HYPO's Flashcards
Independent Contractor (IC): Tory Victus went to E-Stop-L Gas Station to have her brakes repaired. E- Stop-L Gas Station had an independent contractor arrangement with Brake Repairer. Brake Repairer tortiously repaired Tory’s brakes, resulting in an accident. Is E-Stop-L Gas Station Liable?
Say the rule first for points
As a rule there is no vicarious liability for that IC’s (they gave me that phrase in the fact pattern, but just make sure that I always give the rule first) tort
After rule always comes the exception:
Except for: Inherently dangerous activities and estoppel
3 most important words (for all bar questions) IN THIS CASE:
brake repair is inherently dangerous and therefore there will be vicarious liability
Want astro points
Alternatively, estoppel will hold out its brake repairer with the appearance of agency and will always be estopped from denying liability on that ground as well
Frolic v Detour: Employer instructs Employee to drive across town to deliver files to a branch office. On the way back, Employee stops to pick up shirts at the dry cleaner for work the next day. In the parking lot of the dry cleaner, Employee hits a pedestrian. Is Employer liable?
Liable for what (the tort) - This is a scope question (we already know that the first prong is satisfied because of the relationship)
“the principal is liable for its agents torts within the scope agency” - Start with the rule
IN THIS CASE, the agent was on a detour (a mere departure) from an assigned task because, the tort occurred on the way back to work and therefore was within the scope and there will be vicarious liability
Revocation of Express Authority to Enter a Contract: Paula collects rare books. She hires Alice to find a rare book to complete her collection. Alice searches everywhere for the rare book. As Alice is about to pay for the book, Paula dies. Is Paula’s estate bound by the contract and liable to pay for the book?
The principal is liable only on its authorized K’s (the rule, start this for points)
IN THIS CASE, actual express authority did terminate upon the death of Paul the Principal, and therefore the estate will not be liable on this unauthorized K, therefore Alice becomes liable perosnally on this K (unauthorized K, and therefore Alice personally liable)
Apparent Authority: Charles owns an antique store. A shipment of antique clocks arrives from London. Charles tells his employee Dufus not to sell a special grandfather clock. Charles goes to lunch. Dufus sells the clock. Is Charles bound on the sales contract?
Yes -
The principal is liable on its authorized K’s
IN THIS CASE,
There was no actual express or implied authority to sell the clock, because Charles said do not sell the clock
Nonetheless, there was apparent authority because Charles did cloak Dufus with the appearance of authority and the 3rd party buyer may rely on the appearance of authority
Therefore, Charles is liable based on apparent authority
Ratification of a Power to Contract: Priscilla gives Agnes a power of attorney only to purchase steel drums. Agnes enters a contract to purchase 11,000 wooden barrels. Priscilla tells Agnes, “Great job! I love wooden barrels, but I only need 10,000.” Is Priscilla bound?
Very best answer will be no -
1. The Rule: the principal is liable only on its authorized K’s
IN THIS CASE,
There was no express, or implied or even apparent authority to buy wooden barrels, only steel drums (written power narrow) and there was no cloaking here
Ratification: Nonetheless, arguably Priscilla ratified the K through knowledge (“great job” she has knowledge) + acceptance of benefits (“I love them barrels” she accepts) - This means she has ratified the deal
Astro Points
-But ratification here was not valid because Priscilla altered the K’s terms (I love them barrels, BUT - that is an effort to alter the K
There was no valid ratification here, no express, implied or apparent
0-4 so it is unauthorized
Duty of Agents to Principal’s: Priscilla authorizes Agnes to buy diamonds. Agnes spots choice diamonds and secretly buys them for herself for $1 million. Agnes then resells the diamonds for $2 million.
- What duties, if any, has Agnes breached?
- What remedies, if any, does Priscilla have against Agnes?
- The agent has breached the duty of loyalty by
a). Self dealing in that she did benefit herself to the Principal’s detriment, and
b). By usurping the Principal’s diamonds, and
c). By making a secret undisclosed profit on the resale of those diamonds as well - This is a so what question,
The principal may recover losses that are caused by the breach, and also the principal may disgorge profits (use this phrase) made by the breaching agent as well
General Partnership Liability by Estoppel: Paula convinced her friend Peter to start a sailing school and agreed to lend Peter money to purchase a boat for that purpose. At a party, Paula told a wealthy friend: “My partner Peter and I are starting a sailing school and we need a boat.” The wealthy friend offered to sell Paula and Peter a boat and agreed to allow Peter to take it for a test ride the next day. Later that night, however, Peter and Paula fight and decide to drop the sailing school idea. The next day, Peter takes the boat for a ride and tortiously destroys the boat. May the wealthy friend sue Paula for the loss of the boat?
3rd Party tort victim sue Paula (Partner?) for Peter’s (Co-Partner?) tortious activity? LIABILITY
As a rule the general partners are liable for all partnership obligations including, co-partners torts (was the partnership formed) IN THIS CASE, however Paula and Peter never formed a partnership because, their’s was a lending arrangement not based on sharing profits
Nonetheless under estoppel Paula will be liable to that 3rd party tort victim because she did represent to him that she is a partner of Peter’s and therefore will be liable as if she were (which means liable for his tort)
Partnership Property: John buys a car in John’s own name with John’s money which John uses in partnership business. John dies. Does John’s spouse Yoko get the car or is it a specific asset of the partnership?
Because John bought the car with John’s own money, it becomes John’s own car, and therefore he may leave that car to Yoko through inheritance
Partnership Management: A, B and C agree to contribute money and share profits 60-30-10. How do they vote?
This is a trap, WITHOUT AN AGREEMENT ON CONTROL, control is equal, which means one partner one vote and majority vote governs ordinary affairs but unanimous consent is required for fundamental matters
WITHOUT AN AGREEMENT, control is equal (this is the rule)
Partnership Salary: A and B are partners. A works 96 hours a week. B sleeps all day. Does A
get any salary?
No - WITHOUT AN AGREEMENT, no salary is our default rule
*Exception - Partners do receive compensation, for helping to wind up the business
Partnership Distribution: A and B dissolve the AyeBee Partnership. In winding up, they liquidate the partnership assets and have a total of $1 million to distribute. How should that amount be distributed if (1) the partnership owes $600,000 to trade creditors; (2) Partner A loaned the partnership $100,000; and (3) Partner B made capital contributions of $200,000?
SECOND: Suppose, in the prior hypo, that AyeBee Partnership has only $700,000 to distribute?
- First, the partnership must repay all outside trade creditors their 600k plus partner A for the 100K Loan
Second, the partnership still owes partner B the full repayment of its 200K capital amount
Third, The remining 100K profit amount is than shared among partners A & B without an agreement and therefore each gets their equal share of $50K - First, the partnership msut repay all outside trade creditors and partner A together the same &700K
Second, the partnership is still liable to partner B for the full repayment of its $200K
Third, The remaining loss amount of $200K will be shared equally without an agreement between A & B and therefore each must pay in to the partnership $100K
