Agency & Partnerships

Question 1

formation of agency relationship

Answer 1

Assent
Benefit to principal
Control of agent by principal

Question 2

scope of employment

Answer 2

agent performing assigned tasks or agent engaged in conduct within the principal’s control; agent was acting to benefit principal

Question 3

intentional torts in scope of employment

Answer 3

• if within space and time of work (“on the job”)
• done for principal’s benefit
• the kind of act agent was hired to perform

Question 4

test for IC vs. employee

Answer 4

whether the employer controls the physical conduct of work

Question 5

factors of an IC

Answer 5

• work independently
• can work for others
• use their own tools
• paid on a fixed rate

Question 6

exceptions to nonliability for IC’s acts

Answer 6

• nondelegable duty (inherently dangerous)
• principal retains control
• IC has apparent authority
• negligent hiring of IC

Question 7

principal’s direct liability

Answer 7

• for contracts for which agent had actual authority or that principal ratified
• inherently dangerous (nondelegable) duties
• negligent hiring or training

Question 8

formation of partnership

Answer 8

intent to carry on a for-profit business as co-owners

Question 9

presumed intent to form partnership

Answer 9

if profits are shared UNLESS debt, wages, rents, interest, goodwill, or benefits

Question 10

unchangeable default rules in partnership

Answer 10

1. fiduciary duties
2. partner’s right to access books
3. liability to third parties

Question 11

Limited Liability Partnership (LLP)

Answer 11

filed with state; all partners become limited partners, not personally liable

Question 12

Limited Partnership (LP)

Answer 12

file certification with state; at least one general partner and other limited partners

Question 13

purported partner

Answer 13

non-partner may still be personally liable if there’s a representation that the person is a partner, the person makes or consents to it, and a third party detrimentally relies on it

Question 14

partnership’s liability

Answer 14

liable for contracts that partners are authorized to enter into; liable for partners’ tortious acts in the scope of employment

Question 15

partners’ liability

Answer 15

liable for their own tortious acts; absent any limited form, jointly and severally personally liable for partnerships’ obligations; NOT liable for things before became a partner

Question 16

agent’s duty of care

Answer 16

duty to exercise the competence, care, and diligence normally exercised by someone in similar circumstances, based on local community standards; if special skills, expected to use them

Question 17

partner’s duty of care

Answer 17

to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or knowing violations of the law

Question 18

duty of loyalty

Answer 18

duty not to usurp an opportunity, not to advance interests adverse, not to take in secret profits, and not to compete with partnership

Question 19

principal’s duty

Answer 19

to deal fairly and in good faith

Question 20

how to add new partner

Answer 20

by consent of all existing partners; transfer of partnership interest does not make transferee a partner

Question 21

partner’s dissociation

Answer 21

right to dissociate for any reason; must give notice to other partners

Question 22

effect of partner’s dissociation

Answer 22

at will: the partnership is dissolved UNLESS all partners waive the right to terminate the partnership
for term or undertaking: partnership continues until term or undertaking is complete

Question 23

if partner dissociates and partnership doesn’t dissolve

Answer 23

partner is entitled to buyout of her share

Question 24

wrongful dissociation

Answer 24

unlimited partnership: any breach in partnership agreement
partnership for set term or undertaking: judicial expulsion, bankruptcy, or willful termination

Question 25

rights and duties after dissociation

Answer 25

duty not to compete is gone upon dissociation; if involved in winding up, still have the other duties of care and loyalty

Question 26

duties of person winding up

Answer 26

• dispose of partnership property
• discharge partnership liabilities
• preserve the business to maximize value
• distribute assets to partners