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MEE > Agency/Partnership > Flashcards

Agency/Partnership Flashcards

1
Q

Define

Express Actual Authority

A

Actual express authority exists when the principal directs the agent to engage in the precise task in question.

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2
Q

Define

Actual Implied Authority

A

Actual implied authority exists when the agent believes, based on a reasonable interpretation of the principal’s words or conduct, that the principal wishes him (the agent) to act on the principal’s behalf.

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3
Q

When does an agent act with apparent authority?

A

An agent acts with apparent authority when:

(i) the principal holds the agent out as having authority to act on the principal’s behalf; AND
(ii) the principal’s conduct, when reasonably interpreted, causes a third party to rely on the agent’s appearance of authority when dealing with the agent.

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4
Q

When does an agent not have apparent authority?

A

Apparent authority does NOT exist if the third party has knowledge that the agent does not have actual authority.

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5
Q

What is the doctrine that transfers liability from employee to employer?

A

Respondeat Superior

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6
Q

When is an employer, acting as a principal, liable for torts committed by an employee?

A

If:

  1. An employer-employee relationship exists (NOT an independent contractor relationship); AND
  2. The employee’s commission of the tort occurs within the scope of employment.
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7
Q

What determines if someone is an employee or an independent contractor?

A

The extent of control that the principal exercises over the details of the agent’s work.

The more control the principal exercises over the agent, the higher the likelihood that the agent will be considered an employee as opposed to an independent contractor.

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8
Q

How is an agent/principal relationship created?

A
  1. The parties assent voluntarily (expressly or implied) to enter into an agency relationship;
  2. For the principal’s benefit; AND
  3. The agent is subject to the principal’s control
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9
Q

What constitutes “control” by the principal?

A

Supervision is sufficient - the amount of control may be limited

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10
Q

When is an agent acting with apparent authority?

A

When:

  1. The principal holds the agent out as having authority to act on the principal’s behalf; AND
  2. The principal’s conduct, when reasonably interpreted, causes a third party to rely on the agent’s appearance of authority when dealing with the agent.

Note: Apparent authority cannot exist if the third party has knowledge that the agent does not have actual authority.

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11
Q

What dictates the “scope of employment”?

A

When the employee’s conduct is of the same general nature as that authorized or incidental to the conduct authorized by the employer.

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12
Q

What factors do courts look at to examine whether conduct is in the scope of employment?

A
  1. A function for which the employee was hired to perform;
  2. Within the employer’s authorized time and space limits;
  3. Conducted to serve the employer; AND
  4. Foreseeable to the employer.
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13
Q

Define

Detour

A

Minor deviation from the scope of employment

Note: Employer still liable even if the detour is mainly for the employee’s own personal reasons

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14
Q

Define

Frolic

A

Major deviation from the scope of employment

(Employer not liable)

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15
Q

What are the exceptions for employers being liable for employee’s intentional torts?

A

Generally, employers are NOT liable for the intentional torts of employees UNLESS:

  1. The intentional tort was authorized by the employer; OR
  2. Force is within the scope of employment in the employee’s work (e.g. security guards)
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16
Q

True or False

An agent for an undisclosed principal has apparent authority

A

False

An agent for an undisclosed principal CANNOT have apparent authority because the principal cannot hold the agent out as having authority to a third party if the third party is unaware of the principal.

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17
Q

When will a principal be found liable for his agent’s actions if the principal is undisclosed?

A

Courts commonly apply the inherent agency power to hold a principal liable for his agent’s unauthorized actions when the principal is undisclosed to the third party so long as:

  1. An agency relationship exists; AND
  2. The totality of the circumstances weighs against the third-party to absorb the damages.
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18
Q

How is a general partnership formed?

A

When:

  1. Two or more persons;
  2. Associate as co-owners;
  3. To carry on business for profit.
19
Q

What will courts also take into consideration to find a valid formation of a partnership?

A
  1. Sharing of Profits
  2. Joint Ownership
  3. Sharing of Control
20
Q

What will partners be liable for under a general partnership?

A

The actions of every partner that are made within the ordinary course of business to carry on the partnership’s business

21
Q

What are the exceptions to a partner’s liability for another partner’s actions?

A

The partner taking the action:

  1. Has NO authority to act on behalf of the partnership; AND
  2. The other side has knowledge or notice that the partner lacks authority.
22
Q

True or False

Actions outside the ordinary course of business can be liable to the partnership

A

False

Actions taken by a partner that are OUTSIDE the ordinary course of the partnership’s business do NOT bind the partnership

23
Q

What are the exceptions for actions outside the ordinary course of business?

A

Actions outside will not bind the partnership UNLESS the other partner unanimously authorize the action with actual or apparent authority

24
Q

What is a partner’s duty of care

A

Refrain from engaging in:

  1. Grossly negligent or reckless conduct;
  2. Intentional misconduct; OR
  3. A knowing violation of the law.
25
Q

What happens if a partner breaches their duty of care?

A

He may be held personally liable for damages.

26
Q

What is required for a partner’s duty of loyalty?

A

Each partner:

  1. Act in good faith and fairly toward the other partners;
  2. Account for any property, profit, or benefit derived by the partner from the partnership business or property; AND
  3. REFRAIN from:
    1. Competing with the partnership within the scope of the business (even during dissolution); AND
    2. Usurping a business opportunity that properly belongs to the partnership.
27
Q

What happens if a partner breaches the duty of loyalty?

A

He may be held personally liable for damages

28
Q

At what point is a partnership dissolved?

A

At the completion of the winding-up process.

Note: Dissolution triggers the winding-up process and the termination of the partnership.

29
Q

What are the three causes of dissolution?

A
  1. Actions taken by partners - disassociation, partner agree to certain causes for dissolution
  2. Operation of law - It becomes illegal to continue the business
  3. Court Order - A court may grant a judicial dissolution if it is no longer reasonably practicable to continue operation of the partnership
30
Q

What is the Uniform Partnership Act (UPA)?

A

Any change in partnership membership automatically triggers dissolution UNLESS there is an agreement to the contrary (in partnership agreement)

31
Q

What remedy do remaining partners have if dissolution is wrongful?

A

The remaining partners may hold the dissolving partner liable for damages

32
Q

What is the Revised Uniform Partnership Act (RUPA)?

A

Provides a basis for continuing the partnership despite a partner’s withdrawal from the partnership where the remaining partners may buy out the withdrawn partner’s interest instead of winding-up the partnership business.

33
Q

Define

Disassociation

A

When a partner ceases his association with carrying on the partnership business

34
Q

Under the RUPA, when will the disassociation of a partner trigger dissolution?

A
  1. At-Will Partnership. Any member of an at-will partnership can disassociate at any time automatically triggering dissolution and liquidation.
  2. Will of the Parties. A partnership will automatically dissolve upon the occurance of an event that the partners specificed would cause dissolution in the partnership agreement
35
Q

Define

Term Partnership

A

A term partnership is a partnership that exists for a specified duration of time or until a specified event occurs

36
Q

Under RUPA, when will a partnership terminate before the specific term?

A
  1. At least half of the partner’s express their will to wind up the business within 90 days after a partner’s dissociation by death, declaring bankruptcy, becoming incapacitated, or wrongful disassociation; OR
  2. ALL of the partners agree to amend the partnership agreement by expressly agreeing to dissolve the partnership
37
Q

What are limited partners liable for in torts issues?

A

Limited partners are NOT personally liable for the obligations of the limited partnerships arising from the wrongful acts or omissions of other partners.

Note: Limited partners are always liable for their OWN misconduct

38
Q

What are general partners liable for in torts issues?

A

General Partners are jointly and severally liable for ALL obligations of the partnership arising from any wrongful act or omission of any partner acting:

  1. Within the ordinary course of the partnership’s business; OR
  2. Within the authority of ALL other partners
39
Q

When will a partnership be bound to post-dissolution contracts?

A

If it is an appropriate means for winding up the business

40
Q

When will a partnership be bound by a post-dissolution contract that is not connected with winding up?

A

If the third-party with whom the partner dealt did not have notice of the dissolution

41
Q

Absent a partnership agreement, how are profits and losses split?

A

Partners share profits equally and losses are split in the same ratio as profits.

42
Q

Parties who pay into a business and share profits are partners. When does this presumption not apply?

A

When a party gives a loan where the profits are received in payment of a debt by installment or otherwise.

43
Q

When is property considered partnership property?

A

When it is acquired in the name of the partnership

44
Q

Does death of a principal terminate an agency relationship?

A

Yes, unless the agency is irrevocable

MEE (7 decks)

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