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Business Associations > Midterm Review > Flashcards

Midterm Review Flashcards

1
Q

Agency

A

principal assents to agent acting on behalf of and under control of principal and agent consents

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2
Q

What is ratification?

A

Ratification is the affirmance of an act done by another whereby the act is given effect as if done by an agent with actual authority

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3
Q

How does a person ratify an act?

A

A person ratifies an act by manifesting assent that the act shall effect the person’s legal relations or conduct that justifies a reasonable assumption that person so consents

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4
Q

What is a partnership?

A

An association of two or more persons who carry on as co-owners of a business for profit

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5
Q

When does an agent act with actual authority?

A

When, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations for the agent, that the principal wishes the agent so to act

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6
Q

What constitutes assent?

A

When a person manifests assent, that manifestation may be written or spoken words or observable conduct that expresses meaning

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7
Q

When an agent has actual authority (express or implied), how can the agent act?

A

Necessary or incidental to achieving the principal’s objectives as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act

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8
Q

What is inherent agency authority based on?

A

the idea that principals are responsible for some acts of their agents which, while unauthorized, are close to or incidental to that which the agents are authorized to do

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9
Q

How does a principal create apparent authority?

A

by written or spoken words, or any other conduct that, reasonably interpreted, causes a third person to believe that the principal has consented to the agent acting for him

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10
Q

How can actual authority be terminated?

A

By the agent’s or principal’s death, the principal’s loss of capacity, a manifestation of revocation by the principal to the agent, or the occurrence of circumstances on the basis of which the agent should reasonably conclude that the principal no longer would assent to the agent’s taking action on the principal’s behalf

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11
Q

What is a subagent?

A

A subagent is an agent with two principals, one of those principals being the agent of the other principal

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12
Q

When does an employee act within the scope of her employment?

A

When she is performing work assigned by the employer, is acting subject to the employer’s control, and is not pursuing an independent course of conduct not intended to serve the employer

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13
Q

When is a principal subject to vicarious liability for conduct of its agent?

A

the agent is an employee who commits a tort while acting within the scope of his employment for the principal or the agent commits a tort when acting with apparent authority in dealing with a third party on or purportedly on behalf of the principal

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14
Q

What type of duty does an agent owe to a principal if the agent claims to posses a special skill or knowledge?

A

the agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents with such skill or knowledge

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15
Q

Who can an agent communicate principal’s confidential information to?

A

Only a duly authorized law enforcement representative

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16
Q

When is property that of the partnership?

A

When it is: acquired in the name of the partnership, acquired in the name of the partnership by a transfer to the partnership in its name, purchased with partnership assets, or acquired in the name of a partner with an indication in the instrument transferring title of the person’s capacity as a partner but without an indication of the name of the partnership

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17
Q

What duties are included in a partner’s duty of loyalty?

A

to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding down of the partnership business or derived from a use by a partner of a partnership property, including the appropriation of a partnership opportunity; refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership

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18
Q

What duty does a partner have in a transaction that is a partnership opportunity?

A

If a transaction is a partnership opportunity, the other partners must consent to a partner taking the opportunity

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19
Q

When is a partnership liable for a partner?

A

A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner who is acting in the ordinary course of business of the partnership

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20
Q

What does a partner’s duty of care to the partnership include refraining from?

A

gross negligence, reckless conduct, intentional misconduct, and a knowing violation of the law

21
Q

What vote is required for a difference arising as to a matter in the ordinary course of a partnership?

A

majority vote

22
Q

What vote is required for a difference arising as to a matter outside the ordinary course of business in a partnership?

A

a unanimous vote

23
Q

What can cause a partner to be dissociated from a partnership?

A

that partner’s express will (with notice) to withdraw, an event agreed to in the partnership agreement, that partner’s expulsion pursuant to the partnership agreement, or that partner’s becoming a debtor in bankruptcy

24
Q

What could cause a partnership to be dissolved?

A

Partnership business becomes unlawful
In a partnership at will when the partnership receives notice from a partner (who has not been dislocated) of the partner’s express will to withdraw as a partner
When, upon partner application, a court determines that the economic purpose of the partnership is likely to be unreasonably frustrated, or after expiration of the defined term for the partnership

25
Q

What happens when a partnership is dissolved and its business affairs are being wound up?

A

The partnership continues to exist for the purpose of winding up
The partners can bind the partnership for appropriate winding up act
The partnership is liable for transactions with other parties who lac notice of the dissolution
The partnership pays its debts and distributes its assets

26
Q

How does a person cease to be a general partner of a limited partnership?

A

they are removed in accordance with the partnership agreement, they withdraw from the limited partnership, or they die

27
Q

What is the business judgement rule?

A

The presumption of courts that if the board makes a decision, then the decision is informed, uninterested, serves a rational purpose, and made independently

28
Q

What is inherent agency power?

A

The power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relationship and exists for the protection of persons harmed or dealing with a servant or other agent

29
Q

Does a person need consent from the other partners to become a partner in a partnership?

A

Yes, a person may become a partner only with the consent of all of the partners

30
Q

What is the holding of Owen v. Cohen?

A

A partner can move to dissolve a partnership if another partner’s conduct undermines or breaches the partnership agreement

31
Q

Does a partnership continue after dissolution?

A

A partnership continues after dissolution only for the purpose of winding up its business. The partnership is terminated when the winding up of its business is completed.

32
Q

Can a partner waive the right to wind up?

A

Any partner including a dissociated partner other than a wrongful dissociated partner may waive the right to wind up. If this occurs, the partnership resumes as if the dissolution had never occurred

33
Q

What is the definition of agency?

A

The fiduciary relationship that arises when one person (a principal) manifests assent to another person (an agent) that the agent shall act on the principal’s behalf and subject to the principal’s control

34
Q

How is actually authority created?

A

By a principal’s manifestations to an agent that, as reasonably understood by the agent, expresses the principal’s assent that the agent take action on the principal’s behalf

35
Q

What is apparent authority?

A

The power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations

36
Q

Ratification is not effective when:

A

It is obtained by misrepresentation, duress, etc; the principal ratifies to avoid a loss; or it diminishes the rights of third parties that were acquired in the subject matter prior to ratification

37
Q

How is apparent authority terminated?

A

When it is no longer reasonable for the third party with whom an agent deals to believe that the agent continues to act with actual authority

38
Q

What does a person do if they are listed as a partner and are not?

A

file a statement of denial stating the name of the partnership and the fact that is being denied

39
Q

Three requirements for a corporate entity to possess criminal intent for liability

A

i. The agent was acting within the scope of his employment, with authority to act for the corporation with respect to the business that was conducted criminally;
ii. The agent was acting at least in part in furtherance of the corporation’s business interests’ and
iii. The criminal acts were authorized, tolerated or ratified by the corporate management

40
Q

What was the holding of Holzman v. Escamilla?

A

The limited partner became liable to third parties when he exercised control over the business

41
Q

How is an LLC formed?

A

by filing an Articles of Organization with the state

42
Q

Can a limited partner vote?

A

The partnership agreement may grant to all or a specified group of the limited partners the right to vote upon any matter

43
Q

How can partnership property be transferred?

A

property held in the name of the partnership can be transferred by an instrument of transfer executed by a partner in the partnership name, property held in the name of one or more partners with an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, but without an indication of the name of the partnership, may be transferred by an instrument of transfer executed by the persons whose name the property is held, partnership property held in the name of one or more persons other than the partnership, without an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, may be transferred by an instrument of transfer executed by the persons in-house name the property is held

44
Q

What does a person do if they are listed as a partner and are not?

A

file a statement of denial stating the name of the partnership and the fact that is being denied

45
Q

What do you need in the certificate of limited partnership that is filed with the state?

A

Name of LP
Address and name and address of agent
Name and address of each general partner
Latest date on which the LP is to dissolve
Anything else general partners want to include

46
Q

What was the holding of Holzman v. Escamilla?

A

The limited partner became liable to third parties when he exercised control over the business

47
Q

Things that a limited partner can do without becoming a general partner (having more liability):

A

Being a contractor
Consulting with and advising a general partner
Acting as surety or guaranteeing one or more specific obligations of the LP
Requesting or attending a meeting
Proposing, approving, or disapproving by voting
Taking any action required or permitted by law to bring or pursue a derivative action in the right of the LP

48
Q

Can a limited partner vote?

A

The partnership agreement may grant to all or a specified group of the limited partners the right to vote upon any matter

49
Q

What is the holding of Theodora?

A

corporations can make charitable donations

Business Associations (23 decks)

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