M4 Flashcards
Does osmeonoe need to actively engage and contribute skill/capital to be a partner?
NO you can be a partner who deosnts
what are the tests to seeing if a partnership is taking place
- joint participatnts in managemen and control of businesss
- joint ownership of property
- stating intention to form partnership
- sharing information
- holding out relationships to 3rd party as a partnership
no paperowrk needed for a partnership!!
law of agency
any partner can bind organization to a 3rd party in a contract; can make firm collecticvely liable to tort that is raised
BUT in partnership a partners act outside the firms typical course of business can not make other partners liable
Fiduciary duties of partners
- where fiduciary is acting on behlaf of another PERSONAL INTEREST CAN NOT SWAY THEM
- fiduciary can not profit from position of trust
3 charactieris of relationship where there is a fiduicaryy obilgation “test”
- fiduciary has scope fo rthe exercise of some power
- foduciary can unilaterally excersie power for legal/practical interests
- beneficiary is at the mercy of the difuciary that has power
a person in a partnership has a duty to be loyal to the firm AND has to fellow partners
- partners must be honest. cant compete with the firm. cant use partnership property for gain. cant use info from the partnership for personal benefit. cant take advantage of business opportunies gained from the partnership.
** all of these can be changed with consent
Formal requirements for partenrships
- virtually none!!!! you can do nothing
but section 106 in AB must file a declaration form [THIS IS IN THE PARTNERSHIP ACT]
PARTNERSHIP ACT
- EQUAL SHARING OF PROFITS/LOSSES
- ALL PARTNERS CAN APARTICIAPTE IN MANAGEMENT
- NO PARTNER GETS SALARY!!!! THEY GET PROFITS OF BUSINESS
- MAJORITY RULES
- YOU NEED UNANIMOUS CONSENT A LOT
- RECORDS MUST BE AVAILABLE FOR INSPECTION
3 types of partnerships
[mix between partnerships x corps]
General
limited partnership
Limited liabiltiy partnership
Limited partnership
- a silent partner who invests money but is not responsible for activity “second tier partner”
- they CANT be involved in legal or day to day operations, and their liabiilty is limited to the amount they invested.
CAN CONTRIBUTE CAPTIAL!!!!! BUT NOT TO SERVICES
General partners CAN contribute to business but fully exposed for risks
requirements for liimted partnership
- NEED one gernal partner who is 100% liable
- must declare at registry
- limited partners cant be invlved in services BUT CAN give advice
- Ltd partners cant be in the name of the firm
- if the partner does bad things they become general partners
Limited liability partnerships
oNLY available for professional aprtnerships! LIKE CHARTERED ACCOUNTS/DENTISTS ETC
-> an LLP partner is not liable AT ALL!!!!! for negligence/wrongdoing for other partners
BASICALLY when there is an LLP there is LIABILITYROTECTION!!!! ONLY those partners who do wrongful acts are liable
agency relationship
relation between princpial party and agent party!! acting on behald
an agent is an alter ego NOT A PERSONAL CONDUIT
AGENT SHOULD ALWAYS ACT IN THE BEST INTEREST OF PRICNIPAL
why would u get an agent?
when u are entering a foreing market! they have local knwoledge
what are the features of the agency relationship
Agent has authority to represnt and bind the principal (and also affect principals relations with 3rd party)
-> agents have fiduciary dutires to rcincpal (loyalty, care, confidentiality)
-> principal has a degree control over the agent
-> princpal may be viacriously liable for agents actions
do agents take on liabilitesi in a contract they negotiatoe?
NO!!!
How is the agency relationship created
- express or implied consent
- inplication of law
- subseqnt ratification: princpal can ratify agents act on its behalf AFTER action is done
- estoppel
- operation of law
the authority given to agents
- actual authority: authority that has been given expressdly (specific authority given written or verbal) implied (deemed to have due to the tasks and nature of the relationship)
- apparent/ostensible authrotiy: authority an agent is considered to possess that arises because of representtations made by the princpal
Ostensible authority
REPRESENTATION BY CONDUCT CAN CREATE APPARENT/OSTENSIBLE AUTHORITY
-> when princpil permits the agent to act in some way, they are giving up this authotity
-> 3rd parties can assume that those acts form the actual authority even if they do not
PRINCIPLES should have clear agreements with agents and communicate clearly with 3rd parties
who is bound flow chart?
is there an agency relationship? blah blah view this https://d2l.ucalgary.ca/d2l/le/content/619780/viewContent/6544772/View
Are agents fiduciaries?
YES! they need to always act in the best interest! utmost faith!!! must always put principals interst above their own
Agents duties
- OBEDIANCE: obey and carry out principals instructions, liabl to the pricnples loss if they do not follow obedience!!
- PERSONAL PERFORMNCE: requires agents to carry out tasks personally, can not SUB-CONTRACT IT OUT! ensures agents are fully responsible for their actions. They can sub-contract/deelgate tasks when they have principles consent or if the tasks are like adminsitrial. Any engligence or money recieved by sub agent makes the agent liable to principal
- EXERCISE CARE AND SKILL: standard of care! requires agents to use a reaosnable level of skill to perform the tasks they are given! if they dont then they are liable in negligence. to fulfill this duty agent must have knowledge expereince and experience. remedy for an agents breach of duty of care would be DAMAGES due to the breach!!!
- DUTY OF LOYALTY/CONFLICT AVOIDANCE: must act in best interests of principal!!! FIDUCIARY!!! if an agent vilates this they are liable to account
- full disclosure: AGENTS NEED TO present all material facts to principal. IF not: negligence on part of the agent.
- ACCOUNTABILITY: agent has a duty to accoutn for all money recieved!!!! must PAY OVER MONEY RECIEVED ON BEHALF OF THE PRICNIPAL OR CAN GET SUED.
can agent take personal benefit from relationship after they are done being an agent?
noooOooO
PRINCPIALS DUTIES TO AGENT
- compensate: princpal needs to pay agent !!!
- indemnfiy the agent against all cliams, liabilities, costs and expenses the agent incurs in the performance of duties. agent should have access to all the info they need
frnachise
business arrangement formed by a written agreement in which a business grants the right to use its trade name, trademark, and operating procedures to operate a similar business.
franchisor
person granting the rights under the franchise agreement.
franchisee
Franchisee - the person receiving the rights from the franchisor under the franchise agreement.
joint venture
business activity usually for a specific time period where two or more parties according to terms and conditions set out in a contract
2 types of JV’s
contractual
equity
A general artners personal exposure to liability from the partnerships business operations is
UNLIEMITIED! AND JOINT/SEVERLA QITHT OTHER PARTNERS!
