Bar Prep - Ageny & Partnership Flashcards
What is the two part test regarding whether a principal will be liable for torts committed by agent?
Requires (1) a principal-agent relationship and (2) tort committed by agent with the scope of that relationship.
What is required for a principal agent relationship?
ASSENT
BENEFIT
CONTROL
What is the definition of assent?
Informal agreement between principal and agent.
What is the definition of benefit?
Agent’s conduct must be for principal’s benefit
What is the definition of control?
Principal must have the right to control the agent by having the power to supervise the manor of the agent’s performance.
If principal has the power to supervise the manor of performance - principal has ____?
Control (Principal-Agent Relationship)
When will the principal be vicarious liability for agent’s tort of sub-agent?
When there is assent, benefit and control between the principal and sub-agent tortfeasor.
When will principal be liable for a borrowed agent’s tort?
When there is assent, benefit and control between the borrowing principal and borrowed agent tortfeasor.
What is the difference between Agents and Independent Contractors?
No right to control independent contractor bc there is NO POWER TO SUPERVISE manner of performance.
What is the general rule regarding principal vicarious liability for independent contractors?
There is NO vicarious liability for independent contractors.
What are the exceptions to the general rule that principal’s are not vicariously liable for tort of independent contractors?
(1) Inherently dangerous activity and
(2) Estoppel
What is the rule regarding liability for an independent contractor and an inherently dangerous activity?
The independent contractor commits tort while engaged in inherently dangerous activity.
Thus, principal will be liable for ID tort.
What is the rule regarding liability for independent contractor and estoppel?
If you HOLD OUT your independent contractor with the APPEARANCE OF AGENCY, you (principal) will be estopped from denying liability on that ground.
What are the factors for analyzing whether a tort is WITHIN THE SCOPE of a Principal-Agent Relationship?
(a) Conduct “of the kind” agent was hired to perform.
(b) Tort occurred “on the job”
(c) Did agent intend to benefit principal?
To determine whether tort was within scope as conduct “of the kind” agent was hired to perform it must ___?
Be conduct that was within the job description, thus likely within scope.
What is the rule regarding Principal-Agent relationship scope factor for tort conduct “on the job.”
FROLIC = outside scope; new and independent journey.
DETOUR = within scope, mere departure from an assigned task
True or False: If an agent intended to benefit a principal by its conduct, principal is liable for a tort committed during this conduct?
True.
What is the general rule regarding principal liability for intentional torts committed by agent?
Intentional torts are generally OUTSIDE the scope of principal-agent relationship.
What are the exceptions to the general rule that intentional torts are outside the scope of a principal-agent relationship?
(1) Authorized by Principal
(2) Natural, from nature of employment
(3) Motivated by desire to serve principal
A bouncer at a bar committing battery as he bounces a drunken patron is an example of ____?
Exception to general rule that intentional torts are outside the scope of principal-agent relationship
When is the principal liable for contracts entered into by its agent?
When the principal AUTHORIZED the agent to enter into contract.
What are four types of authority (regarding principal-agent authority for K)?
(1) Actual Express
(2) Actual Implied
(3) Apparent and
(4) Ratification
What is the rule regarding actual express authority (given by principal)?
It can be oral and private, but its narrowly construed.
What is the exception to general rule that actual express authority can be oral?
If contract itself must be in writing, then express authority MUST be in writing as well. (ex. contracts for real estate).
How can express authority be revoked?
(1) Unilateral act of either the principal or the agent, or
(2) Death of principal
How can a principal give agent actual implied authority?
Through conduct or circumstance, specifically:
(1) Necessity
(2) Custom
(3) Prior dealings
How is implied authority established via necessity?
There is implied authority to do all tasks which are necessary to accomplish an expressly authorized task.
How is implied authority established via custom?
There is implied authority to do all tasks which by custom are performed by persons with agent’s TITLE AND POSITION.
How is implied authority established via prior dealings?
There is implied authority to o all tasks which the agent believes to be authorized to do from PRIOR ACQUIESCENCE.
What is apparent authority?
The appearance of authority, principal can still be liable.
How will you know if there is apparent authority?
Two part test:
(1) Principal “CLOAKED” agent with the appearance of authority, and
(2) Third party must rely reasonably on appearance of authority
What is ratification?
Method for granting agent authority even after contract has been entered into.
What is the exception to the general rule that a principal is liable on its authorized contracts?
Undisclosed principal.
What duties does an agent owe to a principal?
(1) Duty of Care
(2) Duty of Obedience
(3) Duty of Loyalty
What actions commonly represent a breach of the duty of loyalty?
Self-dealing; usurping principal opportunity; secret profits
What are the formation requirements for a general partnership?
None
What is the key aspect of a general partnership?
Sharing of profits
What is the rule regarding liabilities of general partners to 3P?
Each general partner is personally liable for all debts of partnership AND each co-partner torts
Is a new partner liable for pre-existing debts?
Generally no.
When are dissociating partners liability for subsequent debts end?
Withdrawing partners retain liability on future debts until ACTUAL NOTICE and PUBLICATION NOTICE.
What is the definition of a general partnership?
Association of 2+ persons who are carrying on as co-owners of a business for profit.
What is general partnership liability by estoppel?
One who REPRESENTS (holding out) to a 3P that a general partnership exists WILL BE LIABLE as if a general partnership exists.
What are the 3 major steps when discussing a general partnerships liability to 3P?
Formation –> Liability –> Estoppel
What is the general rule regarding rights and liabilities between general partners?
General partners are FIDUCIARIES of each other and the partnership.
True or False: general partners owe each other a duty of loyalty
TRUE.
Partners may never engage in SELF-DEALING, never USURP partnership opportunities, and may never make SECRET PROFIT.
What is an action for accounting?
Partnership remedy for violation of fiduciary duty.
Partnership may recover losses that are caused AND disgorge profits made by breaching partners.
What is a partner’s rights in specific partnership assets?
(land, leases, and equipment owned only by partnership) — may not be transferred without partnership authority.
What is a general partner’s rights in share of profits and surplus?
The share of profits = personal property owned by each individual partner and therefore may be transferred by individual partners to 3P.
What is a general partner’s rights in the share in management?
General partners have right to share management but asset owned only by partnership itself and THEREFORE may not be transferred.
What is a general partner’s right in management?
Absent an agreement, each partner entitled to EQUAL control (vote).
What is a general partner’s right in a salary?
Absent agreement, partners get no salary.
What are the voting requirements regarding ordinary matters vs. fundamental matters in a general partnership?
Ordinary Matters – majority vote
Fundamental Matters – unanimous vote
What is a general partner’s share of partnership profits?
Absent agreement – Profits shared equally.
What is a general partner’s share of partnership losses?
Absent agreement – profits shared like profits.
What is the definition of a partnership dissolution?
A general partnership dissolves automatically upon any material change in partnership caused by death or withdrawal of any single general partner.
What is the real end of the partnership called?
Termination
What is the winding up period?
Period between dissolution and termination in which the remaining partners liquidate partnership assets to satisfy partnership’s creditors.
What is the partnerships liability on old business during dissolution?
Partnership/Individual general partners retain liability on ALL transactions entered into to wind up, and OLD business by satisfying creditors who existed when winding up began.
What is the priority of distribution regarding assets/creditors at the dissolution of a general partnership?
First – outside creditors must be paid
Second – inside creditors must be paid
Third – capital contributions by partners
Fourth – profits and surplus, if any.
What is a limited partnership?
Partnership w/ at least 1 general partner and at least 1 limited partner.
How is a limited partnership formed?
Must file limited partnership certificate that includes names of all general partners.
What are the liability and control rules for general partners vs limited partners?
General partners – liable for all limited partnership obligations but also may control the business.
Limited partners – have limited liability and therefore not liable for obligations of limited partnership itself.
True or False: In NY, limited partners may not manage/control business without forfeiting limited status.
TRUE.
What is a RLLP?
Registered Limited Liability Partnerships
How is a RLLP formed?
Filing a certificate of registration w/ label RLLP and stating the profession to be practiced.
What is the definition of an LLC?
Hybrid btwn corp. and partnership, in which owners (called members) have same rights & limited liability of S/H in corporation + the benefits of partnerships tax treatment.
How is an LLC controlled?
the owners (members) may control or may delegate control to team of managers.
What is the limited liquidity concept used with LLCs?
Full membership interest MAY NOT be transferred w/o majority consent of the membership interests OR as provided in operating agmt.
To what extent is a general partner liable for the debts of a partnership?
General partner is liable for all debts of a partnership, whether he contributed services or not.
To what extent is a retired general partner liable for the debts of a partnership?
Simply because a general partner retires, he is not released from partnership liability.
Retiring partner remains liable until he withdraws from the partnership and proper notice is given of withdrawal.
To what extent is a surviving spouse who holds herself out as a partner liable for partnership debts?
In NY, when a person, by words or conduct, represents himself as a partner, he will be personally liable to 3P who extend credit to the partnership in reliance on the representation.
What is partnership by estoppel?
The doctrine of partnership by estoppel holds agent personally liable whose words or conduct represent himself as a partner.
To what extent is a partnership liable for an agent’s personal debts?
A person is liable for her debts.
To what extent is a deceased general partner liable for the future debts of the partnership?
In NY, a deceased partner does not become liable for new partnership debts.
True or False: Although a partnership agreement provided that the surviving spouse of any deceased partner shall receive what would have been the partner’s share of profits, spouse does not become part of partnership.
TRUE.
To what extent is a partnership liable for its own debts?
Partnership is liable for its own debts.
When, if ever, is an agent entitled to compensation from a partnership?
In NY, an agent is entitled to compensation for her services rendered.
If there is no agmt setting rate of compensation, rate will be FMV.
When does a power of attorney generally terminate?
Agency power - generally terminates on the incapacity of the principal unless it specifically provides otherwise.
What is a “springing power of attorney” and when does it become effective?
Springing Power of Attorney – instrument drafted so as to only become effective on the happening of a specified future event.
True or False: An unlicensed broker can enforce a claim for commissions in NY?
FALSE. Only a licensed real estate broker may enforce a claim.
This applies to full or part time brokers.
When does respondeat superior attached?
(1) Employment relationship
(2) Tortious conduct must have been within the scope of employment.
True or False: The principal is generally not liable for torts committed by an agent function as an independent contractor.
True.
Employee = principal exercises control over how agent performs.
When is maters liable for torts of servant?
Only when tort occurred within scope of employment.
Within scope = at time of act, servant was motivated by a desire to serve the purposes of master.
A is an agent of P. A invites 3P into her car with the intent of driving 3P to her own office. After an accident where 3P is injured, is P liable for these injuries?
NO - when the situation arises that A invited 3P to ride in vehicle without the EXPRESS AUTHORIZATION by P, this is outside the scope of employment relationship.
