Agency Partnership

Question 1

Partnership

Answer 1

A partnership is formed when two or more people associate to carry on as co-owners of a business for profit whether or not they intended to form a partnership or not. Where intent to form a partnership is uncertain, the courts consider factors sharing of property, title to property, or the parties holding themselves out as partners

Question 2

Partnership Property

Answer 2

Partnership property is owned by the partnership and a partner is not a co-owner of such property. The property that is owned by the partnership is not subject to execution by an individual’s creditors.

Question 3

Transfer of transferrable interest :

Answer 3

A partner has a transferrable interest in the partnership, which consists of his share of the profits and losses and the right to receive distributions. He cannot transfer his interest in management and other rights. The interest can be transferred to a third party and the third party is entitiled receive the distributions to which the partner was entitled. He however has no rights to manage or inspect the books.

Question 4

Assignment of rights

Answer 4

Generally, a partner may only become a partner with the consent of all the partners. Thus, a partner does not have the unilateral power to make someone a partner by transferring his partnership interest to them. An assignee does not acquire the rights to inspect books or conduct management business. These rights are only reserved for partners in the business.

Question 5

Right to manage

Answer 5

Absent an agreement, all partners have equal rights in management of the partnership business. There is no right to remuneration for services rendered to the partnership absent an agreement

Question 6

Fiduciary Duties:

Answer 6

Each partner owes a duty of loyalty and a duty of care. Under the duty of loyalty, partners are to account for all profits and losses, have no adverse interest, and not compete with partnership. The duty of care requires no negligent, reckless, or intentional misconduct

Question 7

Creditors of individual partners

Answer 7

Generally, a creditor of an individual partner first has to convert their claim to a judgement. After it has been converted, the creditor must attach that claim to the partner’s interest in the partnership. It is the only interest that can be pursued by a creditor.

Question 8

Liability of the partners

Answer 8

A partnership is liable for all contracts and torts entered into or committed that are within the ordinary course and scope of the partnership. Each partner can be held jointly and severally liable. That means that each partner is also personally and individually liable for the entire amount of the partnership obligations

Question 9

Authority

Answer 9

When a general partner has actual or apparent authority, they can bind the partnership to any acts or contracts enter into that are in the ordinary course of business. When a partner objects to an act that is within the ordinary course of business, there must be a majority vote of the partners in order to act. However, when a partner does not object to an act within the ordinary course of business, a general partner has the authority to act unless otherwise specified by the partners.
• When a partner objects to an act that is not within the ordinary course of business, there must be a unanimous vote of the partners in order to act

Question 10

Dissociation:

Answer 10

is the change in the relationship caused by a partner’s ceasing to be associated in the carrying on of the business. It can come by withdrawl, an agreed upon event, or the expulsion of a partner.

Question 11

Wrongful Dissociation

Answer 11

A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express term in the partnership agreement, when a term partner withdraws, is expelled, or becomes bankrupt. A wrongful dissociating partner is liable to the partnership for any damages caused by the dissociation

Question 12

Limited Liability Partnerships

Answer 12

In order to form an LLP, a partnership must file a statement of qualification with the sec of state. It must be executed by at least two partners, and contain info about 1. Name and address of partnership, 2. Statement that the partnership elects to become LLP, and 3. Deferred effective date. LLP is final at the time of filing on the date and time specified in filing.

Question 13

Dissolution:

Answer 13

In general, when a partner dissociates by express will in an at-will partnership, the partnership is dissolved, and its business must be wound up. Dissolution and winding up of the partnership are required only if, within 90 days after the dissociation, one-half of the remaining partners agree to wind up the partnership.

Question 14

Agency

Answer 14

Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. The person who is acting for another is the agent and the person for whom the agent is acting is the principal.

Question 15

• Actual Authority

Answer 15

o Actual authority is the authority that the agent reasonably believes he possess based on his dealings with the principal.

Question 16

• Apparent Authority

Answer 16

Apparent authority exists when the principal “holds out” another as possessing authority and a third party is reasonably led to believe that authority exists. o Apparent authority can exist in the minds of third parties even when actual authority is nonexistent.

Question 17

• Ratification Authority:

Answer 17

Where an agent purports to act on behalf of a principal but lacks authority to do so, principal may still be bound by the agent’s acts if she subsequently ratifies the acts.

Question 18

Agent Liability to K

Answer 18

If actual authority, apparent authority, or ratification is present, the principal is liable on the contract and the agent is not. However, if the principal is undisclosed (third party has no knowledge that agent is acting for principal) or partially disclosed (third party has knowledge that agent is acting for a principal but has no notice of principal’s identity) the agent is also liable on the contract

Question 19

Employee

Answer 19

o In general, if a person is subject to the control of another as to the means to achieve a particular result, he is an employee.
- Employment relationship: employee is compensated on a time basis; employer has a right to control the manner and method by which employee performs the job.