Essay Info Flashcards
When is an agency relationship created?
The principal manifests an intent that the agent act on his behalf and both parties consent to the agreement.
What is actual authority?
Authority that the agent reasonably thinks he possesses based on the principal’s dealings with him.
What is apparent authority?
Arises when the principal holds out the agent as having certain authority, causing third parties to reasonably believe that the agent has such authority.
When is a partnership formed?
When two or more people associate to carry on as co-owners of a business for profit.
Is a person who receives a share of the profits presumed to be a partner?
Yes
Is a partner an agent of the partnership?
Yes and can bind the partnership to a contract.
When can a partnership be bound by a contract entered into by a partner?
If that partner had actual or apparent authority.
When will an act of a partner not bind the partnership?
The partner had no authority to act and the third party knew that the partner lacked authority.
What votes are required for both transactions of actual authority regarding ordinary matters of business and matters outside the business?
Inside = majority Outside = unanimous
Are individual partners liable for contracts entered on behalf of the partnership?
Yes; all partners are jointly and severally liable for all obligations on the partnership
What must D do to recover from individual partners?
Secure a judgment against both the partnership and the partners, and go after the partnership’s assets first.
What is the primary issue in determining whether someone is an independent contractor or an employee?
Whether the principal has the right to control the individual’s method or manner of work.
A principal is liable to a contract to a third party entered in behalf of its agent when:
The agents has the authority to enter the contract or the principal ratifies that contract.
Is a principal ordinarily held liable for the torts of its independent contractors?
No
What is estoppel?
The principal creates the appearance of an employer-employee relationship and a third party relies on that relationship.
What is dissociation?
A change in the relationship of the partners caused by any partner ceasing to be associated with carrying on the business.
What is dissolution?
A partnership is dissolved and its business must be wound up when a partner in a partnership notifies his intent to withdraw.
Can an act by a partner bind the partnership after dissolution?
Yes if the act is appropriate for winding up the partnership’s business.
May a partner who pays the entire amount of a partnership debt collect contribution from another partner?
Yes; each partner is jointly and severally liable for the obligations of the partnership.
In the absence of an agreement otherwise, how are profits and losses split?
Profits = equally Losses = same ratio as profits
What is a limited partnership?
A partnership of at least one general partner and one limited partner.
What must be done with a certificate of limited partnership?
It must be filed with the secretary of state and signed by all the partners.
3 duties a partner owes to the partnership:
- A fiduciary duty of loyalty
- Must account for profits, property, opportunities and other benefits derived from the partner
- Refrain from competing with the partnership.
How can the partnership continue after dissolution?
The dissociating partners unanimously agree to continue the partnership.
When will a third party have notice of dissolution?
90 days after a partner files a statement of dissolution to the secretary of state or has express notice.
