Essay Info

Question 1

When is an agency relationship created?

Answer 1

The principal manifests an intent that the agent act on his behalf and both parties consent to the agreement.

Question 2

What is actual authority?

Answer 2

Authority that the agent reasonably thinks he possesses based on the principal’s dealings with him.

Question 3

What is apparent authority?

Answer 3

Arises when the principal holds out the agent as having certain authority, causing third parties to reasonably believe that the agent has such authority.

Question 4

When is a partnership formed?

Answer 4

When two or more people associate to carry on as co-owners of a business for profit.

Question 5

Is a person who receives a share of the profits presumed to be a partner?

Answer 5

Yes

Question 6

Is a partner an agent of the partnership?

Answer 6

Yes and can bind the partnership to a contract.

Question 7

When can a partnership be bound by a contract entered into by a partner?

Answer 7

If that partner had actual or apparent authority.

Question 8

When will an act of a partner not bind the partnership?

Answer 8

The partner had no authority to act and the third party knew that the partner lacked authority.

Question 9

What votes are required for both transactions of actual authority regarding ordinary matters of business and matters outside the business?

Answer 9

Inside = majority
Outside = unanimous

Question 10

Are individual partners liable for contracts entered on behalf of the partnership?

Answer 10

Yes; all partners are jointly and severally liable for all obligations on the partnership

Question 11

What must D do to recover from individual partners?

Answer 11

Secure a judgment against both the partnership and the partners, and go after the partnership’s assets first.

Question 12

What is the primary issue in determining whether someone is an independent contractor or an employee?

Answer 12

Whether the principal has the right to control the individual’s method or manner of work.

Question 13

A principal is liable to a contract to a third party entered in behalf of its agent when:

Answer 13

The agents has the authority to enter the contract or the principal ratifies that contract.

Question 14

Is a principal ordinarily held liable for the torts of its independent contractors?

Answer 14

No

Question 15

What is estoppel?

Answer 15

The principal creates the appearance of an employer-employee relationship and a third party relies on that relationship.

Question 16

What is dissociation?

Answer 16

A change in the relationship of the partners caused by any partner ceasing to be associated with carrying on the business.

Question 17

What is dissolution?

Answer 17

A partnership is dissolved and its business must be wound up when a partner in a partnership notifies his intent to withdraw.

Question 18

Can an act by a partner bind the partnership after dissolution?

Answer 18

Yes if the act is appropriate for winding up the partnership’s business.

Question 19

May a partner who pays the entire amount of a partnership debt collect contribution from another partner?

Answer 19

Yes; each partner is jointly and severally liable for the obligations of the partnership.

Question 20

In the absence of an agreement otherwise, how are profits and losses split?

Answer 20

Profits = equally 
Losses = same ratio as profits

Question 21

What is a limited partnership?

Answer 21

A partnership of at least one general partner and one limited partner.

Question 22

What must be done with a certificate of limited partnership?

Answer 22

It must be filed with the secretary of state and signed by all the partners.

Question 23

3 duties a partner owes to the partnership:

Answer 23

1. A fiduciary duty of loyalty
2. Must account for profits, property, opportunities and other benefits derived from the partner
3. Refrain from competing with the partnership.

Question 24

How can the partnership continue after dissolution?

Answer 24

The dissociating partners unanimously agree to continue the partnership.

Question 25

When will a third party have notice of dissolution?

Answer 25

90 days after a partner files a statement of dissolution to the secretary of state or has express notice.