Agency & Partnership

Question 1

General Characters of Agency

Answer 1

1. Principal: Controls agent
2. Agent: Acts on behalf of principal

Question 2

Define

Agency and Partnership tort Liablity

Answer 2

Principal will be liable for torts committed by the agent if
1. a principal/agent relationship exists and
2. tort was committed by agent within the scope of relationship.

Question 3

Requirements of the Principal/Agent Relationship

Answer 3

Assent - Voluntary, informal agreement between princpal & agent.
Benefit - Agent’s conduct is for principals benefit
Control - principal has right to control agent by having superviosry power.

A sub-agent is not vicariouly liable unless they have ABC.

Mnemonic: ABC

Question 4

Do independent contractors fall under the ABC relationship?

Answer 4

No.

There is no vicarious liabity for an independent contractor because there is no power to supervise their performance, except for
- great ultra-hazardous activity and
- Estoppel

Question 5

Scope of the principal/agent relationship

Answer 5

1. Was conduct the kind that the agent was hired to perform?
2. Did the tort occur on the job?
3. Did agent intend to benefit the principal?

Question 6

Frolic

Answer 6

A frolic is a new and independent journey outside the scope of relationship.

Question 7

Detour

Answer 7

A detour is a mere departure from the assigned task but within the scope of the relationship.

Question 8

Intentional Tort

Answer 8

Generally an intentional tort is outside the scope of vicarious liablity except:
1. When specifically authorized by principal
2. Falling naturally from type of employment
3. Motivated by desire to serve the principal.

ISSUE SPOT: Bouncer at a club that must physically detain someone and sued for battery.

Question 9

Liability for Contracts

Answer 9

Principals are liable for contracts entered into any agent if princpal authorized agent to enter into the K.

Question 10

What are the types of K authority?

Answer 10

• Actual Express
• Actual Implied
• Apparent

Discuss all three types of authority in agency essay.

Question 11

Define

Actual Express Authority

Answer 11

Principal used words to grant express authority to agent.

Discuss all three types of authority in agency essay.

Question 12

Actual Implied Authority

Answer 12

Authority which the agent reasonably believes the principal has given because of necessity in order to accmoplish assigned task.

Look for: custom or prior dealings

Discuss all three types of authority in agency essay.

Question 13

Apparent Authority

Answer 13

Authority in which the principal “cloaked” the agent with the appearance of authority and 3rd party reasonably relied on appearance.

Discuss all three types of authority in agency essay.

Question 14

Secret Limiting Instruction

Answer 14

If agent has actual authority but the princpal secretly limited the authoirty and agent goes beyond the scope, the principal still liable

Question 15

Lingering Authority

Answer 15

The actual authority has terminated, but the agent continues to act on the principals behalf. The principal is till liable until customer receives notice of termination.

Question 16

Agency Ratification

Answer 16

Authority granted after the K was entered if the principal has
1. knowlege of all material fact regarding the K and
2. Principal has accepted benefits.

Question 17

Extent of principal liability

Answer 17

If there is no authority – the principal is not liable but the agent is liable.

If there is authority – the principal is liable, but the agent is not

Question 18

What duties does an agent owe a principal?

Answer 18

Duty of Reasoanble Care
Duty to Obey Instructions
Duty of Loyalty

Remedies of breach:
1. Losses caused by breach & disgorged profits

Question 19

General Partnership Formation

Answer 19

A partnership is an agreement between tow or more perople to carry on as co-owners in a for-profit business.

Use this rule at top of Partnership essay

Question 20

What is the debt liability for partnerships?

Answer 20

An incoming partner is not liable for pre-existing debt

However, funds from incoming payments may be used to satisfy prior debts.

DIssociating partner does retain liablity for future debts until actual notice is given to creditors or 90 days after filing notice of disassociation with state.

Question 21

Liability by Estoppel

Answer 21

A person who represents to a 3rd party that a general partnership exisits is liable as if one does exist.

Question 22

Limited Partnership

Answer 22

A limited partnership is when there is one general partner and one limited partner.

The general partner is personally liable for all limited partner obligations (including torts & K’s).

Question 23

Registered Limited Liability Partnership (LLP)

Answer 23

Required to register statement of qualification and annual reports.

There is no liablity for underlying obligations of a partner but is liablity for personal wrongdoing.

Question 24

LLC

Answer 24

LLC members are owners with limited liablity for debts and obligations of business and benefits of personal taxation

Question 25

Duties between partners

Answer 25

Fiduciary duty of loyalty

• no self dealing
• no usurping opportunity
• no secret profits

Question 26

Remedies for fiduciary breach

Answer 26

• Recover losses caused by breach and
• Disgorge profits

Question 27

Salary Agreements

Answer 27

Generally, partners do not get a salary unless winding up

Question 28

Partnership Dissolution

Answer 28

Dissolution begins the end of a partnership.

Winding up is the time between dissolution & termination.

Termination is the actual end.

Question 29

Partnership Compensation

Not Salary

Answer 29

Partners are compensation during the winding up phase.

Question 30

Partnership Creditor Priority

Answer 30

Priority decends:
- Creditors (Outside non-partners and inside P’s who loaned money)
- Capital Contributions by Parnters
- Remainder: Profits are shared equally absent agreement
- Losses: shared like profits.