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Bar Prep > Bar Prep - Ageny & Partnership > Flashcards

Bar Prep - Ageny & Partnership Flashcards

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1
Q

What is the two part test regarding whether a principal will be liable for torts committed by agent?

A

Requires (1) a principal-agent relationship and (2) tort committed by agent with the scope of that relationship.

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2
Q

What is required for a principal agent relationship?

A

ASSENT
BENEFIT
CONTROL

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3
Q

What is the definition of assent?

A

Informal agreement between principal and agent.

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4
Q

What is the definition of benefit?

A

Agent’s conduct must be for principal’s benefit

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5
Q

What is the definition of control?

A

Principal must have the right to control the agent by having the power to supervise the manor of the agent’s performance.

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6
Q

If principal has the power to supervise the manor of performance - principal has ____?

A

Control (Principal-Agent Relationship)

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7
Q

When will the principal be vicarious liability for agent’s tort of sub-agent?

A

When there is assent, benefit and control between the principal and sub-agent tortfeasor.

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8
Q

When will principal be liable for a borrowed agent’s tort?

A

When there is assent, benefit and control between the borrowing principal and borrowed agent tortfeasor.

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9
Q

What is the difference between Agents and Independent Contractors?

A

No right to control independent contractor bc there is NO POWER TO SUPERVISE manner of performance.

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10
Q

What is the general rule regarding principal vicarious liability for independent contractors?

A

There is NO vicarious liability for independent contractors.

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11
Q

What are the exceptions to the general rule that principal’s are not vicariously liable for tort of independent contractors?

A

(1) Inherently dangerous activity and

(2) Estoppel

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12
Q

What is the rule regarding liability for an independent contractor and an inherently dangerous activity?

A

The independent contractor commits tort while engaged in inherently dangerous activity.

Thus, principal will be liable for ID tort.

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13
Q

What is the rule regarding liability for independent contractor and estoppel?

A

If you HOLD OUT your independent contractor with the APPEARANCE OF AGENCY, you (principal) will be estopped from denying liability on that ground.

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14
Q

What are the factors for analyzing whether a tort is WITHIN THE SCOPE of a Principal-Agent Relationship?

A

(a) Conduct “of the kind” agent was hired to perform.
(b) Tort occurred “on the job”
(c) Did agent intend to benefit principal?

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15
Q

To determine whether tort was within scope as conduct “of the kind” agent was hired to perform it must ___?

A

Be conduct that was within the job description, thus likely within scope.

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16
Q

What is the rule regarding Principal-Agent relationship scope factor for tort conduct “on the job.”

A

FROLIC = outside scope; new and independent journey.

DETOUR = within scope, mere departure from an assigned task

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17
Q

True or False: If an agent intended to benefit a principal by its conduct, principal is liable for a tort committed during this conduct?

A

True.

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18
Q

What is the general rule regarding principal liability for intentional torts committed by agent?

A

Intentional torts are generally OUTSIDE the scope of principal-agent relationship.

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19
Q

What are the exceptions to the general rule that intentional torts are outside the scope of a principal-agent relationship?

A

(1) Authorized by Principal
(2) Natural, from nature of employment
(3) Motivated by desire to serve principal

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20
Q

A bouncer at a bar committing battery as he bounces a drunken patron is an example of ____?

A

Exception to general rule that intentional torts are outside the scope of principal-agent relationship

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21
Q

When is the principal liable for contracts entered into by its agent?

A

When the principal AUTHORIZED the agent to enter into contract.

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22
Q

What are four types of authority (regarding principal-agent authority for K)?

A

(1) Actual Express
(2) Actual Implied
(3) Apparent and
(4) Ratification

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23
Q

What is the rule regarding actual express authority (given by principal)?

A

It can be oral and private, but its narrowly construed.

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24
Q

What is the exception to general rule that actual express authority can be oral?

A

If contract itself must be in writing, then express authority MUST be in writing as well. (ex. contracts for real estate).

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25
Q

How can express authority be revoked?

A

(1) Unilateral act of either the principal or the agent, or

(2) Death of principal

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26
Q

How can a principal give agent actual implied authority?

A

Through conduct or circumstance, specifically:

(1) Necessity
(2) Custom
(3) Prior dealings

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27
Q

How is implied authority established via necessity?

A

There is implied authority to do all tasks which are necessary to accomplish an expressly authorized task.

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28
Q

How is implied authority established via custom?

A

There is implied authority to do all tasks which by custom are performed by persons with agent’s TITLE AND POSITION.

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29
Q

How is implied authority established via prior dealings?

A

There is implied authority to o all tasks which the agent believes to be authorized to do from PRIOR ACQUIESCENCE.

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30
Q

What is apparent authority?

A

The appearance of authority, principal can still be liable.

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31
Q

How will you know if there is apparent authority?

A

Two part test:

(1) Principal “CLOAKED” agent with the appearance of authority, and
(2) Third party must rely reasonably on appearance of authority

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32
Q

What is ratification?

A

Method for granting agent authority even after contract has been entered into.

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33
Q

What is the exception to the general rule that a principal is liable on its authorized contracts?

A

Undisclosed principal.

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34
Q

What duties does an agent owe to a principal?

A

(1) Duty of Care
(2) Duty of Obedience
(3) Duty of Loyalty

35
Q

What actions commonly represent a breach of the duty of loyalty?

A

Self-dealing; usurping principal opportunity; secret profits

36
Q

What are the formation requirements for a general partnership?

A

None

37
Q

What is the key aspect of a general partnership?

A

Sharing of profits

38
Q

What is the rule regarding liabilities of general partners to 3P?

A

Each general partner is personally liable for all debts of partnership AND each co-partner torts

39
Q

Is a new partner liable for pre-existing debts?

A

Generally no.

40
Q

When are dissociating partners liability for subsequent debts end?

A

Withdrawing partners retain liability on future debts until ACTUAL NOTICE and PUBLICATION NOTICE.

41
Q

What is the definition of a general partnership?

A

Association of 2+ persons who are carrying on as co-owners of a business for profit.

42
Q

What is general partnership liability by estoppel?

A

One who REPRESENTS (holding out) to a 3P that a general partnership exists WILL BE LIABLE as if a general partnership exists.

43
Q

What are the 3 major steps when discussing a general partnerships liability to 3P?

A

Formation –> Liability –> Estoppel

44
Q

What is the general rule regarding rights and liabilities between general partners?

A

General partners are FIDUCIARIES of each other and the partnership.

45
Q

True or False: general partners owe each other a duty of loyalty

A

TRUE.

Partners may never engage in SELF-DEALING, never USURP partnership opportunities, and may never make SECRET PROFIT.

46
Q

What is an action for accounting?

A

Partnership remedy for violation of fiduciary duty.

Partnership may recover losses that are caused AND disgorge profits made by breaching partners.

47
Q

What is a partner’s rights in specific partnership assets?

A

(land, leases, and equipment owned only by partnership) — may not be transferred without partnership authority.

48
Q

What is a general partner’s rights in share of profits and surplus?

A

The share of profits = personal property owned by each individual partner and therefore may be transferred by individual partners to 3P.

49
Q

What is a general partner’s rights in the share in management?

A

General partners have right to share management but asset owned only by partnership itself and THEREFORE may not be transferred.

50
Q

What is a general partner’s right in management?

A

Absent an agreement, each partner entitled to EQUAL control (vote).

51
Q

What is a general partner’s right in a salary?

A

Absent agreement, partners get no salary.

52
Q

What are the voting requirements regarding ordinary matters vs. fundamental matters in a general partnership?

A

Ordinary Matters – majority vote

Fundamental Matters – unanimous vote

53
Q

What is a general partner’s share of partnership profits?

A

Absent agreement – Profits shared equally.

54
Q

What is a general partner’s share of partnership losses?

A

Absent agreement – profits shared like profits.

55
Q

What is the definition of a partnership dissolution?

A

A general partnership dissolves automatically upon any material change in partnership caused by death or withdrawal of any single general partner.

56
Q

What is the real end of the partnership called?

A

Termination

57
Q

What is the winding up period?

A

Period between dissolution and termination in which the remaining partners liquidate partnership assets to satisfy partnership’s creditors.

58
Q

What is the partnerships liability on old business during dissolution?

A

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.

59
Q

What is the priority of distribution regarding assets/creditors at the dissolution of a general partnership?

A

First – outside creditors must be paid
Second – inside creditors must be paid
Third – capital contributions by partners
Fourth – profits and surplus, if any.

60
Q

What is a limited partnership?

A

Partnership w/ at least 1 general partner and at least 1 limited partner.

61
Q

How is a limited partnership formed?

A

Must file limited partnership certificate that includes names of all general partners.

62
Q

What are the liability and control rules for general partners vs limited partners?

A

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.

63
Q

True or False: In NY, limited partners may not manage/control business without forfeiting limited status.

A

TRUE.

64
Q

What is a RLLP?

A

Registered Limited Liability Partnerships

65
Q

How is a RLLP formed?

A

Filing a certificate of registration w/ label RLLP and stating the profession to be practiced.

66
Q

What is the definition of an LLC?

A

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.

67
Q

How is an LLC controlled?

A

the owners (members) may control or may delegate control to team of managers.

68
Q

What is the limited liquidity concept used with LLCs?

A

Full membership interest MAY NOT be transferred w/o majority consent of the membership interests OR as provided in operating agmt.

69
Q

To what extent is a general partner liable for the debts of a partnership?

A

General partner is liable for all debts of a partnership, whether he contributed services or not.

70
Q

To what extent is a retired general partner liable for the debts of a partnership?

A

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.

71
Q

To what extent is a surviving spouse who holds herself out as a partner liable for partnership debts?

A

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.

72
Q

What is partnership by estoppel?

A

The doctrine of partnership by estoppel holds agent personally liable whose words or conduct represent himself as a partner.

73
Q

To what extent is a partnership liable for an agent’s personal debts?

A

A person is liable for her debts.

74
Q

To what extent is a deceased general partner liable for the future debts of the partnership?

A

In NY, a deceased partner does not become liable for new partnership debts.

75
Q

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.

A

TRUE.

76
Q

To what extent is a partnership liable for its own debts?

A

Partnership is liable for its own debts.

77
Q

When, if ever, is an agent entitled to compensation from a partnership?

A

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.

78
Q

When does a power of attorney generally terminate?

A

Agency power - generally terminates on the incapacity of the principal unless it specifically provides otherwise.

79
Q

What is a “springing power of attorney” and when does it become effective?

A

Springing Power of Attorney – instrument drafted so as to only become effective on the happening of a specified future event.

80
Q

True or False: An unlicensed broker can enforce a claim for commissions in NY?

A

FALSE. Only a licensed real estate broker may enforce a claim.

This applies to full or part time brokers.

81
Q

When does respondeat superior attached?

A

(1) Employment relationship

(2) Tortious conduct must have been within the scope of employment.

82
Q

True or False: The principal is generally not liable for torts committed by an agent function as an independent contractor.

A

True.

Employee = principal exercises control over how agent performs.

83
Q

When is maters liable for torts of servant?

A

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.

84
Q

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?

A

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.

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