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Agency > Final > Flashcards

Final Flashcards

1
Q

Agency Rule

A

The fiduciary relationship where the P manifests CONSENT that the A shall act on the P’s BEHALF, subject to the P’s CONTROL, and the A manifests assent or otherwise consents so to act.

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2
Q

On Behalf Of Element

A
  • Acting PRIMARILY for P’s benefit
  • Does not require success in accomplishing the task
  • Not simply offering help or making a suggestion
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3
Q

Control Element

A

Can be physical control or simply control over the goals of the relationship (dissent in US v Bonds)

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4
Q

Agency v. Buyer-Seller

A 
Hunter Mining Lab v. MAI
Key = level of control
-title passage
-price v. proceeds
-when P gets paid (on delivery or sale to consumer)
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5
Q

Agency v. Creditor-Debtor

A

Gay Jenson Farms v. Cargill

Look at totality of the circumstances - did creditor do way more than a normal creditor does?

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6
Q

Agency v. Trustee

A
  • Trustee is not subject to control of beneficiary
  • Trust may be created w/o consent of beneficiary/trustee
  • Trust cannot usually be terminated at will
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7
Q

Agency v. Escrow

A

ESCROW REQUIRES THREE PARTY AGREEMENT

But an A acting on behalf of one person may be held liable to a 3rd party for failure to perform a K intended to benefit that 3rd person

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8
Q

Dual Agency Rule

A

A cannot act adversely to P w/o P’s consent

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9
Q

Thayer v. Pacific Railway

A

Employee of ∆ can become TEMPORARILY and INSTANTANEOUSLY the A of π for the limited purpose of a task

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10
Q

Ambiguous P - ON BEHALF OF TEST

A

Kilbourn v. Henderson

Consultant is acting on behalf of party with whom her interests were aligned at the time of the act in question

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11
Q

Ambiguous P - CONTROL APPROACH

A

Norby v. Bankers Life

P is whichever entity dictates the terms of the relationship

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12
Q

Ambiguous P - GENERAL EMPLOYMENT APPROACH

A
  • Continuity of employment
  • Length of time
  • Number of transactions
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13
Q

Ambiguous P - EQUITY APPROACH

A

Between two innocents, put burden on the party who put the A in the position to do the harm

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14
Q

Duties P owes to A

A
  • Indemnification
  • Compensation
  • Care
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15
Q

Duty to Indemnify (P to A)

A

Admiral Oriental Line v. U.S.

Venture is P, profits will be his, so should be the expenses

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16
Q

Duty to Compensate (P to A)

A

Objective test: is there a reasonable expectation of P to pay and of A to be paid?

If yes, quantum meruit

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17
Q

Duty of Care (P to A)

A

Provide safe working conditions for A to complete his duties without undue harm

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18
Q

Duties A owes to P

A
  • good conduct & to obey
  • indemnify for loss caused by misconduct
  • account
  • care
  • disclosure
  • loyalty
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19
Q

Duty of Good Conduct and to Obey (A to P)

A
  • Don’t purposefully bring P into disrepute

- Obey reasonable instructions to perform goal

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20
Q

Duty to Indemnify for Loss Caused by Misconduct (A to P)

A

Where A negligently damages property, exceeds auth’y, negligently or fraudulently causes P to be liable to 3rd person, or violates duty of loyalty

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21
Q

Duty to Account (A to P)

A

If A is somehow in charge of funds or property, A has a duty to keep track and show P

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22
Q

Duty of Care (A to P)

A
  • Duty to conduct the affairs of P w/ a certain level of diligence, skill, and competence
  • If you claim to have a higher level of skill/expertise, you will be held to that heightened level
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23
Q

Duty to Disclose (A to P)

A

Provide full, frank, fair disclosure of all material info
–reasonable person would attach importance to its existence or non-existence in making his decision in the transaction in question

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24
Q

Duty of Loyalty (A to P)

A
  • Scope varies w/ position and nature of violation*
  • Profit
  • Confidential info
  • Competition
  • Self-dealing
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25
Q

Post-Termination Competition

A

A is allowed to compete fairly, but can’t use or disclose trade secrets to compete w/ or injure P

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26
Q

Covenants Not to Compete

A
  • geographical extent
  • duration
  • nature of duties (training, skill)
  • nature of employer interest sough to be protected (trade secrets, goodwill)
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27
Q

Servant v. Independent Contractor

A
  • Extent of control over details**
  • Distinct occupation or business
  • Kind of occupation (usually supervised or independent)
  • Skill required
  • Who supplies tools or instrumentalities?
  • Length of time
  • Method of payment
  • Part of employer’s regular business
  • Parties’ intent to create relationship
  • Whether P is or is not in businss
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28
Q

Exceptions to Independent Contractor Defense

A

1) Inherently dangerous activity – work which, in its nature, will create some peculiar risk of injury to others unless special precautions are taken
2) Negligent failure to select a competent contractor
3) Non-delegable duty

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29
Q

Borrowed Servant - ON BEHALF OF TEST

A

General employer remains liable as long as the employee is furthering his business unless control has been completely surrendered

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30
Q

Borrowed Servant - GENERAL CONTROL TEST

A
  • General employer can substitute another servant
  • Length of new employment is short
  • Servant has specialized skill
  • GE rents out machine and servant to operate it
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31
Q

Borrowed Servant - ON THE SPOT CONTROL TEST

A

Employer w/ control over the specific act giving rise to the cause of action was P

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32
Q

Frolic v. Detour

A
  • General kind of conduct he’s employed to perform
  • W/in auth’d time and space limits
  • Motivated at least in part by the purpose of serving employer’s interest
  • If intentional force is used by A, that use of force is not unexpected by P
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33
Q

“Since You’re Going Anyway” Cases

A

Trip is not w/in the scope of employment if the employee would have continued the trip even if the business purpose was cancelled

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34
Q

Re-Entry After Frolic

A
  • Fiocco = when the dominant purpose is the performance of the master’s business
  • R(2)§237 = servant does not re-enter until reasonably near auth’d time and space limits AND is acting w/ the intention of serving master’s business
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35
Q

Intentional Torts - Motive Test

A

Employer can be held liable if the intentional tort is during the course of employment AND in furtherance of a purpose to serve the employer

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36
Q

Intentional Torts - Foreseeability Test

A

Employer can be held liable if RISK is foreseeable and characteristic of this employment

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37
Q

Intentional Tort - Implied K Theory

A

Employer can be held liable under an implied K between himself and passenger for her safe passage based on her inability to leave in a common carrier situation

38
Q

A’s Express Actual Auth’y

A

P’s written/spoken words or other conduct which causes A to reasonably believe P desires him to act on his behalf

39
Q

A’s Implied/Incidental Auth’y

A

The auth’y to conduct a transaction includes the auth’y to do acts which: (1) are incidental to it; (2) usually accompany it; or (3) are reasonably necessary to accomplish it

40
Q

A’s Apparent Auth’y

A

1) P’s manifestations to 3rd person
2) 3P’s subjective belief P had auth’d A
3) Belief was reasonable and objectively supported by the facts

41
Q

A’s Apparent Auth’y by Position

A

Mere position/title is P’s manifestation that A has the power to do things customarily associated with the position

42
Q

Sauber v. Northland

A

Inviting the public to do business over the phone and allowing an employee to answer it gives rise to the rebuttable presumption that she had auth’y to bind

43
Q

Auth’y by Estoppel

A

∆ is estopped from avoiding responsibility under the K if:

  • 3P changed his position to his detriment b/c of a reasonable belief
  • ∆ intentionally or carelessly caused such belief or knew of it and did not take any reasonable steps to notify
44
Q

Undisclosed P’s Rights

A

Same rights on K as if he were disclosed UNLESS:

(1) 3P would have objected and refused to deal w/ this particular P and P knew this
(2) 3P has a substantial interest in receiving the performance of A

45
Q

Senor v. Bangor Mills

A

Where a special agent requires authorization for each transaction and no general positional power exists on which to base an inherent agency claim

46
Q

Form of Signature

A

To avoid becoming personally liable, signature must put 3P on notice of existence and identity of P, including whether P is a corporate entity

47
Q

A’s Liability to 3rd Parties

A
  • When 3P knows or has reason to know of the agency relationship at the time of the transaction, A is not liable
  • When P is undisclosed or partially disclosed, A is personally liable
48
Q

A’s Warranty of Auth’y

A
  • Where A purports to make a K for a P, A is personally liable on the K, even if he acts in good faith belief that he was auth’d
  • Does not apply where 3P has actual knowledge of A’s lack of auth’y
49
Q

Ratification Rule

A

If X assumes to act for Y w/o precedent auth’y and Y subsequently affirms X’s act, it is a ratification which relates back and supplies original auth’y for the act

50
Q

Implied Ratification

A

When P, w/ full knowledge of, or deliberate indifference to, material facts:

  • retains a benefit
  • remains silent and acquiesces where one would expect a reasonable person to speak if he did not consent
  • fails to repudiate/disavow
51
Q

No Partial Ratification Rule

A

Ratification is not effective unless it encompasses the entirety of the act, K, or other single transaction

52
Q

Ratification - Changed Circumstances Rule

A

Ratification is not effective when the situation has so materially changed that it would be inequitable to bind the other party

53
Q

Ratification - Formalities Requirement

A

Where formalities are required for the authorization of an act, its affirmance must be by the same formalities in order to constitute a ratification

54
Q

Imputed Knowledge

A

If A has actual knowledge or reason to know something at the time of a transaction, that knowledge is imputed to P, UNLESS A was secretly acting adversely to P and entirely for his own or another’s interest

55
Q

Termination of Agency Auth’y

A

Either party has the power to terminate at any time by manifesting, in any manner, dissent to the relationship’s continuance

56
Q

Lingering Auth’y

A

Must give notice to protect those who relied on A’s auth’y in the past or may rely on an appearance of continuing auth’y

57
Q

P’ship Basics

A
  • Equal management rights
  • Personal liability
  • Pass through taxation
  • Free exit
  • Each p’r is a general agent of the p’ship
58
Q

P’ship Rule

A

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

59
Q

Profit Sharing

A

UPA - prima facie evidence of p’ship

RUPA - rebuttable presumption of p’ship

60
Q

Aggregate Theory

A

UPA

  • P’ship is just the sum of individual p’rs
  • P’ship existence depends on the presence and identity of each p’r
61
Q

Entity Theory

A

RUPA

-P’ship is its own stand-alone being

62
Q

Contribution of Property to P’ship

A

UPA - prop brought into p’ship stock is p’ship prop

RUPA

  • prop acquired by p’ship is presumed to belong to p’ship
  • prop acquired by p’r in p’ship capacity is presumed to be p’ship prop
63
Q

P’rs Interest in Specific P’ship Prop

A
  • ONLY use or possess for p’ship purposes

- CANNOT be individually assigned

64
Q

P’rs Actual Auth’y

A

UPA

  • equal rights to mgt and conduct of the business
  • ordinary matters must be decided by a majority of p’rs
65
Q

P’rs Apparent Auth’y

A
  • P’ship is bound through apparent auth’y for acts in the usual business of the p’ship
  • Look to other p’ships in the locale or this p’ship in other transactions
66
Q

LLPs

A
  • CA - only available where all p’rs are licensed pros (atty, acct, architect)
  • Full shield = no vicarious liability for K or tort liabilities of p’ship
  • Partial shield = protected from VL for torts only
67
Q

P’ship by Estoppel

A

Elements:

  • Holding out
  • Consent
  • Reasonable reliance
68
Q

P’Ship Tort Liability

A
  • P’ship is liable for wrongs of p’r acting in the ordinary course of business
  • P’ship is liable for fraud w/in the scope of apparent auth’y
69
Q

Duty of Loyalty (P’ship)

A
  • Deny all self-interest; put p’ship first
  • Render on demand full and true info
  • Cannot give away confidential info gained by virtue of position of trust
70
Q

Duty of Care (P’ship)

A

Only way a p’r can be liable in DoC is if there is an actual physical injury to person or prop (not just regular business negligence)

71
Q

K’ing Out of P’ship Duties

A

Cannot contractually eliminated a duty, but may carve out certain activities if not manifestly unreasonable

72
Q

Charging Order

A

Permits a creditor to enforce a judgment against a p’rs interest in the p’ship

73
Q

Dissolution Rule

A

Change in relation of p’rs caused by any p’r ceasing to be associated in the carrying on of the business

74
Q

Winding Up

A

When rightful dissolution occurs, each p’r may have p’ship wound up and receive the surplus in cash (unless otherwise agreed)

75
Q

Distribution in Kind

A

ONLY allowed when:

  • no creditors
  • p’rs all agree
  • sale would be futile b/c there are no other buyers
  • fair to all parties
76
Q

Rightful Causes of Dissolution

A
  • End of term
  • Express will of any p’r (if no definite term)
  • Express will of all p’rs
  • Expulsion
77
Q

Wrongful Cause of Dissolution

A

Express will of any p’r at any time in any other way

78
Q

Termination of P’ship Auth’y

A

Dissolution terminates all auth’y to act for the p’ship except as necessary to wind up p’ship affairs, to complete transactions begun but not then finished

79
Q

Hunter v. Straube

A
  • UPA right to dissolution can be K’d around
  • Can’t divest one p’r of his right to continue the business or escape from liability assumed under the p’ship K simply by calling your withdrawal a dissolution
80
Q

Liability of Incoming P’r

A

General rule: new p’r is not personally liable for pre-existing debt

81
Q

Liability of Withdrawing P’r

A

P’s obligations are not terminated until after winding up (until outstanding Ks are either performed or other K’ing party gives consent that withdrawing p’r need to perform)

82
Q

Faulty Limited P’ship Filings

A
  • Noncompliance w/ filing requirements results in a general p’ship
  • -ULPA = person who erroneously believes he is in an LP can preserve protection by promptly renouncing interest upon discovering mistake
  • -RULPA = removed prompt, now before 3P reliance on person being a GP is formed
83
Q

LP Control Issue (RULPA ‘76)

A

LP will not become liable as GP unless he takes part in control of the business. If LP’s participation is not substantially the same as that of a GP, he is liable only to persons who transact business w/ the LP w/ actual knowledge of his participation in control

84
Q

LP Control Issue (RULPA ‘85)

A
  • Mere participation is not enough, need 3P reliance

- Safe harbors

85
Q

LP Control Issue (Re-RULPA)

A
  • FULL SHIELD for limited p’r

- Cannot be transformed into GP no matter how much control he exerts

86
Q

Duties of Limited P’rs

A

GP owes heightened fiduciary duties b/c once LP joins, he no longer has an effective voice in the decision-making process

87
Q

LP - Removing GP

A

RULPA = to prevent dissolution, ALL p’rs need to agree in writing to a successor w/in 90 days

Re-RULPA = only req’s a majority, not unanimity

88
Q

Demand Futility

A
  • When you’re dealing w/ a “bad” GP
  • Majority has material financial or familial interest
  • Reason to believe GP in not truly independent
  • Underlying transaction is so egregious it can’t possibly be a valid exercise of business judgment
89
Q

LP - K’ing out of Fiduciary Duties

A

GP can’t K out of the fiduciary character of the relationship altogether, but can K out of specific duties as long as your intent to do so is plain in the LP agreement

90
Q

LLC Formation

A
  • Have to file articles of organization w/ secretary of state
  • Need operating agreement (heart of LLC)
91
Q

Member-Managed LLC Fiduciary Duties

A

Member owes care, loyalty, and good faith and fair dealing to company and other members

92
Q

Manager-Managed LLC Fiduciary Duties

A

Managers owe care, loyalty, and good faith and fair dealing to company and other members

Members owe good faith and fair dealing only

Agency (1 decks)

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