Business Organizations

Question 1

Partnership

Answer 1

An association of two or more persons to carry on as co-owners a business for profit.

Question 2

Agency

Answer 2

The fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to so act.

Question 3

Actual authority

Answer 3

Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestations of consent to him.

Question 4

Apparent authority

Answer 4

Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other’s manifestations to such third persons.

Question 5

Inherent agency power

Answer 5

Inherent agency power is a term used to indicate the power of an agent which is derived solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent. In order for the principal to be liable under inherent agency power, the actions of the agent must have been reasonably foreseeable by the principal.

Question 6

Types of principals

Answer 6

Disclosed (third party knows the agent is an agent, and who the principal is)

Partially disclosed (third party knows the agent is an agent, but doesn’t know who the principal is)

Undisclosed (third party doesn’t know the agent is an agent)