MD Agency & Partnership

Question 1

Duties of principal

Answer 1

pay, reimburse reasonable expenses, indemnify if no negligence and in course of agency

Question 2

Duties of agent

Answer 2

 care: to act w/o negligence, and not to breach K
 loyalty: no self-dealing, usurp business opp, not to compete → disgorge profits
 good faith and fair dealing

Question 3

Tort liability of Principal

Answer 3

 negligent torts respondeat superior 1. Servant (close physical control) 2. w/in scope of employment (detour, not frolic → look at advancement of emp’s interests, before emp objective served, scope of deviation, in keeping)
 intentional torts: natural outgrowth (e.g. bouncer) but NOT vent personal anger

Question 4

Contract liability of Principal

Answer 4

 actual express/implied
 apparent (need P manifestation) or by position
 estoppel: if P did not make any manifestation but 1. P knows (intentionally or carelessly caused the belief) 2. P doesn’t stop A 3. 3rd party relies
 Principal undisclosed OJO! Inherent agency power: Apparent authority w/o manifestation if 3rd party relies and P knew

Question 5

Formation of Agency Relationship

Answer 5

A agreement (consent) both parties
B to benefit of Principal
C control of Principal

Question 6

Termination of agency

Answer 6

by either A or P, may be breach of K OJO! P must notify 3rd parties

Question 7

Creation of partnership

Answer 7

default for 2+ ppl co-owning business for profit, no filing. Joint/several liability, pass through tax

Question 8

Proving a partnership

Answer 8

1. Share of profits (NOT associate, bank loan, gross rev) 2. Intent 3. Mgmt. rights 4. Share loss/liability

Question 9

Adding new partners

Answer 9

unanimous consent

Question 10

Partnership property

Answer 10

property originally contributed, acquired in partnership name, or wit partnership funds

Question 11

Partner’s ability to bind the Partnership

Answer 11

 IN ORDINARY COURSE each power to bind (even if no express power bound and sue), majority vote
 FUNDAMENTAL requires unanimity (transaction voidable)
 liability for Pship debts: jt/several + indemnification from the Pship, contribution from other Ps BUT incoming P no liability for incurred before OJO not automatic personal liability: must be named a D
- liability for other Ps: loss/injury b/c of wrong done by P acting IN ORDINARY COURSE w/ authority of Pship. Same as when P liable for A: vicarious / ordinary course for tort, w/in agency for K

Question 12

Partners’ duties to other partners

Answer 12

 of care: P must indemnify Pship if acts negligently & personally liable
 loyalty: usurpation, interest averse to, compete – disgorgement
 can reduce care (honest belief) and enumerate nonviolative conduct

Question 13

Partner Relations

Answer 13

default equal profits and losses → if profits split otherwise, losses the same
 self-dealing OK if commercially reasonable
 rights to: written full accounting (not to steal)
NO right to compensation for labor

Question 14

Transfer of partner interests

Answer 14

can transfer profit stream freely BUT keep mgmt. (new P needs unanimous consent)

Question 15

Withdrawal

Answer 15

1. can quit at any time 2. Specified In agreement 3. Unanimous vote if a. illegal to carry on or b. sells interest 4. Go to court for a. adversely and manifestly affects Pship b. violates agreement c. impracticable to continue w. P 5. Bankrupt 6. Death → redemption of fair value greater of 1. Liquidation or 2. Ongoing business LESS damages. OJO if for term, no redemption until time period complete

Question 16

Wrongful withdrawal

Answer 16

1. Breach Agreement 2. Before express term/undertaking 3. Court expulsion → damages for cost

Question 17

Withdrawal and power to bind

Answer 17

withdrawn partner ca bind for two years unless Pship notify 3rd parties, filing statement of dissociation cuts off after 90 days

Question 18

Mandatory wind up

Answer 18

1. Definite term/undertaking 2. All unanimous 3. Wrongful withdrawal + majority vote 4. If @ will and one quits 5. Becomes illegal not cured 90 days 6. Court order by petition of P →  majority vote to continue

Question 19

Limited Liability Partnership

Answer 19

LL (none for debts of Pship or other Ps) except remain liable for own negligence and those they supervise, Pship liable for debts incurred by negligence

Question 20

Limited Partnerships

Answer 20

GP manages and has general liability, LP no management and only limited liability. profits shared proportional to contribution in cash, property, services rendered, promissory note

Question 21

LP: losing limited partner status

Answer 21

if to 3rd parties looks like manager

BUT these things ok: contractor/empee, officer of corp gen partner, consultant, surety, voting, amend Pship agreement

Question 22

LP: rights of limited partners

Answer 22

get their share, reasonable requests to inspect

Question 23

LP: new partners

Answer 23

new LPs in agreement or unanimous consent of all Ps  new GPs consent of GPs and majority in interest of LPs

Question 24

LP: Dissolution

Answer 24

1. Unanimous 2. Specified in Agreement 3. Withdrawal of GP UNLESS still have one, w/in 90 days all agree to apt 4. Court if not reasonably practicable to carry on in conformity w. agreement

Question 25

Limited Liability Limited Partnership

Answer 25

limited liability also for the general partner, must file and state in name

Question 26

LP: withdrawal

Answer 26

 LPs can’t generally  GPs written notice → maybe dissolution