Business Associations Flashcards
Übersicht Business Associations
I. Agency
II. Partnerships
III. Corporations
I. Agency
Agency Übersicht
- Agency Grundsätze
- Agency Authority
- Agency Contract Liability
- Agency Tort Liability
I. Agency
- Agency Grundsätze
I. Grds: The principal (P) is responsible for the acts of his agent (A) (“respondeat superior” doctrine)
II. Voraussetzungen:
a) Formation by act of parties: An agency relationship results from assent by one entity (principal, P) to another (agent, A) that the agent shall represent and act on the principal’s behalf in dealing with third parties and subject to the principal’s control, and assent by the agent so to act
b) Formation by estoppel (quasi eine Art Duldungs-/Anscheinsvollmacht): third-party reliance on P’s
communication
III. Rechtsfolge
a) Duties owed by agent:
1. fiduciary duty of loyalty
2. duty of obedience to reasonable directions
3. duty of care under the circumstances (e.g., disclose all relevant information)
4. express contractual duties
b) Duties owed by principal:
1. duty to reasonably compensate or reimburse expenses
2. duty to cooperate (not unreasonably interfere with A’s performance)
3. express contractual duties
I. Agency
SonderP: Kann ein Minderjähriger einen Vertreter bennenen?
P must have contractual capacity (e.g., an appointment of an agent by a minor is voidable), but no consideration is required
I. Agency
- Agency Authority
Grds: To determine if P is bound by the contract, A must have had authority to enter into the contract and bind P
Arten von Authority:
1. Actual express authority: Authority through express manifestations to A contained within four corners of agreement
2. Actual implied authority: Authority that A reasonably believes that A has as a result of P’s actions, e.g., incidental to express authority, customary, prior acquiescence by P, emergency measures, buy or sell goods, manage investments
Termination of actual authority: Termination occurs by lapse of a specified or reasonable time, occurrence of a specified event, change in circumstances, breach of duty by A, unilateral termination by either A or P (subject to breach of K), operation of law (death or incapacity unless irrevocable, or by filing a statement of authority with secretary of state to terminate P’s authority)
3. Apparent authority (P-3P): Arises from manifestations of A’s authority due to P holding out as such via P’s words, actions, or failure to act, thereby inducing 3P to reasonably but mistakenly rely on that authority
a) Duldung: Impostors: If P negligently lets impostor appear to have agency, P is liable for impostor’s actions
b) Anschein: Lingering apparent authority: If A’s actual authority has terminated (unless by death or incapacity), he has apparent authority to act on P’s behalf as to 3P with whom P knows he dealt with, unless 3P received notice of the termination
4. Ratification: If an “agent” acts for P without any authority but P subsequently validates the act (expressly or impliedly), P is bound if: P must (1) know or have reason to know all material facts, (2) accept the transaction, and (3) have capacity
I. Agency
- Agency contract liability
A. 3P v. P: Any type of P is liable to 3P on the K entered into by A as long as A had valid authority to act
B. 3P v. A: A’s liability depends on P’s identity and existence known to 3P
a) Disclosed P: A is generally not liable (and P is liable on the K), unless K intended A to be liable
b) Unidentified (partially disclosed) P: A and/or P may be liable at 3P’s election. A may avoid liability by disclosing P’s identity
c) Undisclosed P: A and/or P may be liable at 3P’s election
C. 3P liability: Disclosed P may enforce K but not A. Unidentified/undisclosed P and A may enforce K (P still benefits)
I. Agency
- Agency tort liability
Grds. P is generally liable for torts committed by A who is an employee, but not an independent contractor. If A is not liable, P is not liable (aber: P may be still be liable for negligent hiring, supervision, or entrustment of employee)
Reichweite: liable for employee’s torts if they were committed ** within the scope of employee’s employment**
- Factors: same general nature as job, proximity to time and place of authorized employment, motivation to serve employer
- Intentional torts are not considered within the scope of employment, unless authorized by P, a natural part of duties, or a misrepresentation
Ausn. P may be still be liable for an independent contractor (IC) if
a) the activity involved was inherently dangerous,
b) duty was nondelegable, or
c) P was negligent in hiring IC
Relationship by estoppel: If P creates the appearance of employer employee relationship that 3P relies on, P is estopped from denying the relationship and will be liable
Exkurs: Abgrenzung Employee/IC
a) P’s control over manner and method of A’s performance
b) characterization by parties
c) customs of locality regarding supervision of work
d) degree of skill required on the job
e) whose tools or facilities are used,
f) length of employment (short more likely to be IC, indefinite more likely to be employee)
g) basis of compensation (project basis vs. time basis)
h) understanding of parties, whether hired to further P’s business (nonbusiness purpose, e.g., mowing lawn, more likely IC)
II. Partnerships
Übersicht
II. Partnerships
I. Rechtsquellen
II. Definition
III. Voraussetzung/Bildung
IV. Haftung
V. Gesellschafterwechsel
VI. Eigentum
I. Rechtsquellen: default rules of Revised Uniform Partnership Act, may be modified by agreement
II. Definition: general partnership (GP) is an association of 2+ entities to carry on a business for profit as co-owners
III. Voraussetzung/Bildung: key test is parties’ intent. No formal agreement is required, intent may be implied through conduct (e.g. profit sharing, joint title to property, partie’s designation as “partnership”)
IV. Haftung: unlimited personal liability no matter what limited liability they declare
V. Gesellschafterwechsel: Bringing in new partners requires unanimous approval
VI. Eigentum. Property acquired by GP is owned by GP and not the individual partners—not freely transferrable, no right to use partnership property other than for the benefit of GP
II. Partnerships
Rechte von general partner
- Management: All partners have an equal right to participate in the management and control of the partnership, unless there is an agreement providing otherwise
a) Decisions involving “ordinary course of business” are controlled by majority of partners
b) Matters outside “ordinary course of business” require (unanimous) consent of all partners - Profits: Each GP is entitled to share equally in profits and must contribute toward losses in proportion to profit share. May agree to share profits other than equally and share the losses in the same ratio
- Interest: Economic right to interest in GP is personal and transferable w/o dissolving GP (transferee is only entitled to receive distributions; transferor retains other rights and duties)
- Indemnification for payments and obligations reasonably incurred in carrying on the partnership business
a) Contribution from other partner for paying more than his share of partnership liability
b) No right to remuneration for services to GP except reasonable comp for winding up business - Inspection: A partner may inspect and copy the partnership books
- Lawsuit: A partner may sue another partner (e.g., for breach of agreement or duty, or to enforce a right)
- Settlement of account upon dissolution
Duties von general partner
- Duty of care not to engage in negligent, reckless, or unlawful conduct or intentional misconduct
- Duty of loyalty to act in best interests of the partnership, including duties to (1) account for all profits and benefits derived from GP (2) not deal with GP as one with adverse interest, and (3) not compete with GP, (4) Must present business opportunities to GP if it is connected to the business
- Duty of good faith and fair dealing
- Duty to keep books complete and accurate and present to interested partners
II. Partnerships
Partnership Authority
Grds. Each partner is an agent of the partnership for the purpose of its business. Apply agency concepts
- A partner is bound by another partner’s act if the other partner had actual authority, which could come from express agreement or the other partner’s** reasonable belief** he had authority based on communication with other partners
- Apparent authority: A partner who acts in the ordinary course of the partnership’s business binds the general partnership, unless at the time of K, (1) the general partner did not have authority to act in that particular matter, and (2) the person with whom he is dealing actually knew or had notification that he lacked authority
II. Partnership
General partnership liability
A. Partners are liable for all K entered into by a partner in the scope of partnership or w/ authority of partnership
B. Partners are liable for all torts by any partner or employee w/in the ordinary business or w/ authority of partnership
C. Civil liability is joint and several (1+ partner may be sued)
a) Suit against partner: Each partner is personally and individually liable for entire amount of partnership obligations. If paid more than fair share, can seek contribution/indemnification (if whole obligation paid)
b) New partner not personally liable for obligations arising before he became a partner
c) Outgoing partner liable for obligations arising while he was a partner, unless payment, release, or novation
D. Criminal liability: Partners are criminally liable only for their own crime or participation
