Agency & Partnerships Flashcards
Rule for Actual Authority
Actual authority can be express, where the agent is expressly given authority to act for the principal. It can also be implied, where the principal’s conduct leads the agent to believe it have the authority (such as a past course of conduct or emergency situation).
Rule for Apparent Authority
Apparent authority exists when the person dealing with the agent reasonably believes the agent has authority and the belief is generated by some act of the principal.
Rule for Respondeat Superior
Under the doctrine of respondeat superior, an employer (principal) can be vicariously liable for torts committed by an employee (agent) if an agency relationship exists and the employee (agent) commits the tort within the scope of employment.
Rule for direct liability
An agent is always liable for its own torts.
Rule for scope of employment
An employee is acting within the scope of employment when performing work assigned by the employer or engaging in conduct subject to the employer’s control.
An employee’s act is not with the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employee. Conduct is NOT outside the scope of employment merely because an employee disregards the employer’s instructions.
rule for frolic and detour
The employer remains liable during an employee’s detour (a minor deviation) even if the detour is mainly for the employee’s own personal reason. However, the employer is NOT liable during an employee’s frolic (major deviation).
rule for employer liability for intentional torts
Employers are NOT liable for the intentional torts of employees unless the intentional tort was authorized by the employer, driven by a desire to serve the employer, or a natural result from the type of employment.
rule for principal’s liability for acts of independent contractors
Generally, a principal is NOT vicariously liable for the torts of an independent contractor, unless:
1) the IC is engaged in an inherently dangerous activity;
2) a non-delegable duty; or
3) the principal holds the independent contractor out as his agent to a third-party who relies on the independent contractor, and suffers hard as a result of the independent contractor’s act.
duties owed by the agent to the principal
An agent owes the principal:
1) Duty of Care - to use reasonable care when performing the agent’s duties;
2) Duty of Loyalty - to act solely and loyally for the principal’s benefit;
3) Duty of Obedience - to obey all reasonable directions from the principal.
rule for employee vs. independent contractor
The determination of whether a person is an employee or an independent contractor depends on whether the principal had a right to control the manner and method in which the job is performed.
Factor include: the extent of control the principal has over the work; nature of the work; who supplies the equipment or tools for the work; method of payment, and how the parties characterize the relationship.
Rule for creation of agency relationship
An agent is a person or entity that acts on behalf of another - the principal.
An agency relationship exists if there is an agreement between the principal and agent that the agent act on behalf of and for the benefit of the principal, and the principal has the right to control the agent.
Rule for creation of general partnership
A general partnership is created when two or more persons carry on as co-owners of a business for profit. No written agreement or formalities are required. A person sharing in profits is presumed to be a partner.
A joint venture does not automatically create a partnership.
Rule for authority to bind a partnership
Each partner is an agent of the partnership and has the authority to bind the partnership for the purpose of its business.
Rule for personal liability of general partners
General partners are personally liable for all obligations of the partnership unless otherwise agreed by the claimant or by law. Under the Uniform Partnership act, general partners are jointly and severally liable for partnership obligations.
Rule for judgment enforcement of general partners
Generally, a judgment cannot levy execution of the judgment against a partner’s personal assets for a partnership UNLESS a judgment has been rendered against the partner and the partnership assets have been exhausted or are insufficient.
