Relations With Third Parties Flashcards
What sort of rules apply with respect to a PS’s dealing with third parties?
Agency
Every P is a ____ of the PS.
Agent
The PS is bound by the act of any P for _________ carrying on in the ______ way the business of the P.
Reasonably
Usual
Express authority can be conferred by the ____ or ____ consent of the other partners.
Written
Oral
What sort of consent is required for the disposition of partnership property for the benefit of creditors?
Unanimous.
What sort of consent is required for the disposing of the assets of the PS business?
Unanimous
What sort of consent in required for the confession of a judgment?
Unanimous
What sort of consent in required for submitting claims to arbitration?
Unanimous
What sort of consent is needed for performing any act that would make it impossible or impractical to carry on the ordinary business of the PS?
Unanimous
Ps have implied authority for all things ___, ___, and ____ to accomplish express responsibilities or reasonably incident to express authority.
Usual
Customary
Ordinary
T and J are Ps in a clothing business with many stores. The PS agreement designates T as the managing partner is charge of DTD operations. From the earliest day of the PS, Mike has been employed as the manager of the PS’s most profitable store. T recently fired M. M now complains that T had no authority to do so. Is he right? Explain.
No.
T had the express authority to manage the DTD operations of the business. It is implied that such a power includes the power to hire and fire.
Even though the act of a P was w/o actual authority, a PS may be bound by the P’s acts if the 3rd party with whom the purported partner is dealing believes that the actor is authorized IF what else is true?
The 3rd party’s belief is traceable to a manifestation of the principal.
The A/B PS has been purchasing computer equipment from the same supplier on a regular basis for 5 year. A recently sent a $300k purchase order (on PS letterhead) for neq equipment, which the supplier promptly delivered. Under terms specified in the A/B PS agreement, neither partner has authority to execute purchase orders in excess of $250k without consent of the other.
B seeks to return $50k worth of the equipment for a full refund. Is the PS liable for the full amount? Explain.
Yes. A acted in excess of his actual authority, but the PS is bound by his apparent authority. There was a course of dealing and A sent the order on PS letterhead.
The unauthorized act of a P may still bind the PS if the co-Ps subsequently do what?
Ratify
Ratification can be accomplished in which 2 ways?
Expressly; or
Impliedly by conduct that would only make sense if partners had ratified.
Describe PS by Estoppel.
A person not a P who represents himself as a P or consents to another making such a representation may be liable to any person who has in good faith extended credit to the PS based upon such representations.
What element in required for PS by Estoppel?
Good faith on the part of the 3rd party
In which two ways can Ps be liable for a non-P’s conduct?
If they intentionally or negligently cause the 3rd party to believe that he or she is a P; or
They knew of the 3rd party’s erroneous belief and did not take reasonable action to notify the 3rd party.
Imposter puts on a suit and walks into XYZ Dealership and negotiates with a customer for the sale of a cat. Imposter is a complete stranger to the XYZ PS and all its employees. Can the XYZ PS be held liable for the k? Explain.
No. Not unless they knew he was there and didn’t try to stop him.
What sort of liability do Ps incur to 3rd parties for injury stemming from wrongful acts or omissions of any P acting in the ordinary course of business or with the authority of his or her co-partners.
J and S.
Partners are J and S liable to third parties for any loss or injury from . . .
wrongful acts or omissions of any P acting in the ordinary course of business or with the authority of his or her co-partners.
Partners will/won’t be held liable if they are innocent of and have no knowledge of the wrong committed by any P acting in the ordinary course of business or with the authority of his or her co-partners.
Will be
X, Y, and Z were partners in XYZ PS. Unbeknownst to his partners, Z provided false info to the bank on a PS loan app. Are X and Y liable for any fraud or misrepresentation? Explain.
Yes. They are J and S liable because the loan was in the ordinary course of business.
Ps incur J and S liability to 3rd parties for injury stemming from wrongful acts or omissions of any P acting in the ordinary course of business or with the authority of his or her co-partners.
X, Y, and Z were partners in XYZ PS. Unbeknownst to his partners, Z provided false info to the bank on a personal loan app. Are X and Y liable for any fraud or misrepresentation? Explain.
No. A personal loan is not related to the business, so no liability for X an Y.
What sort of liability do Ps incur for any one P’s improper receipt and misuse of any money or property if the P is acting within the scope of AA?
J and S.
What sort of liability do Ps incur for any one P’s misappropriation of money or property in the custody of the PS that was received in the course of business from a 3rd party?
J and S.
In PA, Ps are J and S liable for other debts and obligations of the PS under the _____ _____ Act.
Uniform Partnership Act.
X, Y, and Z were partners in XYZ PS. Unbeknownst to his partners, Z took out a PS loan from the band. If the PS has insufficient funds to repay, are X and Y liable? Explain.
Yes. Under the Uniform Partnership Act, Ps are jointly and severally liable for all debts and obligations of the PS.
IF X has a suit against the PS, why might he prefer to bring suit against the individual partners rather than the PS?
Because a judgment against the PS in the PS name only entitles X to execution upon PS property.
Can actions be brought against a PS in the PS name?
Yes
