GOTTA KNOW Flashcards
AGENCY. Actual Authority - “”
Actual authority can be express, where the agent is expressly given authority to act for the principal. It can also be implied, which is present when the principal’s conduct leads the agent to believe it has authority. This authority can be implied by custom, past course of conduct by the principal, necessity, or an emergency circumstance. This authority terminates after a reasonable time or following a change in circumstances, death, or incapacity of the principal
AGENCY. Apparent Authority - “”
The elements of apparent authority are: (a) the person dealing with the agent must do so with a reasonable belief in the agent’s authority, and (b) the belief must be generated by some act or neglect on the part of the principal
AGENCY. Vicarious Liability for torts.
An agent is always liable for ____.
A principal can be vicariously liable if the agent / employee was ____ and (1) ____ OR (2) ____ (a), (b), (c).
• An agent is always liable for her own torts. A principal can be vicariously liable if the agent or employee was acting in the scope of employment, made a minor deviation from employment, or committed an intentional tort (a) for the principal’s benefit, or (b) because the principal authorized it, or (c) the intentional tort arose naturally due to the nature of the employment
AGENCY. Liability of a principal for contracts entered into by an agent.
• Agent is bound to a third party on a contract she enters into with the third party if the agent had no actual or apparent authority to enter into the contract. Also liable if the principal is undisclosed (i.e., the third party does not know the agent is acting on another’s behalf) or if the principal is “partially disclosed” (i.e., the third party knows the agent is acting on behalf of another but does not know the identity of the principal).
PARTNERSHIP. Formation of a partnership.
- “A partnership is . . .”
- ____ creates a presumption that a person is a partner unless . . .
- Writing Requirement?
A partnership is the association of two or more persons to carry on as co-owners, a business for profit, whether or not the persons intended to form the partnership.” Profit sharing creates a presumption that a person is a partner unless the profits were received in payment of a debt, rent to a landlord, wages, etc. Other indicia of a partnership include capital contributions and mutual agency. No writing or certificate needs to be filed for a general partnership to be formed. Note that a general partnership is the default form, sometimes a general partnership is formed because a limited partnership was improperly formed (paperwork was not filed correctly).
PARTNERSHIP. Fiduciary duties of loyalty.
Duty of Loyalty - A partner must discharge her duties in good faith and with the reasonable belief that her actions are in the best interest of the partnership. Duty owed to other partners and to the partnership.
PARTNERSHIP. Fiduciary duty of care.
Duty of Care - A partner must use the care that a prudent person in like position would reasonably believe appropriate under the circumstances. Duty owed to other partners and to the partnership.
PARTNERSHIP. Statutory duty of partners.
Partnership shall furnish to a partner (1) without demand any information concerning the partnership’s business and affairs reasonably required for the partner’s proper exercise of rights and duties, and (2) on demand any other information concerning the partnership’s business and affairs.
PARTNERSHIP. Dissolution.
• Dissolution is not the end of the partnership but occurs when a partner withdraws in an at-will partnership; then the partners wind up the partnership and pay creditors. Then the partnership terminates
PARTNERSHIP. What if a partner commits a tort before an LLP is filed and then files an LLP?
Partner is still liable for any actions that took place before the conversion to LLP
PARTNERSHIP. Collection by a creditor of a partner or of a partnership.
• In general, although the partners are liable for debts of the partnership, creditors must attempt to collect from the partnership first before seeking the personal assets of the partners. If a creditor has a claim against a partner, the creditor can obtain an interest in the partnership. This includes profits, but not management or voting rights. If a creditor has a claim against the partnership, the creditor can try to collect from the individual partners
CORPORATIONS. What do directors do?
- Role
- Mttgs?
- Voting?
- BJR?
• Manage the corporation. Meet regularly. Must vote responsibly (cannot vote by proxy or voting agreement). BJR applies. Presumed to act reasonably
CORPORATIONS. What do shareholders do?
• Own the corporation. Don’t meet that often but are entitled to annual meetings. Need special notice for meetings. Can vote by proxy or agreement
CORPORATIONS. Incorporation of a corporation and of an LLC.
• A corporation must be incorporated (articles must be filed with the state) in order for a valid corporation to be formed. For an LLC to be formed, articles of organization must be filed with the state
CORPORATIONS. Business Judgment Rule.
- There is a presumption that . . .
- They are entitled to rely on . . .
• There is a presumption that “in making a business decision, the directors acted on an informed basis, in good faith, and with the honest belief that the action taken was in the best interest of the company.” Directors must be informed to an extent that they reasonably believe is appropriate. They are entitled to rely on information, opinions, reports, or statements of corporate officers, legal counsel, public accountants, etc., in making a decision
CORPORATIONS. Lawsuits by shareholders against the corporation.
- A shareholder may . . .
- A direct suit is appropriate when . . .
- A derivative suit is appropriate when . . .
- A shareholder may file an action to establish that the acts of the directors are illegal, fraudulent, or willfully unfair and oppressive to either the corporation or the shareholder. Whether a suit is appropriately brought as a direct or derivative action depends on the injury
- A direct suit is appropriate when the wrong done amounts to a breach of duty owed to the individual personally. E.g., shareholder is denied preemptive rights, denied payment of a dividend, or is bringing a suit for oppression in a close corporation
- A derivative suit is appropriate when the injury is caused to the corporation, and a shareholder is trying to enforce the corporation’s rights. Also applies to LLCs. Requires SAD: (1) shareholder must have Standing to bring a lawsuit (owns stock in the corporation); (2) Adequacy (shareholder represents the interests of the corp), and (3) Demand (shareholder should file a written demand and wait 90 days before filing a suit unless irreparable injury would result or a demand would be futile). E.g., if the board is making a decision that hurts the corporation
CORPORATIONS. When can a court pierce the corporate veil?
- He must show that ___ and ____ requires holding them liable.
- E.g., ___ or ___ or ____.
• If a plaintiff wants to sue a shareholder in a close corporation or in an LLC, he can seek to “pierce the corporate veil.” He must show that parties abused the privilege of incorporating and fairness requires holding them liable. E.g., if plaintiff can show undercapitalization of the business, or failing to follow formalities, or commingling of assets
CORPORATIONS.
- Formation of an LLC.
- Duties of members in an LLC
- Members of an LLC in a member-managed LLC are treated as ____ of the LLC with actual and apparent authority to bind the LLC in ___ but not ___ affairs.
Articles of organization must be filed to create an LLC. Members of an LLC have fiduciary duties. Members of an LLC in a member-managed LLC are treated as agents of the LLC (with actual and apparent authority to bind the LLC in ordinary—but not extraordinary—affairs)
CONFLICTS. Civil Procedure Combo - Klaxon Doctrine
• A federal district court sitting in diversity must apply the choice of law approach prevailing in the state in which it sits. This makes sense because it provides no incentive for the parties to forum shop
CONFLICTS. Civil Procedure Combo - Transfer to a more appropriate forum.
• Federal court has authority to transfer a case to another federal district for the convenience of the parties and witnesses and in the interest of justice. The new forum must have subject matter jurisdiction and personal jurisdiction. The court will apply the law of the transferor forum
CONFLICTS. Family Law combo - Recognition of Marriage.
- A marriage which is valid under . . .
- Common Law marriage rule:
- A marriage which is valid under the law of the state in which it was contracted will be valid elsewhere unless it violates a strong public policy of the state that has the most significant relationship to the spouses and the marriage. I.e., incest, polygamy, but not blood test requirements, marriage license requirements, common law marriage.
- If the common law marriage is recognized by the state where the couple entered into the marriage, it will be recognized by all other states
CONFLICTS. Family Law Combo - Full Faith and Credit.
A state must recognize final judgments of other states so long as . . .
• A state must recognize final judgments of other states so long as the requirements of the Full Faith and Credit Clause are satisfied: the judgment is on the merits, the other state had jurisdiction, and the decision was final. i.e., a divorce decree
CONFLICTS. Wills Combo - Postportem distribution of personal and real property.
• The postportem distribution of personal property is governed by the law of the state in which the decedent was domiciled at the time of his death. The postportem distribution of real property is governed by the law of the situs (where the property is located).
FAMILY LAW. Common law marriage
If a couple is common law married in a state that recognizes it, ____.
Proponent must show CACH.
• If a couple is common law married in a state that recognizes it, other states will recognize the marriage too. Proponent must show CACH : Capacity to enter into a marital contract, a present agreement to be married, cohabitation, and holding out a marital relationship
FAMILY LAW . Custody Determinations
- Custody is determined by looking at . . .
- This is a ____ approach.
- Modifiable?
• Custody is determined by looking at the best interests of the child. This is a multifactor approach. Modifications allowed if there is a substantial change in circumstances
FAMILY LAW. Custody Determination - Home State Test.
• Under the UCCJEA, the home state test provides that the home state has exclusive jurisdiction to modify a decree. A home state is a state where the child has lived with a parent or guardian for at least six consecutive months immediately before the commencement of the child custody proceeding. A home state continues to have exclusive jurisdiction to issue a custody order for six months after a child leaves the state, so long as a parent or guardian still lives in the state
FAMILY LAW. Custody Determinations - Significant Connections Test.
• Applies if a child has no home state. Under this test, a state may exercise jurisdiction based on (1) significant connections with the child and at least one parent, and (2) the existence of substantial evidence relating to child custody in the forum jurisdiction
FAMILY LAW. Child Support -
• Court will look at factors like income and earnings of the parents, number of children, ages, and special needs of the children. Modifications allowed if there is a substantial change in circumstances
FAMILY LAW. Retroactive Modifications of Child support
• Forbidden under federal law (absent fraud)
FAMILY LAW. Rights of the biological father.
• Biological fathers generally have parenting rights; however, the state may make the parent exercise his rights within a specific time (two years).
FAMILY LAW. Marital vs. Separate Property.
- Marital property is . . .
- Separate property is . . . (BIG).
- Professional degrees?
Marital property is property acquired during the marriage and is subject to division. Separate property includes BIG (property acquired BEFORE the marriage, an INHERITANCE, or a GIFT to one party). Most states do not count professional degrees earned during the marriage as marital property. Separate property is generally not subject to division
FAMILY LAW. Premarital Agreement.
- A court will enforce a premarital agreement so long as 1) 2) 3)
- A court will not enforce a premarital agreement regarding __ or __ if it is not ___.
• A court will enforce a premarital agreement so long as voluntarily made, substantively fair, and if full disclosure of assets and obligations was made. A court will not enforce a premarital agreement regarding child custody or support if it is not in the best interests of the child
FAMILY LAW. Alimony.
- Can be __, __, or ___.
- Almost all states require the trial court to consider __, __, __. Some states look at __ and ___.
- Finality? Modifiable?
• Can be permanent, temporary, or granted in a lump sum. Almost all states require the trial court to consider the parties’ financial resources and needs, marital contributions, and marital duration. Some states also look at spousal misconduct, one spouse’s support for the other’s education or training. Trial court has substantial discretion in choosing to award alimony. Awards are not final and can be modified if there is a substantial change in circumstances
SECURED TRANSACTIONS. UCC Article 9 applies to ___.
• Applies to all security interests in personal property or fixtures by contract
SECURED TRANSACTIONS. Kinds of goods.
- Tangibles - Consumer goods are bought primarily for personal, family, or household purposes. Inventory is anything being held for sale or lease, raw materials for that inventory, work in process, or materials used or consumed in a business. Farm products have never been tested. Equipment is anything that is not consumer goods, inventory, or farm products.
- Intangibles – accounts and chattel paper usually
SECURED TRANSACTIONS. Requirements of Attachment.
- If attachment does not occur, the secured party will not have an enforceable security interest.
- Requires: (1) value must be given by the secured party to the debtor (a loan), (2) debtor must have rights in the collateral; and (3) there must be a binding security agreement which reqs AID – authentication, intent to create a security agreement, and a description of the collateral. Discuss attachment always
SECURED TRANSACTIONS. Perfection.
• Perfection can occur by filing a financing statement. It can be automatic in some cases (e.g., a PMSI in consumer goods). Or, an interest can be perfected by possession or control
SECURED TRANSACTIONS. Priority.
• When multiple secured parties have a security interest in the same collateral, the first to file or perfect has priority. If no party perfects, then the first to attach has priority. Know that a perfected security interest beats an unperfected one—even if one has an unperfected PMSI
SECURED TRANSACTIONS. Buyer in the Ordinary Course of Business.
• Takes free from a security interest even if it was perfected so long as BFP and bought in the ordinary course of business.
TRUSTS. Validity.
- A trust of personal property is valid if . . .
- A trust will not fail for . . .
- A trust’s beneficiaries must be both __ and __.
- Sole trustee/beneficiary?
- The __ must be identifiable.
• “A trust of personal property is valid if it has a trustee, a beneficiary, and trust property.” A trust will not fail for lack of a specially-named trustee. The court can appoint one. A trust’s beneficiaries must be definite and ascertainable. Same person cannot be both the sole trustee and the sole beneficiary. The trust property, or trust res, must be identifiable
TRUSTS. Revocability.
- Before settlor dies
- After settlor dies
• If a trust is revocable, a settlor may terminate the trust if all beneficiaries are in existence and all agree. After the settlor dies, an irrevocable trust can be terminated through unanimous consent of both the income beneficiaries and the remaindermen. Additionally, there must be no material purpose of the trust yet to be performed
TRUSTS. Pour-Over Will.
- A will that ___.
- Valid so long as the trust is (1) __, and (2) the terms are ___.
- Validity of later amendments to the trust under the modern approach and the common law approach.
• A will makes a gift to a trust. Valid so long as the trust is identified in the will and the terms are incorporated in a writing executed before or concurrently with the execution of the will. Under the modern approach, later-made amendments to the trust are valid. Under the common law, amendments made after the execution of the will are not valid
TRUSTS. Discretionary Trust.
• In a discretionary trust, the trustee has discretion to decide when to make a distribution to a beneficiary. The beneficiary cannot demand any disbursements. Neither can a creditor, except for child support or alimony in some states
TRUSTS. Discretionary Trust (Support Trust).
• Trustee must pay what is necessary for the beneficiary’s support
TRUSTS. Discretionary Trust (Spendthrift Trust).
1. The only creditors that can reach a beneficiary’s distribution before it reaches the beneficiary are . . .
Restrains both the voluntary and involuntary transfer of a beneficiary’s interest. The only creditors that can reach a beneficiary’s distribution before it reaches the beneficiary are child/spousal support creditors, a judgment creditor who has provided services for the protection of a beneficiary’s interest in the trust, the state or the United States, or a creditor with a claim for necessaries
TRUSTS. Charitable Trusts.
• May be created for a charitable purpose. It must have a large number of not-readily-identifiable individuals (rather than a few). The trust may be terminated if the charitable purpose becomes unlawful, impracticable, or impossible. Cy pres may save the trust. If the purpose is no longer possible, no alternative charity is named in the trust and the court determines that the settlor had a general rather than specific charitable intent, then cy pres can be applied to modify or terminate the trust. This involves directing that the trust property can be distributed in a manner consistent with the settlor’s general charitable intent
TRUSTS. Duty of Care - Prudent Administration.
• Most states have adopted a form of the Uniform Prudent Investor Act, which states that a trustee must “administer the trust as a prudent person would . . . using reasonable care, skill, and caution.” This requires a duty to diversify. Note that the entire portfolio is examined to see whether a trustee breached her duty
WILLS. Valid will.
Will must be in writing, signed by the testator, and witnessed by two witnesses. Testator must be 18 or older and intend that the document is his will. Any mark that is made with intent to adopt the will counts as a signature
WILLS. Holographic Wills.
• Holographic wills are unwitnessed wills. Valid if signed and if the material portions of the will are in the testator’s handwriting. Recognized by about half the states. You’ll know it’s holographic will question if the will is unwitnessed
WILLS. Dispensing Power.
• The UPC adopts the “dispensing power” to allow a court to save an invalid will so long as there is clear and convincing evidence that the decedent intended the document to be her will
WILLS. Revocation of a will.
- By physical act: 1), 2), 3). Must be done with ___. Either the testator or someone acting at the testator’s direction and ______ may revoke.
- Under the dependent relative revocation doctrine,…
- If a testator revokes a will based on mistaken assumptions of law or fact, . . .
- Divorce?
• By physical act – execution of a new will or cancellation or other writings on the document. Must be done with intent to revoke. Either the testator or someone acting at the testator’s direction and in the testator’s conscious presence may revoke. Under the dependent relative revocation doctrine, a first will is not revoked if a later will is found invalid. If a testator revokes a will or bequest based on mistaken assumptions of law or fact, the revocation of the will is ineffective if it appears that the testator would not have revoked had he had accurate information. A final divorce revokes gifts in favor of a spouse
WILLS. Slayer Statute.
• An individual who feloniously and intentionally kills the decedent, or who is convicted of committing abuse, neglect, or exploitation with respect to the decedent, forfeits all benefits with respect to the decedent’s estate (including an intestate share, an elective share, an omitted spouse or child share). Voluntary manslaughter is a form of a “felonious and intentional” killing. If a beneficiary accidentally kills the decedent (even if it rises to involuntary manslaughter), the slayer rule does not bar a gift. Nor if the slayer murdered someone other than the decedent. Usually not barred when tested on the MEE
WILLS. Intestate Succession.
- Per capita at each generation approach
- Per capita with representation (modern per stirpes) approach
• A decedent who dies without a will or with an incomplete will. Per capita at each generation approach: Find the first generation where there are children living and give one share to each living child and one share for each in that generation who died but left surviving children of their own. Then combine all the shares of the decedent and divide them equally at the next generational level. Every individual at each generational level is treated alike.
Per capita with representation (modern per stirpes) approach: Instead of combining the shares of the deceased to distribute evenly, the children of the deceased take the exact share that their deceased parents would have. Thus, individuals at each generational level not treated alike
