Agency/Partnership/LLC Flashcards
1
Q
Who needs capacity to contract in an agency relationship?
A
Just the principal, not necessarily the agent.
2
Q
Agency requires no writing unless:
A
The agency falls w/i the SoF (usually if the agency can’t be performed w/i 1 year.)
3
Q
Actual authority may be:
A
express or implied.
4
Q
Actual express authority:
A
P tells A to act on P’s behalf.
5
Q
Implied express authority:
A
P’s conduct leads A to believe that A has authority.
6
Q
Six ways to terminate actual authority:
A
- After a specified time/event OR a reasonable time.
- Change of circumstances (e.g. subject matter is destroyed.)
- If the agent acquires an adverse interest. (e.g. joins a competitor)
- Agent says so.
- Principal says so (UNLESS coupled with an interest which makes agency irrevocable)
- By death/incapacity/bankruptcy - unless coupled w/ an interest.
7
Q
Three substitutions for actual authority:
A
- Apparent authority
- Ratification
- Adoption
8
Q
Apparent Authority:
A
P leads third party to mistakenly believe that A has authority.
9
Q
Policy behind apparent authority:
A
Protects innocent third party who relies on P’s holding out A as agent.
10
Q
For apparent authority reasonable belief must be created by:
A
PRINCIPAL, not the agent alone.
11
Q
Apparent authority can _______ after actual authority ends.
A
Linger.
12
Q
How can P destroy apparent authority?
A
By telling 3d party that A has no authority to bind.
13
Q
How to ratify? P can ratify by: (3)
A
- expressly affirming the K,
- accepting the benefit of the K, or
- Suing the third party on it.
14
Q
Three requirements for ratification:
A
- Knowledge: P must have knowledge of all material facts.
- All or nothing: P must accept entire transaction.
- Capacity: P must have capacity BOTH at time of ratification AND at the time of the original contract.
15
Q
Difference between adoption and ratification?
A
Ratification is retroactive and adoption makes the principal liable only from the moment of adoption.
16
Q
Duties that Agent owes Principal:
A
- Loyalty
- Care - sliding scale depending on special skills.
- Obedience.
17
Q
Duties principal owes agent:
A
- Compensation (if not gratuitous)
- Reimbursement
- Indemnification
18
Q
Assuming some sort of authority, the principal is _______ liable to a third party.
A
Always
19
Q
Assuming some sort of authority, a third party is ________ liable to principal.
A
Almost always.
Unless there is an undisclosed principal AND the undisclosed principal has special skills.
20
Q
If the tort was committed by an employee acting within the scope of employment then:
A
Employee/employer are jointly and severally liable.
21
Q
Factors for determining whether an employee vs. independent K: (6)
A
MOST IMPORTANT: 1. Did the employer have the right to control how the employee did the job?
- Who supplied the tools/workplace?
- Was the job a part of employer’s regular business?
- Was it long term?
- Was much skill required?
- Was payment in regular intervals or lump sum?
22
Q
Employer only liable for employees tort if employee was acting:
A
w/i the scope of employment.
23
Q
Detour:
A
minor deviation is usually WITHIN the scope of employment.
24
Q
Frolic:
A
substantial deviation usually not w/i the scope of employment.
25
Intentional torts committed by employees:
Employers are generally not liable unless force is used to further employer's business (bouncer)
26
For P to be liable to a third party on a K entered into by A what factors must be considered? (Analysis)
1. Did the agent have ACTUAL or APPARENT authority at the time of the K, OR
2. Did the principal RATIFY or ADOPT the K later on?
If so, then PRINCIPAL IS LIABLE on the K, but the agent is not.
27
Is an employer liable for a tort committed by an employee? (Analysis:)
Yes, if the tort was committed by an EMPLOYEE acting in the SCOPE OF EMPLOYMENT.
THEN employee and employer are jointly and severally liable.
28
General PS:
Association of 2 or more persons to carry on as CO-OWNERS a business for profit, whether they intend to form a PS or not.
29
Factors to determine who is a partner: (From most to least important) (3 - PCC)
1. PROFIT: A person recieving a share of the profits is presumed to be a partner.
2. Control: the right to control may be enough even if the control is never exercised.
3. Capital: Not required.
30
Formalities to create a PS:
None unless K falls w/i SOF
31
Statement of PS: Who is it filed with?
A PS MAY file this with the superior court clerk of any county. (Not required to establish a PS)
A public filing automatically establishes the existence of a PS.
32
PS by estoppel:
If no PS is formed then parties may still be liable AS IF they are partners to protect reasonable reliance by third parties.
33
PS Property: Property is presumed to belong to the PS if it is: (3 - FAN)
1. characterized as such in the PS agreement;
2. acquired in the PSs name; or
3. acquired with PS funds.
34
Property is presumed to belong to a partner if it is:
acquired in the partner's name without PS funds -- even though the PS uses it.
35
PS Property: Title: If RP is held other than in the PSs name it will:
NOT be deemed PS property to the prejudice of an innocent person.
36
PS rights in its property:
Totally unrestricted.
37
Partner's rights in PS property:
VERY LIMITED. She can use PS property only for PS purposes and that right is not transferable.
38
Partner's economic interest in the PS:
A partner's share in the profits.
39
Is partner's economic interest in the PS transferable?
Yes. Just like any other financial asset - but that does not make the transferee a partner.
40
GP: Profits and losses are:
Split equally unless otherwise agreed.
41
GP: Management rights are:
equal unless otherwise agreed.
42
GP: No right to:
Compensation - unless otherwise agreed.
43
GP: Right to:
indemnification with interest.
44
GP: Partner's duties: (3)
1. Care,
2. loyalty, and
3. to render full information WHETHER A DEMAND IS MADE OR NOT.
45
GP: Admission of a new partner:
must be unanimous.
46
GP: Apparent authority:
Look at partner's title and prior conduct.
47
GP: Partner's liability for PS obligations:
the PS is liable but SO ARE ALL THE PARTNERS
48
LLP: Just like a GP, except:
no vicarious liability for wrongful acts of other partners.
49
How to form an LLP: (3)
1. File an ELECTION w/ the superior ct
2. of any county where LLP has office, and
2. Pay fee.
50
LLP's name must:
Include the words LLP.
51
Six causes of dissolution: (GP/LLP)
1. End of a definite term
2. Accomplishment of a particular undertaking
3. By partner's express will or withdrawal
4. Expulsion of a partner
5. By operation of law
6. Entry of a judicial decree.
52
After winding up a PS can avoid liability by:
giving notice to potential creditors.
53
Prior creditors are entitled to:
personal notice
54
Others who knew of the PS before dissolution are entitled to:
newspaper notice.
55
Ranking of distribution of PS assets after dissolution: (1 - 4)
1. Third party creditors
2. To partners OTHER THAN for capital and profits (e.g. loans, salaries)
3. To partners for capital
4. To partners for profits.
56
Creditor's rights: PS creditors have priority on:
PS assets.
57
Creditor's rights: PARTNER'S creditors have priority on:
SEPARATE assets.
58
If some partners want to continue PS business after dissolution, what happens? (3 things)
1. Consent from all partners who have not wrongfully dissolved.
2. Creditors AUTOMATICALLY b/c creditors of the continuing PS.
3. Buyout: UOA withdrawing partner gets his interest in the PS as dissolution plus interest or pro-rata share of profits.
59
A Limited PS is:
A PS that has one or more GP and one or more limited partners.
60
Forming LP: (3 things)
1. Must file a certificate of LP w/ Sec. of State
2. Pay a fee
3. File Annual statement to maintain status.
61
LP: Name:
Must have LP in the name.
62
LP: Liability of limited partners:
Ltd Partner can only lose its CAPITAL CONTRIBUTION.
63
Ltd Partner does not b/c GP in GA for participating in:
control (but ltd partner may be liable to creditor who was misled by conduct into thinking that ltd partner was a GP.)
64
LP: If no certificate is filed then:
Ltd partners are jointly and severally liable - basically it's a GP.
65
LP shields _______ and LLP shields _______
ltd partners,
GP
the two combined are LLLP
66
LLLP Distributing assets on winding up: (3 levels)
1. ALL creditors are repaid - including partners who are creditors.
2. Captial returned to limited partners
3. Profits split per contributions UOA
67
LLC Formation: (3)
1. File Certificate of Organization
2. Pay required fees
3. File annual statement to maintain status.
68
LLC Name:
Must have LLC in it.
69
LLC: Profits/Losses
UOA shared equally.
70
IN GA what's the best way to organize?
LLP or LLC
71
LLC: Limited liability:
No members have to accept full personal responsibility for LLC's debts.
72
LLC: Flexible management:
ALL owners may exercise control
73
LLC: Less tax:
Income is passed through to owners unlike a C Corp
74
LLC: Conversion/Merger:
May convert into another business form if all owners consent and appropriate documents are filed.
75
What's the most important factor in determining whether an individual is an employee vs. and independent K?
Did the employer have the right to control how the employee did the job?
76
Statement of PS: What must it contain?
Whatever the PS wants to make a matter of public record.
| No specific requirements
77
Statement of PS: What does it establish:
A public filing automatically establishes the existence of a PS.
78
LLP:
Basically, a regular PS except the partners in an LLP are not personally liable for some or all of the PS debts and obligations.
79
LLC is a hybrid business organization that is: (3 things)
1. Taxed like a PS
2. Offers owners (called members) limited liability of SH in a corp.
3. Can be run like a corp or a PS
80
An LLC must file:
Certificate of Organization with the secretary of state
81
An LLP must file:
an ELECTION w/ the superior ct of the county where LLP has an office.
82
An LP must file:
A Certificate of LP with the Secretary of State
83
LLC Certificate of Organization must include: (3 things)
1. Name of LLC
2. Address of LLCs registered office
3. Name and address of LLCs registered agent.
84
What must the Certificate of Limited PS contain? (5)
1. Signatures of all general partners
2. The name of the PS
3. Names and addresses of the agent for service of process
4. Names and addresses of all GP
5. Latest date on which the PS is to dissolve.
