Agency & Partnership Flashcards

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1
Q

def of agency, requirements for agency relationship

A

def = fiduciary relationship that arises when one person appoints another to act on their behalf and the agent consents. Agent must be subject to principal’s control.

  1. capacity (P: contractual, A: minimal mental capacity)
  2. consent of both parties
  3. Writing (if agency is ks under SoF, “equal dignities rule”)
  4. Method of formation
    - ->act of parties, estoppel, or statute
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2
Q

duty of agent + principal, both parties’ remedies

A

agent: duty of care, duty of loyalty, duty of obedience
- -> remedies against P = contractual, possessory lien

principal: not fiduciary duties
but: compensation/reimbursement, indemnification, noninterference
- -> remedies against A = contract, tort, constructive trust, action for profits, withhold compensation, terminate agency

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3
Q

liability of principal for agent’s contracts

A

-a principal is liable if agent acted with actual (express or implied) or apparent authority, or if principal later ratifies the transaction

~actual authority = authority an agent RB has based on principal’s words or conduct
~apparent authority = when a principal holds a 3P out as being their agent, and a 3P RB had authority
~ratification = agent lacks authority but principal subsequently validates the act
–ratification requires: P had knowledge of all material facts, accepted entire transaction, has capacity

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4
Q

liability of P/A to third parties

A
  • P is liable to 3P if agent acted with authority
  • A is not liable to 3P in general
  • -> disclosed principal: agent is not liable unless agreed to
  • -> undisclosed/unidentified principal: A liable if had authority
  • P can enforce contract against a 3P if disclosed
  • Either P or A may enforce contract against a 3P if undisclosed/unidentified
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5
Q

liability of P for A’s torts

A
  • respondeat superior: P is J+S liable if A committed tort within the scope of their employment
  • -> A is employee if P controls A’s physical conduct, manner in which work done (likely if lower skill needed, using work tools, long period of employment, time-based compensation, business purpose, characterized as employment)
  • -> doesn’t apply if A is an independent contractor, UNLESS activity inherently dangerous, involved a nondelegable duty, principal knowingly selected incompetent contractor
  • -> scope of employment: conduct of the kind hired to perform, tort occurred on the job, conduct actuated to benefit the principal
  • -> intentional torts: P not liable unless natural incident of job, employee motivated to serve employer, authorized/ratified by employer
  • apparent authority: if A’s apparent authority allows A to 1) commit a tort or 2) conceal its commission
  • consider also estoppel theory
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6
Q

def of partnership, requirements to form

A

def = association of two or more persons to carry on as co-owners a business for profit

proof to infer a partnership: sharing of profit (raises a presumption), right to participate in control, title to property, calling relationship a partnership, sharing of gross returns

or can be formed by estoppel if partner consents to holding out

other requirements

  • anyone with capacity to k can be a partner
  • can add new partners only if all parties consent
  • p-ship can’t have an illegal purpose
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7
Q

partners’ rights (6) + duties + liability

A

rights:

  • equal management rights
  • equal vote (decisions outside ordinary course require unanimous vote)
  • equal right to profits + losses (by # of partners)
  • right to inspect + copy partnership books
  • right to contribution if paid more than liability
  • right to transfer financial rights
  • no right to compensation unless winding up
  • no right to transfer management rights (new partner only with unanimous vote)

duties:

  • must indemnify every partner
  • DoL
  • DoC
  • duty of disclosure: provide complete + accurate information
  • duty of obedience

liability: J+S liable for all obligations of the partnership; after partnership assets are exhausted
~new partners: NL for previous debts
~dissociating partners: remain L unless payment, release, novation; can be liable for another 2 years if party didn’t have notice/RB a partner

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8
Q

partnership liability

A

each partner is an agent of the partnership for the purposes of its business

-tort: partnership is liable for conduct of partners/employees in the scope of their employment or with authority

-contract: partnership is liable for all contracts entered into by a partner in the scope of business or with actual (partnership agreement, vote of partners)/apparent authority
~partner can bind partnership to transactions in the ordinary course unless third party is aware (subjectively) that partner lacks actual authority

-dissociated partners: partnership can continue to be bound for 2 years if other party didn’t have notice

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9
Q

partnership property ~ how to determine for titled vs. untitled property; partners’ rights in partnership property

A

titled property: consider title, source of funds, whether purchased in titleholder’s capacity as partner

untitled property: consider funds, use, record in partnership books, relationship with business, improvement with partnership funds, maintenance with partnership funds

rights:

  • partner cannot transfer interest
  • partner can use partnership property for partnership purposes
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10
Q

dissociation/dissolution

A

Dissociation

  • change in the relationship of partners caused by any partner ceasing to be associated in the business. can happen through express will, event, death, expulsion, bankruptcy…
  • ->wrongful dissociation = withdrawal, expulsion, bankruptcy in a term partnership

Dissolution
-at-will pship: when a partner dissociates by express will
-term pship: when a partner dissociates due to withdrawal, bankruptcy, death; remaining partners can agree to dissolve within 90 days
~if don’t dissolve, partner entitled to buyout of partnership interest

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11
Q

limited partnership (definition, formation, rights, liability, dissolution)

A
  • definition = partnership with at least one GP and at least one LP
  • form through: certificate of LP filed with SoS
  • rights: GPs manage the business; LPs don’t have management rights but some voting rights, can inspect books
  • liability: GPs are J+S liable, LPs can only lose value of investment
  • dissolution: 90D after GP dissolves, 90D after last LP dissociates, vote of majority in interest
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12
Q

limited liability company

A

-characteristic: taxed like a partnership, but members enjoy limited liability
-can be member-managed or manager-managed
~whoever manages gets to vote, bind to contracts, owes fiduciary duties
-distributions based on contributions
-liability only if pierce the corporate veil

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