Flashcards in 2nd QUARTER- BUSINESS LAW Exam 4 Deck (54):
specialized business relationship between one party known as the “principal” and another known as the “agent.”
Party who appoints a second party to serve as an agent
Party appointed by a principal to enter into a contract with a third party on the principal’s behalf.
From principal to agent. Act in good faith on behalf of principal’s interest. Enter into contracts on principal’s behalf
delegation of powers
authorized to carry out particular kind of business or all business at a location.
Example: FDIC funeral Director in charge. Responsible for the funeral home
authorized to transact specific act or act(s).
three types of agent's authority
Stated in agreement creating agency. Authority by appointment. Example: Written power of attorney
Authority to do things in order to carry out expressed authority.
How to remember: You hire commercial embalmer, they believe they have authority to determine injection site, chemicals, etc.
Authority agent believed to have because of principal’s behavior
Person who undertakes to perform a specified task according to the terms of a contract. Other contracting party has no control except as stated in the contract.
Think of trade embalmer
Party who hires employees to do certain work
Person hired to perform work
Need to know information for employer and employee relationships
Employee performs work for employer.
Employee under control of employer for work and manner of completion.
Employer liable for injuries to third party caused by negligence of employee.
Employer liable for torts committed by employee acting within scope of employment.
Employer must comply with laws relating to employees.
Social Security deductions (FICA).
Worker’s compensation (FUTA & SUTA).
Federal and state income tax withholdings.
agent's duty to principal
Loyalty and good faith
Reasonable skill and diligence
principal's duty to agent
Reimbursement of expenses incurred during course of employment.
compensation for sustained losses. Adherence to terms of employment contract.
Termination of agency by act of the parties
Renunciation by agent
Termination of agency by operation of law
Subsequent illegality of subject matter
Death or incapacity of either party
Destruction of subject matter
Bankruptcy of principal
Dissolution of the corporation
Types of business organization
1. Proprietorship (sole proprietorship)
Business owned by one person who is subject to claims of creditors. No separation of personal and business assets
Simplest form of business organization.
receives all profits and assumes all losses.
bears all risks and has personal liability for all debts.
Death terminates the business.
Voluntary association of two or more people who have combined their resources to carry on as co-owners of a lawful enterprise for their joint profit
Kinds of partners
general, silent, and limited
individual actively and openly engaged in the business and held out to everyone as a partner
- individual who takes no active part in management of a business, but has capital invested in the business
partner who has his/her liability for the firm’s debts limited to the amount of their investment
Duties of a partner
Exercise loyalty and good faith
Use reasonable care and skill
Conform to contract of partnership
Inform one another
Rights of a partner
Participate in management
Inspect financial data
Contribution- input as to how business is managed
Withdraw advances (business money for personal use)
Liabilities of a partner
For contracts of the partnership
three types of dissolutions of a partnership
By acts of the parties
By court decree
By operation of law
Dissolution of a partnership by acts of the parties
By withdrawal or alienation
By expulsion (one may kick or buy the other out)
Dissolution of a partnership by court decree
Futility - not making money
Dissolution of a partnership by operation of law -
Illegality / Death
an artificial being, invisible, intangible, and existing only in contemplation of law. An entity that is something that has a distinct existence separated and apart from the existence of its individual members.
Formed to carry out government functions
Formed by individual to perform some non-governmental function for profit.
types of public corporations
types of private corporations
For profit or
written document setting forth facts about a corporation prescribed by law for issuance of a charter and asserting the corporation has complied with legal requirements.
articles of incorporation
grant of authority from a government to exist as a corporation
Stock holders / Board of Directors / Officers
Those having title to one or more shares of stock in a corporation.
Represent combined ownership of the corporation.
Conduct meetings at least once a year.
rights of the stockholders
Receive properly executed stock certificates as evidence of ownership
Attend corporate meetings and vote (unless denied by express agreement).
Receive proportionate shares of profits when distributed as in dividends.
Person authorized to vote for another, written authorization to vote for another.
Body elected by stockholders to act on behalf of the corporation and carry out the board’s policies.
board of directors
Authorized by Board of Directors to carry out board policies.
(President / Vice-President / Secretary / Treasurer)
types of dissolution of corporations
voluntary dissolution of corporation
By vote of the stockholders
Corporation pays debts,
Distributes remaining assets to stockholders as to number of stocks owned, and
Surrenders articles of incorporation.
involuntary dissolution of corporation
Action of the court or state
Due to forfeiture or abuse of corporate charter,
Violation of state or federal law,
Fraud in obtaining the charter, or
Failure to pay specified taxes.
manner of dissolution of a corporation
Existence terminated except to complete its business.
Cannot sue, own property, or form contracts.
Except to convert assets to cash.
What are some examples of how funeral homes enter into agency agreements?
answering service, embalming agency, livery company
What is unique about independent contractors?
They have more freedom
for example Trade embalmer sets schedule, has own keys; you have less control over them