Agency & Partnerships Flashcards
Actual Express Authority (agency)
Express authority is that authority contained within the four corners of the agency agreement and those expressly granted by the principal.
Actual Implied Authority (agency)
Implied authority is authority that the agent reasonably believes she has a result of the principal’s actions.
Termination of Actual Authority (agency)
Termination of actual authority occurs by either party’s unilateral termination.
Apparent Authority (agency)
Apparent authority arises from reasonable belief of third parties. It exists if the principal holds the agent out as possessing certain authority, thereby inducing reasonable reliance by others on that authority. The third party must reasonably rely on the holding out.
Lingering Authority (agency)
Where an agent’s actual authority has terminated, he will have apparent authority to act on the principal’s behalf as to all third parties with whom the principal knows he dealt unless and until the third parties receive either actual or constructive notice of the termination.
Ratification (agency)
A relationship is created by ratification when an “agent” purports to act on behalf of the principal without any authority at all, but the principal subsequently validates the act and becomes bound. For ratification to occur, the principal must know or have reason to know all material facts, accept the transaction, and have capacity.
Limited Partnership
A limited partnership (LP) is composed of one or more general partners and one or more limited partners. The general partners are personally liable for partnership obligations, while the limited partners generally do not have any liability beyond the liability to make agreed-upon contributions. In order to validly form an LP, a certificate of limited partnership must be filed with the secretary of state.
Limited Liability Partnership
To become a limited liability partnership (LLP), a partnership must file a statement of qualification with the secretary of state. A partnership becomes an LLP at the time of filing of the statement or on the date specific in the statement. The advantage of operating as an LLP is that the partners are not personally liable for the LLP’s obligations.
General Partnership
A general partnership (GP) is an association of two or more persons to carry on as co-owners of a business for profit. There is no requirement that the parties subjectively intend to form a partnership, only that they intend to run a business as co-owners. Moreover, there are no formalities required to form a GP. Courts generally look to the intent of parties to carry on as co-owners of a business for profit to determine whether a GP exists.
Extent of Liability of Partners in a GP
In a GP, all partners are jointly and severally liable for all obligations of the partnership, whether the obligations arise in contract or tort. Partners are also liable for any torts committed by a partner or by an employee of the partnership in the ordinary course of the partnership business or with authority of the partnership.
Extent of Liability of Partners in an LP
General partners are jointly and severally liable for all partnership obligations while limited partners have no personal liability. Limited partners are liable only for their agreed-upon contributions.
Extent of Liability of Partners in an LLP
In a limited liability partnership, the partners are not personally liable for the partnership’s obligations. However, a partner remains personally liable for his own wrongful acts.
Scope of Liability in a GP
Where one partner is compelled to pay or satisfy the whole of a partnership obligation, he is entitled to indemnification from the partnership. If the partnership is unable to indemnify, then he can seek contribution from the other partners.
