Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BAR FLASHCARDS MEE SUBJECTS > Agency & Partnerships > Flashcards

Agency & Partnerships Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards
1
Q

An agency relationship exists if:

A

1) Assent – formal or informal agreement;

2) Benefit – the conduct primarily benefits the principal; AND

3) Control – the principal has the right to control the
agent (control doesn’t need to be significant).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Characterization by Parties:

A

The characterization of the relationship by the parties is irrelevant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Definition: Agency is

A

A fiduciary relationship, where a person or entity (the agent) acts on behalf of another (the principal) AND both parties agree to the relationship.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Termination of Agency Relationship

A

An agency relationship terminates when:

a) Manifestation that the relationship is terminated by
either party;

b) Specified term of authority expires;

c) Death of principal or agent (by operation of law);

OR

d) Incapacity of principal or agent (by operation of
law) – except if a durable power of attorney exists.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Death of Principal: (Termination of Agency)

A

Common Law –> revoked regardless of whether 3rd party
has notice of principal’s death.

Some States –> NOT revoked until 3rd party has notice of
the death.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Agency Contracts:

A

Principal can terminate the agent at any time. BUT, principal may be liable for damages if agent is terminated prior to the expiration of a contract (unless agent materially breached contract).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A principal is bound to a contract entered into by its agent if the agent had:

A

actual authority and/or apparent authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

2 types of Actual Authority

A

Express Authority – by principal’s explicit directions to the agent (either orally or in writing)

Implied Authority– either:
(a) action is necessary to carry out agent’s expressly
authorized duties;

(b) agent acted similarly in prior dealings between
principal/agent; OR

(c) customary for agent in that position (silence/acquiescence can give rise to a reasonable belief of authority in the future).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Agent has actual authority when acting within their

A

reasonable understanding of authority, even if principal later shows the agent was mistaken.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Apparent Authority occurs when:

A

1) 3rd party reasonably believes the agent has
authority to act on behalf of the principal; AND

2) That belief is traceable from principal’s manifestations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A principal holds the agent out as having authority when he:

A

(a) gives a position or title indicating authority;

(b) previously held out and did not published a revocation;

OR (c) cloaked the agent with the appearance of authority.

– Not applicable if 3rd party had knowledge that the agent did not have actual authority.

– Continues until principal communicates termination to 3rd parties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q
  1. Unidentified/Partially Disclosed Principal
  2. Undisclosed Principal

(Apparent Authority)

A
  1. Apparent Authority CAN exist.
  2. Apparent Authority CANNOT exist.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Inherent Agency Power

A

Protects 3rd parties when dealing with agents even if there is no actual or apparent authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Two groups of Inherent Agency Power:

A

First Group: Subjects an employer to liability when an
agent acts in furtherance of employer’s business and his
conduct harms a 3rd-party.

Second Group: If an agent violates Principal’s orders and
there is no actual/apparent authority, inherent agency
applies when:
1) An agency relationship exits; AND
2) Agent engaged in acts that are generally of a kind that would fall within his actual authority, but for the violation of Principal’s instructions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Ratification

A

Makes the principal liable for agent’s contracts entered into without authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Ratification occurs when the Principal:

A

1) Has knowledge of all material facts or contract
terms; AND

2) Assents to the same through words or conduct.
(Agent also remains liable if principal was not disclosed)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Generally, an agent has NO liability if they:

(Agent’s Contractual Liability)

A

(1) Fully disclose the principal to a 3rd party; AND

(2) Act within the scope of authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Agent will be liable if:

(Agent’s Contractual Liability)

A

(a) Conduct was unauthorized; OR

(b) Principal was undisclosed or partially disclosed (no name given) to the 3rd party.

Agent may seek Indemnification from a principal if: (1) agent is liable; AND (2) his conduct was authorized.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Liability for Agent’s Torts: (Employer)

A

Under the doctrine of respondeat superior, an employer is liable for an employee’s negligent acts if the employee was acting within the scope of the employment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Agent acts within Scope of Employment when:

A

a) Performing work assigned by the employer; OR

b) Engaging in course of conduct subject to employer’s control.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Scope Factors – Courts analyze these to determine scope of employment:

A

i) Conduct is of the kind employee is employed to
perform.

ii) Occurs substantially within authorized time and space limits;

iii) It is motivated (in whole or part) to serve the employer.

Time, place, and purpose test.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Not Within Scope of Employment:

A

Conduct is NOT within scope if unrelated and not intended to serve any purpose of the employer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Employer Liability Even If Outside Scope of Employment:

A

An employer will be liable for acts outside the scope of employment if:

a) Employer intended the conduct;

b) Employer was negligent or reckless in selecting,
training, supervising, or controlling the employee;

c) It is a non-delegable duty; OR

d) Agent had apparent authority and 3rd party
reasonably relied.

24
Q

Intentional Torts + exceptions

A

Generally outside the scope.

Exceptions:
a) Act was expressly authorized;

b) Act was a natural product of agent’s duties; OR

c) Motivated by a desire to serve the principal.

25
Q

Liability for Independent Contractors + Exceptions

A

Generally, an employer/principal has NO liability for an Independent Contractor’s torts

Exceptions:
1) Inherently Dangerous Activities.

2) Non-delegable duty owed by principal.

3) Estoppel (principal holds out contractor as his agent, 3rd party reasonably relied on contractor’s skill, and 3rd party suffered harm).

26
Q

Independent Contractor vs. Employee

A

Primary focus is whether the principal had the right to control the manner and method in which the job was performed

27
Q

Courts analyze the following to determine if an employee or contractor:

A

1) type of work;

2) pay rate;

3) who supplied the equipment/tools;

4) degree of supervision;

5) degree of skill required;

6) was work for the benefit of the employer’s business;

7) extent of control principal has over work details;
and

8) whether agent/contractor is engaged in a distinct business.

28
Q

Duties Owed by Agent to the Principal:

A

Duty of Care – duty to use reasonable care when performing agent’s duties.

Duty of Loyalty – duty to act solely and loyally for principal’s benefit.

Duty of Obedience – duty to obey all reasonable directions.

29
Q

A general partnership is:

A

An association of two or more persons carrying on as co-owners of a business for profit.

  • Intent to form a partnership is NOT required.
  • A joint venture or sharing in gross profits does not
    automatically create a partnership.
30
Q

Limited Partnerships (LP):

A

An LP is composed of at least one general partner and limited partner(s).

31
Q

An LP is formed upon filing:

A

A Certificate of Limited
Partnership with the Secretary of State, which must
include:

1) name of Pship;
2) address of Pship;
3) name and address of each partner;
4) whether the Pship is an LLP; AND
5) signed by a general partner.

32
Q

A person who receives a share of the profits is presumed to be a partner UNLESS received in payment:

A

a) of a debt;

b) for wages as an employee or independent contractor;

c) of rent;

d) of an annuity or retirement benefit;

e) of interest/loan charges; OR

f) for the sale of goodwill of a business.

33
Q

Amending the Partnership Agreement

A

The partnership agreement may be amended at any time
with a unanimous vote.

34
Q
  1. Authority to Bind the Partnership:
A

A partner is an
agent of the Pship, and generally has authority to bind the Pship for its business (including contracts). To bind the Pship, the partner MUST have authority.

35
Q

Express Actual Authority:

(Authority to Bind the Partnership)

A

A partner receives such
authority from the partners.

  • Acts within the ordinary course of business must be
    approved by a majority of the partners.
  • Acts outside the ordinary course of business must
    approved unanimously.

Ordinary course of business = normal and necessary for managing the business.

36
Q

Implied Actual Authority (Incidental Authority): (p’Ship)

A

A partner may take actions reasonably incidental or
necessary to achieve the partner’s authorized duties.

37
Q

A partner has apparent authority for acts:

A

a) considered within the ordinary course of the Pship
business;

OR

b) of the kind carried on by the partnership.

38
Q

A partner’s act will NOT bind the Pship when:

A

1) partner lacked authority;

AND

2) the 3rd party knew or received notice of lack of authority.

39
Q

Binding the Partnership After Dissolution:

A

A partner’s authority is limited after dissolution.

Actual authority – limited only to acts appropriate for
winding up the business.

Apparent authority – a partner has apparent authoritycto bind the Pship if:

1) partner’s acts would have normally bound the
Pship; AND

2) 3rd party did not have notice of dissolution.

40
Q

Liability of General Partners: (Personal Liability)

A

General partners are personally liable for all obligations of the Pship UNLESS:

(a) otherwise agreed by claimant or

(b) provided by law

41
Q

Liability of General Partners: (Incoming Partners:)

A

Partners admitted into an existing partnership are NOT liable for obligations incurred prior to their admission.

  • BUT, risk losing capital contribution paid to Pship
42
Q

Rights of Partners Among Themselves

Sharing of Profits and Losses:

A

Unless otherwise agreed, profits are shared equally, and losses are shared in the same ratio as profits. Any partner who pays more than his fair share in losses is entitled to contribution from the other partners.

43
Q

Rights of Partners Among Themselves

Right to Management & Control:

A

Unless otherwise agreed, each partner has equal rights in the management and control of the business.

  • A disagreement for ordinary Pship business need only be approved by a majority of the partners.
  • Acts outside the ordinary course of business MUST
    be approved unanimously.
44
Q

Use of Partnership Property

A

Personal use of Pship property requires the consent of the other partners.

45
Q

Judgment Against a Partner

A

A judgment solely against a partner CANNOT be satisfied
with Pship property because the partner has no ownership
interest in Pship property. However, a creditor may seize
the partner’s financial interest in the Pship.

46
Q

Assignment of a Partnership Interest
A partner can only transfer:

A

1) his interest in the share of profits and losses; AND
2) the right to receive distributions.

  • Any other rights CANNOT be transferred, unless the partnership agreement provides otherwise.
  • ALL partners must consent for an assignee of a partnership interest to become a partner.
47
Q

Rights of Partners in a LP

A

General partner – Has full management rights and control.

Limited partner – Has NO say or control as to how the LP
is run, and DOES NOT have the right to manage or control
day-to-day business. Generally, they are passive, and have voting rights only in extraordinary situations (i.e. sale of Pship or all its assets, amending Pship agreement, or admitting a new partner).

48
Q

Limited Partner’s Right to Inspect Records

A
  • Limited partners have the right to inspect and copy records the LP is legally required to keep (RULPA).
  • Upon reasonable demand, a limited partner may obtain:
    (i) true and full info regarding the state of the business and
    financial condition; (ii) LP’s tax returns; and (iii) any info
    just and reasonable – may be exercised for any purpose.
49
Q

Duties Owed by Partners–Duty of Care

A

– A partner owes the fiduciary duty of care to the Pship and other partners.

Under RUPA, a partner only breaches this duty if he
engages in:
a) Grossly negligent or reckless conduct;
b) Intentional misconduct; OR
c) A knowing violation of law.

(If a partner breaches, he may be held personally liable to
the Pship for any losses. )

50
Q

Duties Owed by Partners–Duty of Loyalty

A

A partner owes the fiduciary duty of loyalty to the Pship and other partners. This requires the partners to act in the best interests of the Pship

Under RUPA, a partner must:
1) Account for any property, profit, or benefit derived
from Pship property or business (including refraining from appropriating Pship assets);

2) Not have an interest adverse to the Pship (a
conflict of interest); AND

3) Not compete with the Pship (unless agreed otherwise).

51
Q

Dissociation (Withdrawal of a Partner) + Events

A

A partner may dissociate (withdraw) from the Pship at any time upon notice.

Events: A partner becomes dissociated from the Pship when:
a) partner provides notice of express will to withdraw;

b) occurrence of an agreed upon event;

c) expulsion pursuant to the Pship agreement;

d) expulsion by unanimous vote if it’s unlawful to carry on business with that partner or he transferred all of his Pship interest (other than for security purposes);

e) judicial expulsion;

f) bankruptcy;

g) incapacity or death;

h) appointment of a personal representative or receiver; OR

i) termination of an entity partner.

52
Q

Wrongful Dissociation:

A

Dissociation is deemed
wrongful if: (a) not consistent with the terms of the Pship
agreement; OR (b) before the completion of agreed upon
term or undertaking.

  • A wrongfully dissociated partner may be liable to the
    Pship and other partners for damages, AND may not
    participate in the winding up process
53
Q

Does Dissociation Cause Dissolution? (UPA)

A

If wrongful dissociation -> The remaining partners may waive their right to wind up /terminate the Pship, and instead choose to continue the Pship by buying out the dissociated partner’s interest

If rightful dissociation–> The Pship MUST be wound up and terminated.

54
Q

Does Dissociation Cause Dissolution? (RUPA)

A

the remaining partners have the option to waive dissolution, and buy the dissociated partner’s
interest regardless if the dissociation was rightful or
wrongful.

55
Q

During the winding up process, the Pship assets are converted to cash and distributed in the following order:

A

1) Outside creditors.

2) Inside creditors (partners who loaned money to the Pship).

3) Partner’s capital contributions.

4) Any remaining profits or surplus goes to the partners equally (unless agreed otherwise).

  • If there are insufficient assets to satisfy creditors, the loss will be divided among the
    partners.

BAR FLASHCARDS MEE SUBJECTS (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions