Agency & Partnership Flashcards
Creation of Agency Relationship
Agency is a fiduciary relationship, where a person or entity (agent) acts on behalf of another (principal)
Elements of Agency Relationship (ABC)
Assent - a formal or informal agreement
Benefit - the conduct primarily benefits the principal
Control - the prin has the right control the agent
Actual Authority
A principal is bound to a contract entered into by its agent if the agent had actual authority.
Agent has actual authority when acting within their reasonable understanding of authority.
Two types of Authority
Express Authority- by principal’s explicit directions to the agent.
Implied Authority either:
a) action is necessary to carry out the agent’s express authorized duties.
b) agent acted similarily in prior dealings with the principal
c) it’s customary for an agent in that position.
Apparent Authority
A principal is bound to a contract entered into by its agent if the agent has apparent authority.
exists when: a third party reasonable believes the agent has authority to act AND belief is traceable from the principal’s manifestation.
Apparent Authority
A principal holds the agent out as having authority when he:
- gives a position of authority
- previously held the agent out and did not published a revocation OR
- cloaked the agent with the appearance of authority
Agent’s Contractual Liability
An agent has no liability if they fully disclose, have actual or apparent authority.
seek indemnity if Ag is liable and his conduct was authorized.
Employee vs. Independent contractor
Primary focus is whether the principal had the right to control the manner and method in which the job was performed.
Respondeat Superior Doctrine
An employee is liable for an employee’s a negligent acts if the employee was acting within the scope of the employment.
Liability for Independent Contractor
An employer/ principal has no liability for independent contractors torts unelss
A) inherently dangerous
b) non delegable duty owed by principal.
c) Estoppel - the principal holds out the contractor as his agent
Duty owed by Agent to the Principal
Duty of Care- duty to use reasonable care when performing agent’s duties.
Duty of Loyalty - duty to act solely and loyally for the principal’s benefit.
Duty of Obedience - duty to obey all reasonable directions of the principal.
GP - General Partnership
Created by two or more persons
as coowners
carry on. business for profit.
(intent is not required)
Authority to Bind Partnershi[
A partner is. an agent of the Pship and has authority to bing for business. (Partner MUST have authority to bind the Pship)
Liability of GP: Personal Liability
GP are personally liable for all obligations of the Pship unless otherwise agreed by claimant or provided by law.
Liability of GP- Incoming Partners
Partners admitted into an existing pship are not liable for obligations incurred prior to their admission. (but risk losing their capital contributions.
