Agency, PS Flashcards
Limited Liability PS
- ALL ps have lim liability
Formation:
1) MUST file statement of qualification w/SoS (includes effective date, names and addresses of Gen ps and agents of service)
2) MUST have name and LLP, RLLP
LLPS agreement: written or oral but SoF may apply (MOLES)
Agent’s duty to Principal
Fiduciary Duty: A (even if unpaid) owes fiduciary duties to P:
1) Duty of Care: A must carry out agency w/reasonable care under the circumstances and A’s skills
2) Duty of Loyalty: UNDIVIDED loyalty to P so A must:
- Account to P for profits
- Act solely to benefit P (not A or TP)
- No self-dealing against P
- No compete w/P
- Not use P’s property for A’s own purpose
3) Duty of Obedience: A must obey all reasonable directions of P
Capacity (Agency)
- P must have contractual capacity
- A does not
Agency
Fiduciary relation resulting from a manifestation of MUTUAL consent by P and A that A will act on P’s behalf and subject to P’s control
- NO writing required
- NO consideration required
- REQUIRES consent by BOTH P and A
- A MUST act primarily for the benefit of P
- A acts subject to P’s control
Members Rights Duties and Liabilities in LLC
1) Voting and management
Members: all have equal right to manage
- Acts w/in ordinary course of LLC: ONLY majority vote of members
- Acts outside: requires unanimous vote from all members (e.g. admit new ps, amend PS agreement, sale of all PS prop)
2) Financials: based on member contribution
3) Liability: members NOT personally liable for LLC. ONLY lose investment in LLC
Ratification of K (Agency)
If A has no autho at time of making K, P is bound by A’s actions if P ratifies K by:
- Express: oral or written
- Implied: P accepts benefits
Elements:
- P has knowledge of ALL material facts of K
- P accepts ENTIRE K (cannot ratify portion)
- Cannot alter rights of TP
Limited Liability Companies LLC
- owners called members
Formation:
1) MUST file articles of organization w/SoS (includes effective date, names and addresses of Gen ps and agents of service)
2) MUST have name and LLC
LLC agreement: written agreement can displace almost all statutory provisions
Procedure of dissociation (Gen PS)
Depending on type of dissociation, two options:
- Liquidation: PS is dissolved and buss must be wound up (sold off)
- Buyout: PS continues by buying out dissociated ps
Liability of dissociated partner (Gen PS)
- Dissociated ps remains liable for pre-dissociation PS obligations AND possibly for post-dissociation up to two years UNLESS dissociated ps give notice to creditors directly
- Apparent autho: dissociated ps has apparent autho to bind PS but cannot exceed two yrs UNLESS PS gives notice to creditors directly
- Distribution of liabilities:
1) Creditors: outside (e.g. lenders, suppliers) and inside (e.g. ps gave loan to PS)
2) Repay ALL capital contributions paid by ps into PS
3) Profits or losses
Partnership
Elements:
1) Two or more persons
2) Intend to carry buss for profit
- Subjective intent to NOT form (even if written in K) a PS is irrelevant
- NO formal filing required
- NO writing required BUT SoF may require it (MOLES)
- If PS agreement follow terms otherwise default rules
- At-will PS (no agreed-upon term to remain ps): e.g.: forming a PS to just to conduct a buss w/no time restriction
- Term PS: agreed-upon in PS agreement
- Presumed PS if:
1) Sharing of profits (revenue-expenses=profits) unless payment for deb, wages, rent, interest on loan
2) Right to control buss EVEN if never actually exercised - PS by Estoppel: ps held out as PS to the world and TP reasonably relies to TP’s detriment
Limited Partnerships
- At least one Gen ps and at least one lim ps
Formation:
1) MUST file certificate of LP w/SoS (includes names and addresses of Gen ps and agents of service)
2) MUST have name and LP
LPS agreement: written or oral but SoF may apply (MOLES)
Partnership Dissociation and dissolution (Gen PS)
- Dissociation: withdrawal from PS by:
1) notice to ps
2) ps expulsion, death, of BK
3) agreed-upon event
4) appointment of a receiver for a ps - Wrongful dissociation: withdrawal by
1) breach of express terms in PS agreement
2) withdrawal, expelled, or BK before end of term
a) At-will PS (no agreed-upon term to remain ps): e.g.: forming a PS to just to conduct a buss w/no time restriction
b) Term PS: agreed-upon in PS agreement - ps is liab to PS for damages caused by wrongful dissociation
Gen PS and LLP rights and obligations
1) Voting and management
- ALL ps have equal rights to manage and vote
- Acts w/in ordinary course of PS: ONLY majority vote
- Acts outside: requires all ps to vote unanimously (e.g. admit new ps, amend PS agreement, sale of all PS prop)
2) Salary/compensation
- NO right to salary or compensation unless otherwise agreed
3) Financials
- Profits: shared equally unless otherwise agreed
- Losses: share in same manner as profits (not necessarily equally)
Ownership Interest and transferability in LLC
Member ownership in LLC
- New member MUST be admitted by unanimous vote
- Management rights
Limitations: members CANNOT unilaterally transfer management rights to make a TP a member (need unanimous vote)
- Financial rights: rights to profit distribution from LLC may be transferred to TP BUT member remains a member
Types of Autho (Agency)
1) Actual: autho that A actually thinks A possesses based on P’s acts w/A
- Express Actual
- Implied Actual: A reasonably believes A has autho based on P’s acts
- Termination by: specified time, reasonable time if not specified, change of circumstances, breach of A’s fiduciary duty, unilateral act by P or A, death/incapacity of P or A
- After termination: Actual autho can linger creating apparent autho
2) Apparent autho: P holds out A as having autho to TP
- Apparent autho by title or position: A has actual autho to the extent that A reasonably believes A has autho
- A CANNOT create apparent autho (P holds out A to have autho)
