Business Law Flashcards
Rights and Duties between Principal and Agent
Duty of loyalty: agent must act in principal’s best interest.
Duty of obedience: agent must obey reasonable directions of principal.
Duty of reasonable care: agent should not be negligent.
Duty of account: account for principal’s activities separately.
Subagent: owes duty of care to agent and principal.
Principal’s remedies
Tort damages: recover costs from agent, if agent breached.
Contract damages: if agent rec’d compensation, can collect damages. If not compensated, no contract, no damages.
Recovery of secret profits: if agent rec’d secret profit, principal can recover by imposing constructive trust on profit.
Withhold compensation: intentional break, not required to pay agent.
Duties of principal to agent
Compensation: implied unless agreed upon.
Reimbursement/indemnification: all expenses incurred.
Remedies of agent: if principal breached, agent can sue for damages. If not contractual, may not seek contract remedy of specific performance. Agent has a duty to mitigate damages.
Principal types
Disclosed: agent not liable.
Unidentified and undisclosed: agent liable.
Agent types
Express actual authority: includes powers expressly granted.
Implied actual authority: agent reasonably believes necessary to carry out duties.
Apparent authority: principal caused third party to reasonably believe agent has authority.
*minor can be an agent
*consideration is not required to form agency relationship.
Attachment requirements
Agreement of the parties
Value given by creditor
Debtor has rights in collateral
Two separate sole proprietors merge without filing with the state
General partnership
Guarantor vs Surety
Guarantor- liable second to debtor
Surety - primarily liable
(Gratuitous is not compensated, any changes to risk results in obligation result in discharge)
(Compensated may be released with material changes)
Statue of Frauds - Sale of goods $500+
SWAP:
Specially manufactured (custom) goods
Written confirmation between merchants
Admission in court
Performance
Tort Liability
GR: The principal is not liable for torts (wrongful acts) of an agent.
Exception: An employer can be liable for an employee - Respondeat Superior.
Statute of Frauds - Contracts that need to be in writing
MY LEGS:
Marriage
Year (Cannot be performed in a year)
Land
Executors
Goods
Surety
Tax return preparer - third party liability
General rule - third party could not sue because no professional relationship.
Minority rule - if the TRP could foresee a third party’s reliance then they could sue.
UCC Sale of Goods - Uniform Commercial Code
RISE:
Real estate
Insurance
Services
Employment law
Contact Defenses
Lack of agreement, lack of consideration along with:
Duress: Unlawful use of threat of harm
Undue Influence: Abusing a position of trust or confidence
Statute of Limitations: 4-6 years from date of breach
Accord: Agreement to substantiate one contract for another
Novation: New contract substitutes a new party for an old party in existing contract. Old party is released
Parol Evidence Rule: Prohibits prior evidence that contradicts terms. Except to show fraud.
Merchant’s Firm Offer
Written promise to keep offer open. Irrevocable for time stated, reasonable time but no longer than 3 months
Delivery & ROL of Goods
ROL to pass: goods must be identified. If ROL is not designated;
Non-carrier (seller is not a merchant) - passes to buyer on seller’s tender.
Non-carrier (seller is a merchant) - passes to buyer on delivery.
Carrier (shipment) - passes to buyer when delivered to carrier.
Carrier (destination) - passes to buyer upon delivery.
If seller sends nonconforming goods, ROL remains with seller.
Sale of Approval: ROL on seller until buyer approves.
Sale or Return: ROL passes to buyer when seller delivers.
If buyer rejects: the title revests with seller.
Remedies of Buyer & Seller
Anticipatory Repudiation: anticipate they will not be able to perform. The non-breaching party may act in response.
Duty to Mitigate: parties cannot recover for damages they could have avoided.
Seller’s remedies
Liquidated damages: if buyer makes a down payment and breaches, seller may keep lesser of $500 or 20%.
Buyer’s remedies
Replevin: right to recover goods wrongfully in hands of seller. May be used if goods have been identified and the buyer cannot cover.
Power to terminate relationship
Both parties generally have the power but not necessarily the right. May be held liable for damages if termination breaches contract.
Agency coupled with interest: only the agent can terminate, principal cannot.
Purchase money security interest (PMSI)
Special type of security interest that has priority over collateral
*Replevin: judicial action seeking the transfer of personal property from debtor to secured party.
*Secured party cannot retain collateral if debtor has paid at least 60%, secured party must sell.
General Partnership - Order of Distribution
GP loans
Partner capital accounts
GP profits
Revised Model Business Corporation Act
Stock dividend is not defined as a distribution
LLC Dissolution
Dissolved upon death, retirement, resignation, bankruptcy, etc of a member
