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Agency Partnerships > Agency Partnerships > Flashcards

Agency Partnerships Flashcards

1
Q

How is an agency formed?

A

Formation of Principal-Agent Relationship

  • BY AGREEMENT
    (1) assent - an informal agreement b/w a principal who has capacity and the agent
    (2) benefit - the agent must work for the principal’s benefit
    (3) right to control agent - by having the power to supervise the manner of the agent’s performance
  • BY ESTOPPEL (Apparent Authority) - requires 3d party reliance on principal’s actions
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2
Q

How is a general partnership formed?

A 
General Partnerships - Revised Uniform Partnership Act (RUPA)
def = an ass'n of 2+ persons who are carrying on as co-owners of a business for profits
  • sharing of profits = contribution of money or services in return for a share of profits in any creates a presumption of a general partnership

Formation = there are NO FORMATION FORMALITIES for general partnerships

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3
Q

What types of authority are there?

A

Actual Authority
Apparent Authority
Inherent Authority

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4
Q

What is actual authority?

A

Actual Authority = express agreement b/w principal and agent

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5
Q

What is apparent authority?

A
  1. Principal cloaks agent w/ appearance authority, AND

2. Reliance by 3d party

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6
Q

What is inherent authority?

A

Can be implied to the extent that an agent’s express authority requires it to do certain other acts as a matter of course in order to perform its functions as an agent

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7
Q

What is a principal’s liability for agent’s torts?

A

(Respondeat Superior)

• Tort occurred in the scope of the principal-agent relationship = 3 part term

(1) within the agent’s job description
(2) tort occurred on the job
- frolic = new and independent journey outside of scope
- detour = mere departure w/in scope of agency
(3) conduct INTENDED for PRINCIPAL’S BENEFIT

Intentional torts = outside the scope of agency
EXCEPTIONS:
- specifically authorized by principal
- nature of employment
- motivated by desire to serve principal
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8
Q

What is a principal’s liability for IC torts?

A

No vicarious liability UNLESS

  • ultra-hazardous activities
  • estoppel = hold out IC as agent
  • non-delegable duties
  • principal knowingly selected incompetent IC
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9
Q

What is a principal’s liability for agent’s contracts (Ks)?

A

Principal liable for AUTHORIZED CONTRACTS ONLY

ACTUAL EXPRESS authority

ACTUAL IMPLIED authority = inferred from conduct/circumstance
• necessity
• custom
• prior dealings

APPARENT AUTHORITY

  • principal cloaks agent w/ appearance authority
  • reliance by 3d party

RATIFICATION

  • knowledge and
  • accepted benefits of contract
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10
Q

What is an agent’s liability for contracts?

A

Not liable for authorized contracts (gen) when agent entered into them on behalf of principal

Exception: UNDISCLOSED PRINCIPAL

  • 3d party can sue either the agent
  • or the principal once he/she is disclosed
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11
Q

General Partnerships: Powers of Partners to Bind the Partnership

A

Actual authority = yes
(actual authority = authority a partner reasonably believes he/she possesses based on communications w/ the other partners)

Apparent authority = yes, UNLESS

  • no authority and
  • 3d party knew / had received notification of no authority
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12
Q

General Partnership Rights and Obligations

A

Rights and obligs. under TERMS of partnership agreement - partners may alter default rights and obligs. of a partnership by agreement

Rights and obligs. in ABSENCE of terms in a partnership agreement

  • equal control - one partner = one vote
  • no salaries (exception: winding-up partnership business)

profits and losses

  • profit sharing = equally w/o contrary agreement
  • loss sharing = just like profits w/o contrary agreement
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13
Q

What are the personal liabilities of partners for partnership obligations?

A

liable for debts and obligations of the partnership

liable for co-partners’ torts in scope of usual partnership business

liable for authorized contracts

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14
Q

What are the incoming and outgoing partner liabilities?

A

INCOMING partner ≠ liable for PRIOR debts
- exception: money paid in by incoming partner CAN BE USED BY PARTNERSHIP TO SATISFY PRIOR DEBTS

OUTGOING partner = liable for FUTURE debts UNTIL

  • notice of dissociation given to creditors; or
  • 90 days after notice of dissociation to the state
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15
Q

The outgoing partner is liable for future debts until?

A
  • notice of dissociation given to creditors; or

- 90 days after notice of dissociation to the state

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16
Q

What is the exception to what the money paid in by the incoming partner can be used on?

A

Can be used by the partnership to satisfy prior debts

17
Q

What are the formalities of a Limited Partnership (LP)?

A
  • at least one general partner
  • at least one limited partner
  • must file limited partnership certificate and includes names of general partners
18
Q

What are the general partners rights and liabilities?

A

Right to Manage

General Partners’ personal liability

  • debt and obligations of limited partnership
  • co-partners’ torts in scope of usual partnership business
  • authorized contracts
19
Q

What are the limited partners rights and liabilities?

A

NO right to manage

NO personal liability for debts and obligations of limited partnership

20
Q

What are the formalities of a Limited Liability Companies (LLC)?

A
  • must file articles of organization

- may adopt operating agreement

21
Q

What are the financial rights and obligations of LLC members?

A
  • Internal allocation of financial interests = on basis of member’s contributions
  • No personal liability for debts and obligations of the LLC
22
Q

What are the characteristics of a LLC?

A

Formalities

  • must file articles of organization
  • may adopt operating agreement

Financial Rights and Obligations of LLC Members
• Internal allocation of financial interests = on basis of member’s contributions
• No personal liability for debts and obligations of the LLC

Management by all members - but the articles may provide otherwise

Limited Life

Limited Tax

23
Q

Who manages a LLC?

A

Management by all members - unless the articles provide otherwise

24
Q

What are the formalities of Registered Limited Liability Partnerships?

A

must file statement of qualification

  • executed by at least 2 partners
  • name and address
  • statement that entity is LLP

effective on date of filing or deferred effective date

25
Q

What is the liability of general and limited partners for debts and obligations of LLP?

A

None, no liability

26
Q

What are the fiduciary duties of agents?

A

Duty of Care
Duty of Obedience
Duty of Loyalty

Principal Remedies for Breach

  • may recover losses caused by breach
  • disgorge profits made by the breaching agent
27
Q

What are the duties of principals?

A
  • Duties imposed by Contract
  • Reasonable compensation
  • Reimbursement for Expenses
  • Duty to cooperate w/ agent and no unreasonably interfere
28
Q

What are the remedies for a principal when the agent breaches a duty?

A

Principal

  • may recover losses caused by breach
  • disgorge profits made by the breaching agent
29
Q

What are the fiduciary duties of partners?

A

• Duty of care - no negligent, reckless, or unlawful conduct
• Duty of loyalty
- account for all profits and benefits derived in connection w/ partnership business
- refrain from dealing w/ partnership as an adverse interest
- not compete w/ partnership

Partnership Remedies for breach - ACTION FOR ACCOUNTING

  • may recover losses caused by breach
  • disgorge profits made by breaching partner
30
Q

What remedies does a partnership have for breach of fiduciary duties of partners?

A

ACTION FOR ACCOUNTING

  • may recover losses caused by breach
  • disgorge profits made by breaching partner
31
Q

How do Partners’ Share Profits?

What about Losses?

A

Profit Sharing = EQUALLY w/o contrary agreement
- w/o an agreement to the contrary, partners share profits equally

LOSS SHARING = EQUALLY (just like profits w/o contrary agreement)

32
Q

How is an agency terminated?

A
  • lapse of time (specified time or reasonable time if not specified)
  • occurrence of specified event
  • change in circumstances
    • destruction of subject matter
    • principal or agent insolvent
    • change in law
  • agent’s breach of fiduciary duty
  • unilateral termination by either party
  • death or incapacity of principal or agent (exception: durable power of att’y)
33
Q

How can partnerships end?

A

dissociation
dissolution
winding-up

34
Q

What are the events of dissociation (partnerships)?

A
  • Withdrawal of partner
  • Expulsion of Partner
  • Partner’s bankruptcy
  • Partner’s death or incapacity
  • Appt of a receiver
  • Termination of a business entity that was a partner
35
Q

What are the effects of dissociation (for a partnership)?

A

Partnership MUST
- buy out dissociated partner’s interest - liquidation or going-concern value
- indemnity the partner against
• all known pre-dissociation liabilities
• post dissociation liabilities not result of dissociating partner’s actions

Dissociated partner’s power to BIND W/IN 2 YEARS if

(1) act would have bound partnership prior to dissociation
(2) 3d party reasonably believed dissociated partner still partner AND
(3) no notice of dissociation

Dissociated partner’s liability POST DISSOCIATION W/IN 2 YEARS if

(1) 3d party reasonably believed dissociated partner still partner AND
(2) no notice of dissociation

36
Q

What is the effect of dissolution (partnership)?

A

Requires partnership business to be wound up

37
Q

What are the events for dissolution?

A
  • Withdrawal if partnership may be dissolved at will
  • Lapse of time
  • Occurrence of specified event
  • Change in law
  • Court Order
    • economic purpose frustrated
    • no longer reasonably practicable to continue business
    • business cannot be continued in conformity w/ partnership agreement
38
Q

Winding-up the partnership business

A
  1. LIABILITY after dissolution
    - OLD business transactions = partnership and indiv gen partners retain liability on all transactions entered into to wind-up old business w/ existing creditors
    - NEW business transactions = partnership and indiv gen partners retain liability until the notice of dissolution is given to creditors or until 90 days after filing a statement of dissolution w/ the state
  2. COMPENSATION for helping wind-up partnership = yes
  3. Order of Distribution
    (1) Creditors
    - outside 3d party trade creditors
    - all loans by partners to partnership
    (2) Capital contributions of partners
    (3) Profits or Surpluses = equally w/o contrary agreement
39
Q

What is the order of distribution for winding-up the partnership business?

A

(1) Creditors
- outside 3d party trade creditors
- all loans by partners to partnership
(2) Capital contributions of partners
(3) Profits or Surpluses = equally w/o contrary agreement

Agency Partnerships (1 decks)

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