Corps/Agency/Partnerships MEE

Question 1

Agency

Answer 1

Fiduciary relationship
consent by both parties
to act under control and for benefit of

Duties:
duty of care- reasonable under circumstances
duty of loyalty- no self- dealing
duty of obedience
P has common law obligations to reimburse and compensate

Authority to bind P in contracts:
actual- express or implied
apparent- P holds out to 3rd party
ratification- after the fact

Authority to make P liable for torts:
done within scope of agency, no substantial deviation
independent contractors are not subject to control over means and do not bind P
P can be liable independently for negligent hiring

Question 2

Partnerships

Answer 2

Two or more partners operating a business for profit, whether they intended to create partnership or not

Equal rights. Members have ownership in financial interests and management rights.
ordinary course of business decisions require majority vote
outside ordinary course of business requires unanimous

Profits split evenly by default. Losses split according to profits by default.

Partnership liable for contracts made with authority and torts done within scope. Apparent authority always exists for members even if no actual authority under agreement.

Creditors can get to all members personally after going through partnership.

Members have fiduciary duties to each other and to the partnership. Also duty of disclosure to other members.

A partner who leaves before term is liable for damages. Partnership will dissolve or buy him out.

This structure is obsolete now that LLPs exist.

Question 3

Limited Partnership

Answer 3

General and limited partners. Name has LP.

Certificate must be filed in order to start it. Then there is an internal oral/implied/written partnership agreement.

Profits split by contribution.

Limited partners have limited liability (lose investment) and no management rights. All partners must vote on major decisions about the partnership. Those with management rights have fiduciary duties.

Question 4

Limited Liability Partnership

Answer 4

All partners have limited liability. Better form of regular partnership.
Must file. Name has LLP.

Question 5

LLC

Answer 5

Members have limited liability. Not liable for obligations or partnership but can lose investment. Must file. Name has LLC. Operating agreement gives alternative rules to default rules.

Usually member-managed. All members have management rights. Majority vote for business decision, unanimous for out of ordinary decisions. Unless it is manager managed.

Only managers have fiduciary duties.
BJR- no liability for business decisions unless grossly negligent.
Wrongful disassociation may be liable for damages.

No double taxation- entity pays no tax.