacity: to execute agmt
Sub Agent dramz
- A must have authority from P 2. A is liable to P for A2’s acts 3. P liable for A2’s acts to same extent as would be liable for A1’s acts 4. A2 owes a duty of loyalty to A1 and P
Consequences of partnership dissolution
- Deprives all partnerships of actual authority except for the limited purposes of WINDING UP 2. But apparent authority may persists . . . - If 3rd party does not know of dissolution - notice if advertised in paper or 90 days after filing statement of dissolution
Agency termination by operation of law
- death of P (automatically) - death of A (automatically) - P’s loss of capacity (date of adjudication) Dur - A’s breach of fid duty
Authority to wind up affairs of partnership
All partners, except: - partner who was wrongfully disassociated - partner stripped of wind up authority
Order of partnership asset distribution
- Outside debt 2. Inside debt 3. Residual is divided up amongst partners - first get capital contribution - left over is divided evenly
Holding P liable when A acts w/o authority
- Ratification 2. Estoppel
Inherent authority
catch-all –> usually when there is already a clear agency relationship
Estoppel
3rd party believes that A is acting w/ authority not based on P’s actions but on P’s negligence in preventing the belief - reasonable - injustice
Ratification
P approval of A’s actions after the fact - express or implied
Non-partner petition for dissolution
- Econ rights 2. - term is up - at will
Determining whether property is personal or partnership
- use - improvements to property - similar in character to other p’ship prop - listed as a p’ship asset - who pays taxes
Actual authority
A reasonably and in good-faith believes that he possesses the property 1. express 2. implied - general trade usage w/n industry - P’s acquiescence - emergency
Exceptions to Partnership accounting
- Negligence action in tort 2. So discrete and unrelated to partnership
New partner liability
- only liable for acts post-joining except for capital contribution
Sharing of profits rebuttal to partnership formation
- pay off debt - interest on a loan - form of compensation to employee - goodwill payments from sale of a business - retirement bennies of deceased or former partner
Terminating LP
- Dissolution event per p’ship agmt 2. Written consent of all partners 3. No more general partners 4. Judicial decree
Auto Death termination exception
- bank/customer - A of military P
Creation
- P manifests assent that - A act on P’s behalf - A act subject to P’s control 2. A manifests assent to P
Agency relationship by implication
Parties need not manifest assent to agency rel but only to control and serve
When A has actual authority to delegate
- mere ministerial function 2. required to delegate to specialist under law 3. consisted w/ custom or usage in the industry 4. If impossible for A to perform, A must delegate to the extent necessary Terminating actual authority
Partnership tort liability
P’ship is liable unless: - fraud/crime against p’ship - outside scope of partnership - criminal acts
