Agency+Partnership Flashcards
1
Q
Agency
A
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
- Consent - Both parties required
- On behalf of - Agent must be acting primarily for principal’s benefit
- Control - Degree of control doesn’t have to be significant; task specification is enough
- Capacity - P must have contractual capacity, but A doesn’t if intermediary
- Writing - No req, BUT SoF equal dignities rule
- Consideration - NONE
2
Q
K Liability - Authority - Actual
A
A reasonably thinks she has based on P’s manifestations
- Express - Authority conveyed in words
- Implied - Authority implied from P’s: (1) words/conduct, (2) custom, OR (3) acquiescence
- Termination/revocation:
(a) After a specified time/event, or after a reasonable time
(b) Change of circumstances
(c) Breach of A’s fiduciary duty
(d) Unilateral act of EITHER P or A
(e) Death or incapacity of P or A
3
Q
K Liability - Authority - Apparent
A
P holds out another as possessing authority and a third party is reasonable led to believe it
- Power of Position - Apparent authority can result from A’s title/position given by P
(a) Might also establish actual - Unilateral reps by A - Can’t create apparent authority
(a) BUT can if in P’s presence and P is silent - Lingering apparent authority - Apparent can linger after actual ends
4
Q
K Liability - Authority - Ratification
A
Ex post authority even if A had no authority at time of entering into K
- Methods of ratification:
(a) Express - Verbal affirmation of K
(b) Implied - P accepts the benefits of K - Reqs for ratification:
(1) P must have knowledge of ALL material facts re K,
(2) P must accept the ENTIRE tx, not just part, and
(3) Ratification can’t alter rights of intervening parties
5
Q
K Liability - Rules of Liability
A
- P is liable on K, and A is not, if had actual, apparent, or ratification
- Exception - P AND A are liable if P was undisclosed or partially disclosed
6
Q
Duties - A to P
A
Owes fiduciary duties
- Duty of Care - Must carry out agency w reasonable care; sliding scale based on A’s skills
- Duty of Loyalty:
(1) Account to P for profits made while carry out instructions
(2) Act solely for P’s benefit
(3) Refrain from dealing with P as adverse party or acting on behalf of adverse party
(4) Don’t compete with P concerning subject of agency
(5) Don’t use P’s property for own purposes - Duty of Obedience - Obey all reasonable directions of P
7
Q
Duties - P to A
A
- NOT fiduciary
- Duty to Indemnify - Indemnify A against expenses/losses in carrying out instructions
- Duty to compensate A for services; inferred unless indications otherwise
8
Q
Tort Liability - Servant/Employee vs IC
A
- Servant/Employee - Subject to the control of another as to the MEANS used to achieve a result
- IC - Subject to the control of another as to RESULTS only; factors:
(a) Skill required
(b) Tools and facilities
(c) Period of employment
(d) Basis of compensation (if time, more likely servant)
(e) Business purpose
(f) Distinct business
9
Q
Tort Liability - Rules
A
- Servants & Unintentional Torts - P liable for A’s torts IF A acting in scope of employment
(1) Was conduct “of the kind” hired to do?
(2) Did tort occur “on the job”? - Minor deviation (“detour”) is on the job; substantial deviation (“frolic”) isn’t
(3) Was conduct done at least in part to benefit P? - Servants & Intentional Torts - P NOT liable UNLESS conduct is:
(1) Natural from nature of job,
(2) Motivated to serve P, OR
(3) Specifically authorized/ratified by P - Borrowed Servants - P who has the “primary right of control” is the one liable
- ICs - P not liable
10
Q
Partnership - Formation
A
- Partnership formed when 2 or more persons associate to carry on as co-owners a business for profit, regardless of whether they intend to form a partnership
- No filings/formalities required
(a) BUT maybe SoF equal dignities rule - Factors:
(a) Sharing of profits - Most important
- Presumed partner UNLESS payment: (1) of a debt, (2) as wages/compensation, (3) as rent, or (4) as interest on loan
(b) Right to participate in control of the business
(c) Sharing of losses
- Presumed partner UNLESS payment: (1) of a debt, (2) as wages/compensation, (3) as rent, or (4) as interest on loan
- Partnership by estoppel - If no partnership was formed in fact, parties may still be liable as if they were partners to protect reasonable reliance by third parties
- Partnership agreement - Not required, but K laws allows one to contract around almost all statutory provisions
(a) Can be written, oral, or implied
11
Q
Partnership - Management/Operation
A
- Voting
(a) Unless otherwise agree, all partners have equal votes
(b) Decisions re matters in ordinary course of bus require majority
(c) Decisions re matters outside ordinary course require unanimity
(d) Admitting new partners requires unanimity - Salary/compensation - Unless otherwise agreed, NO right
(a) Exception - Compensation for services rendered in winding up
12
Q
Partnership - Liability
A
- Sharing profits/losses
(a) Profits - Unless otherwise agreed, shared equally
(b) Losses - Unless otherwise agree, shared in same manner as profits - Liability of partnership
(a) Tort - Liability for acts of partner OR employee acting in the ordinary course of bus OR w authority of partnership
(b) K - Liable for Ks entered into by partners w actual or apparent authority - Actual authority
(a) Can be created by: (1) partnership agreement, (2) vote, or (3) filing “Statement of Partnership Authority” w sec of state
(b) If (3): - If authority re real property - Binding on third parties if statement also recorded in county where property is
- If authority re other tx - Binding on partnership AND third parties if GRANTS of authority, but NOT restrictions (unless actual knowledge of them)
- Apparent authority - Each partner has apparent authority as agent to bind partnership in ordinary course of bus
- All partners jointly and severally liable for partnership obligations (after exhausting partnership’s resources)
13
Q
Partnership - Fiduciary Duties
A
- Partners owe loyalty and care to each other, as well as statutory duty of disclosure
- Duty of Loyalty
(a) Account to partnership for any benefit derived conducting bus, using property, or appropriating opp
(b) Refrain from acting adverse/w adverse party
(c) Refrain from competing - Duty of Care - Refrain from ~grossly negligent~ or ~reckless~ conduct, intentional misconduct, or knowing violation of law
- Duty of Disclosure - Partner and partnership shall furnish to a partner:
(a) WITHOUT demand - Any info concerning bus reasonably required for proper exercise of rights/duties
(b) WITH demand - Any other info concerning bus unless unreasonable/improper - Agreement can NOT eliminate loyalty or care; can eliminate disclosure
14
Q
Partnership - Property
A
- Ownership of property:
(a) If acquired in partnership’s name or partner’s in doc where apparent acting for partnership - Partnership property
(b) If partnership funds used - ~Presumed~ partnership property
(c) If acquired in partner’s name without pship funds or sign acting for pship - ~Presumed~ partner property - Rights in partnership property
(a) Rights are totally unrestricted
(b) Partner is NOT co-owner of partnership property; can simply use property for pship purposes
15
Q
Partnership - Partner Ownership Interest
A
- Ownership interest is partner’s personal property
- Comprised of (1) management rights, and (2) financial rights
- Restrictions:
(a) Unless otherwise agreed, partner CAN’T unilaterally transfer management rights
(b) Unless otherwise agreed, partner CAN unilaterally transfer financial rights
