Forms of Organizations & Agency Flashcards
Forms of Organizations & Agency
Considerations for Type of Organization
- Ease of Formation & Administrative Startup Costs
- Continuity of Existence
- Transferability
- Management
- Raising Capital
- Taxation
- Risk & Liability Exposure
Forms of Organizations & Agency
Veil Piercing: Factors
- Actual Control & Fairness
- Inadequate Capitalization
- Lack of Formal Separation
- Comingling of Personal and Business Assets
- Using Entity Funds for Personal Matters
- Lack of Business Records
- Nonfunctioning Officers
- Using the Business for Personal Matters
- Using the Business to Commit a Wrong (Abusing the Liability Shield)
Forms of Organizations & Agency
Agency Relationship: Formation
- Principal manifests desire to have Agent act on their behalf or act subject to their control
- Agent manifests consent
Forms of Organizations & Agency
Contracting Parties/Liability:
Disclosed Principal,
Partially Disclosed/Unidentified Principal, &
Undisclosed Principal
Forms of Organizations & Agency
Types of Agent Authority
- Actual
- Apparent
- Inherent
Forms of Organizations & Agency
Actual Authority
May be express or implied
- At the time of taking action
- The Agent reasonably believes
- Based on the Principal’s manifestations
- Made to the Agent
- That the Principal wishes the Agent to so act
Forms of Organizations & Agency
Apparent Authority
- A Third Party reasonably believes
- That the Agent has the authority to so act, and
- The Third Party’s belief is based on the Principal’s Manifestations
Forms of Organizations & Agency
Inherent Authority
- An Agency Relationshipexists
- Regardless of the Agent’s Actual Authority
- Third Parties were harmed, and
- Fairness requires holding the Principal liable
Forms of Organizations & Agency
Estoppel
A Principal may be liable when:
1. A Third Party is
a. justifiably induced
b. to make a detrimental change in position
c. because they believe it is on the Principal’s behalf
- The Principal
a. Made no manifestation of Agent Authority
b. Is not otherwise liable, however they
c. Intentionally or carelessly, caused or had notice of such belief
d. Knew that belief might change the Third Party’s position, and
e. did not take reasonable steps to notify the Third Party
Forms of Organizations & Agency
Ratification
- Regardless of whether the actor was an agent or had authority
- The Principal
a. manifests asset to be bound OR
b. manifests conduct that justifies a reasonable belief that the Principal consents to the act
Forms of Organizations & Agency
Respondeat Superior
(Vicarious Liability)
- The Actor is an Employee (Not an Independent Contractor)
- the Activity was within the scope of employment (Frolic v. Detour)
Forms of Organizations & Agency
Agents:
Fiduciary Duties
- Care, Competence, & Diligence
- Notify & Disclose
- Loyalty
- Accounting
Forms of Organizations & Agency
Agents:
Duty of Loyalty
- No use of Agency Relationship for personal profit
- No disclosure or use of Principal’s confidential information
- No competing
- No dealing with Principal’s adversaries
- No representing anyone with conflicting interest (unless Principal agrees)
Forms of Organizations & Agency
Principal:
Duties to Agents
- Compensation
- Reimbursement & Indemnification
- Cooperation
Forms of Organizations & Agency
Principal:
Duty of Cooperation
The Principal must
1. Deal with Agent fairly and in good faith and
2. Not hinder Agent’s performance
