Flash Cards for Bar Courses - Agency & Partnerships

Question 1

Agency

Answer 1

Is a fiduciary relatiionship that arises when 1 person, the principal, appoints another, the agent, to ac on the principal’s behalf and the ageny conssent to act.

Question 2

Equal dignities

Answer 2

when the agency agreement itself would fall under the SOF

Question 3

Agents duties to prinicpal

Answer 3

Agent is a fiduciary of the principal

• Duty of care
• Duty of Loyalty
• Duty of Obedience

Question 4

Principals duties to the agent

Answer 4

• No fiduciary duty
• Only owes duty as imposed by their K, reasonable compensation, and reimbursement for expenses.

Question 5

Actual Authority

Answer 5

is an authority that the agent reasonably believed they possess based on the principal’s dealings with the.
-Express: is thar which is actually contained within the 4 corners of the agency agreement. It is authority that is conveyed by the principal in words.

-implied: is authority the aget reasonably beleives they have as a result of the principal’s words or actions.

Question 6

termination of actual authority

Answer 6

• The happening of an event
• Lapse of a reasonable time
• A change is circumstances
• Agent’s breach of fiduciary duty
• Either party’s unilateral termination
• Operation of law

Question 7

Apparent Authority

Answer 7

Exists when the principal “holds out” anotehr as possessiong authority and absed on this holding out, a 3rd party is reasonably led to beloieve that authority ecists.

types of apparent authority:
- When agent exceeds actual authority
- Prior Act
- Power in position

Question 8

Ratification

Answer 8

When an agent purports to act on behalf of a principal without any authority at all, but the principal subsequently validates the act and becomes bound.

Methods of ratification:
-May be express or implied
- Oral or written
- When principal accepts the benefits of the contract

Question 9

Req. for Ratification

Answer 9

Pricipal must:

• have knowledge of all material facts regarding the K
• accept the entire transaction
• Have capacity

Question 10

Liabilites: 3rd parties v. agent

Answer 10

if agent had actual or apparent authority or if principal ratified, the agent is not personally liable. Agent can be liable if identity of agent is not disclosed. Principal is liable if the pricipal is disclosed and identified

Question 11

Principals Liability for Agent’s torts

Answer 11

Principal may be vicariously liable for th torts if their agent under 2 theories: (1) respondeat superior, and (2) apparent authority.

Question 12

Respondeat Superior

Answer 12

Principal can be laibel for the rots of an agent when committed with the scope of employment. Principal is geneerally not liable for torts committed by an independent contractor.

Employee v. Ind. Contractor:
- Employee - P’s right to control the manner which an employee performs their work.

Scope of Employement:
- was the conduct of the kind that the agent was hired to perform?
- did the tort occur on the job? -
- was the conduct actuated at least in part to benefit the principal?

Question 13

Frolic & Detour

Answer 13

Detour- a small deviation from the employer’s direction is within the scope of employement.
Frolic - is a major devation req. substantial departure from employment is beyond the scope.

Question 14

Liability for ind. contractor

Answer 14

where the ind contractor was engaged in (1) inherently dangerous activities, (2) nondelegaboe duties have been delgate, or (3) principal knowinlg selscted an incompetent ind. contractor

Question 15

Proof of Partnership

Answer 15

Courts look to the intent of the parties to see if they intended to carry on the business as co-owners.

Look for:
- Share of profits
- Right to particpate in control

Question 16

Partnership Agreement

Answer 16

No agreement is req. But a agreement usually governs the partnership

Question 17

Voting - Partnership

Answer 17

All partners have equal voting power unless otherwise agreed.

Ordinary course decisition - req. majority vote
Outside ordinary court - req. unanimous consent of all partners

Question 18

Sharing Profits and Losses - Partnership

Answer 18

Unless otherwise agreed, profits are shared equally & losses are shared in the same manner as profits unless provided otherwise.

Question 19

Liability to 3rd parties - partnership

Answer 19

Each partner is an agent of the partnership and has equal liabiltiy

Question 20

Liability of partnerss

Answer 20

Each partner is jointly and severably liable, but the partnership resources must first be exhausted before seeking to collect from an individual partner’s assets.

Question 21

Liability of new partners

Answer 21

a new partner is not liable for debts incurred by the partnership before their admission.

Question 22

Partner’s transfer of rights

Answer 22

Partner cannot transfer management rights. Partner can transfer financial rights.

Question 23

Wrongful Disassocation - Partnership

Answer 23

if the dissociation is in breach of an express term in the partnership agreement. The partner is liabl to the partnership for any damages caused by the dissociation

Question 24

Consequences of Disassociation - Partnership

Answer 24

2 avenues

1) partnership dissolved and business will be liquidated
2) partnership continues w/ the dissociated parter becoming entitled to a buyout of their interest

Question 25

Dissolution - partnership

Answer 25

winding up req. only in limited circumstances:

In general when a partner dissociates by express will in an at-will partnership, the partnership is dissolved and business is would up

OR

if a partner dissociates wrongfully, or if dissociation by death, dissolution are req. only of w/in 90 days after the dissociation, at least 1/2 of the remaining partners agree to wind up.

Question 26

Dissociationg partner’s right to buyout

Answer 26

Partnership must buy-out the dissociating partner and offset any damages agasint the buyout

Question 27

Post dissociatiion partnerliabiliity

Answer 27

Partern is liable for liabilities incurred within 2 years adter unless a filing of public notice is filed and it becomes effective after 90 days of filing.

Same w/ dissociating parnter’s power to bind partnership after leaving

Question 28

Priority of distribution of partnership assets after dissolution

Answer 28

1) Creditors
2) partners’ capital contributions
3) profits or losses, if any

Question 29

Limited Partnerships

Answer 29

Is a partnership w/ at least 1 general partner and at least 1 limited partner

Must file w/ SOS

Question 30

LP General Partners

Answer 30

LP is managed by general partners. Each has equal right in management. And are personally liable for any LP liabilities

Question 31

LP limited partners

Answer 31

Usually habe no management rights unless granted by the partnership agreement. Are NOT personally liable for an obliagtion of the LP.

Question 32

LP voting

Answer 32

Need all partners to vote for extrodinary activites such as:

1) amend the partnership agreement
2_ convert the partershop to a LLP
3) dispose of substantially all LP property
4) admite a new partner
5) compromise a partner’s obligation sto make a contribution or to return an improper distribution

Question 33

LP distribution of profits

Answer 33

Are made on the basis of the partners’ contributions

Question 34

LLPs

Answer 34

all partners have limited liability

-must file a statement of qualififcation with SOS

Question 35

LLP Liability

Answer 35

a partner in an LLP is not personally liable indirectly, or by way of contribution for obligations of the LLP

Question 36

LLCs

Answer 36

Taxed like a partnership offers its owners the limited liability of shareholders or a corp, and can be run either like a corp. or a partnership.

-Formed by filing cert. of formation w/ SOS

Question 37

LLC voting

Answer 37

Majority vote is req. for most ordinary business decisitons
Unanimous vote is req. for extrordinary business decistions

Question 38

LLC profit allocation

Answer 38

Are allocated on the basis of contributions