IL Agency and Partnership

Question 1

Principal’s liability for agent’s torts

Answer 1

Needs:

1. Assent
2. Benefit
3. Control, and
4. Scope

Question 2

Principal’s liability for agent’s contracts

Answer 2

Needs:

1. Actual, express authority
2. Actual, implied authority
3. Apparent authority, or
4. Ratification

Authorized agents are not liable unless there is an undisclosed principal.

Question 3

Actual express authority

Answer 3

Can be oral except for land. Revokable unless made durable.

Question 4

Actual implied authority

Answer 4

Can be found by:

1. Necessity
2. Custom
3. Prior acquiescence

Question 5

Apparent authority

Answer 5

Found when:

1. Principal cloaks and
2. 3rd party relies.

Question 6

Ratification

Answer 6

1. Knowledge, and

2. Acceptance of benefit.

Question 7

Duties Agent Owes to Principal

Answer 7

1. Care
2. Obedience
3. Loyalty

Question 8

General PS Formation

Answer 8

No formalities. Default positon.

1. Association of 2 or more persons
2. Carrying on
3. As co-owners
4. Business
5. For Profit.

Question 9

General PS Liabilities to 3rd Parties

Answer 9

Gen. Partners are liable for all PS debts.

Question 10

Gen PS Liability: Estoppel

Answer 10

Representers are liable as gen. partners.

Question 11

Relations between partners

Answer 11

1. Fiduciaries
2. Only the sharing of profits is liquid (not control or management)
3. w/o an agreement: no salary, equal profits, and losses treated like profits.

Question 12

Dissolution priority payments

Answer 12

1. All outside and inside partner creditors.
2. Repay all capital contributions
3. Profit share.

Question 13

Distribution rule

Answer 13

Each partner must be repaid their loans and capital plus their share of the profits but minus losses

Question 14

Alternative Unincorporated Business Orgs

Answer 14

1. Ltd PS
2. Registered Ltd Liability PS

They have ltd liability.

Question 15

6 Fiduciary duties of partners

Answer 15

1. Deal fairly with each other and the PS;
2. Refrain from competing w/ PS;
3. Use best efforts to ensure that the PS succeeds;
4. Disclose important information to co-partners;
5. Account to PS for any profits they make from PS activities; and
6. Exercise PS powers for the benefit of the PS and not for themselves

Question 16

Factors determining whether a partner intended to contribute property to PS

Answer 16

1. Name. Who’s name the property was titled in?
2. Money. Who’s money (partner or PS) was property acquired with?
3. Relation. Whether the property is closely related to the PS business.

Question 17

Partnership at will

Answer 17

No specified term. A partner has right to dissociate or withdraw at any time.

Dissociation leads to winding up which ends in termination

Question 18

Formation of Ltd. PS

Answer 18

1. Must file certificate of ltd PS w/ the state

2. At least one general partner must be appointed.