Agency/Partnership Flashcards
Creation of an Agency
1) manifestation of the principal’s intent to grant authority to act on behalf and subject to the principal’s control; and
2) the agent’s consent to the principal’s grant of authority (act on behalf and subject to control)
Agency analysis
1) Identify principal/agent
2) Capacity (min for agent; transactional capacity for principal)
3)
Distinguishing Employees from independent contractors
Employee - employer controls the result and the means to achieve the result
Independent K - Employer controls the result but contractor controls the means to achieve the result (how)
Factors for determining independent contractor
(1) the extent to which the agent’s work is typically performed by specialists without supervision;
(2) who supplies the agent with tools and a place for performing the work;
(3) the length and exclusivity of the employment relationship;
(4) whether the agent is paid by the job or at regularly timed intervals; and
(5) whether the agent’s work is part of the regular business of the employer
Agency by ratification
1) Knowledge of all material facts at time of ratification
2) Manifest asset to bind transaction
3) Competency at time of transaction (not ratification)
Agent’s duty of care to principal
1) Follow principal’s instructions
2) perform w/ reasonable care
3) indemnify for loss caused by breach of duty (w/in scope of an agency
When does an agent not have to indemnify the principal for breaching duty of care?
When the actions were outside the scope of the agency relationship.
Agent’s duty of loyalty
1) prefer the interests of the principal over others
2) avoid self dealing
3) can’t compete or usurp principal’s business opportunities
Agent’s ACTUAL authority
Express - Oral/written communication that directly authorizes agent to act
implied - Conduct transactions that are reasonably necessary to fulfill broader responsibilities.
When is an employee acting within the scope of the agency relationship?
1) Performing authorized tasks; or
2) incidental tasks (even if disobedient)
Factors for scope of employment
1) hired to perform
2) w/in time and space authorized by employer
3) conduct serves interest of employment.
When is an agent contractually liable to a third party?
If the principal is not disclosed - agent
If disclosed or partially disclosed - principal and agent.
If fully disclosed - principal
when is a principal liable to a third party in tort b/c of principal’s conduct?
Principal Is liable to a third party for harm caused by principal’s negligence in selecting, training, retaining, supervising, or otherwise controlling an agent.
When is principal vicariously liable to a third party?
the principal has a right to control the agent and the agent’s action are w/in the scope of the agency.
When are employers not vicariously liable to third parties?
1) outside scope of agency/employment
2) intentional torts of employees
What is the exception to no vicarious liability when the employer commits and intentional tort?
1) intentional tort was done in course of work and for the purpose of accomplishing work; 2) no defense that employer instructed employee not to use force.
Are principal’s liable for the tortious conduct of independent contractors?
Generally, no; exception inherently dangerous activities.
Apparent Authority
1) injured party reasonably believes party acted as an authorized agent; AND
2) Belief is based on actions/ommissions of supposed principal
Does apparent authority exist if the principal is undisclosed?
No because they can’t grant authority
General Partnership formation requirements
Association of two or more persons to carry on as co-owners, a business for profit.
What is prima facie evidence that a partnership exists?
Sharing of profits
rebuttable by evidence that losses, management, were not shared.
Limited Partnership Formation
1) file LP certificate
2) signed by all general partners
What happens if partners fail to meet the filing requirements?
General partnership analysis
How to convert a GP into a LLP?
Majority vote of partners (unless otherwise stated in partnership agreement); and
1) filing w/ secretary of state; and
2) payment of fee
What UPA provisions are non-waivable
Duty of loyalty/care
Right to dissociate
Access to books and records
(they can be limited)
What is the rights of general partners in managing/conducting partnership business
Within ordinary course of business - Absent an agreement otherwise, each general partner has an equal right to manage and conduct the partnership business. Majority vote if disagreement.
If outside ordinary course of business -> all partners must consent
Rights of limited partners
1) seek information
2) inspect and copy records
3) obtain information about financial condition
What CAN’T Limited partners do
1) co-manage the business
2) bind the partnership (no power to bind)
Partnership duty of care
Owed to the partnership and each partner. May not engage in:
1) grossly negligent or wreckless conduct
2) intentional misconduct; or
3) knowing violation of law.
Partnership Duty of loyalty
1) not to compete or appropriate partnership opportunity
2) not engage in adverse dealings
3) to account for any transaction connected w/ partnership
Partnership Duty to disclose
Without demand - any information that: is related to the partnership business and reasonably required for the proper exercise of a partners rights and duties under the agreement
on Demand - Any reasonable information that concerns the partnership business
Limited partnership Duties
Good faith and fair dealing.
How do partners share profits and losses (what %)
Profits: Absent an agreement, each partner shares equally in the profits.
losses: absent an agreement, same percentage as profits.
What does a transfer in partnership interest entitle the transferee to?
Profits, losses, and distribution NOT management or access to records.
Events causing dissociation
1) death
2) bankruptcy
3) appointment of guardian
4) judicial determination
5) some specific event articulated in agreement
How can a partner be dispelled from the partnership
1) provision in agreement
2) unamimous vote
3) judicial determination
What are the tree reasons a court can dissolve a partnership?
1) frustrated economic purpose
2) impractical based on partnership agreement
3) impractical based on individual partners conduct.
