Agency and Partnerships Flashcards
Agency Relationshp
Agency is the fiduciary relation which results from the manifestation of CONSENT between two people that one shall ACT ON BEHALF of the other and subject to his CONTROL
- the agen acts primarily for the benefit of the principal
- principal needs contractual capacity (not the agent)
- no writing required, but SoF may apply
- no consideration required
Contract Liability (for contracts entered by agents)
Principal Liable if actual, apparent, or ratification is present
Agent is generally not liable, unless at time of transaction:
- principal is undislcosed or
- Principal is partially disclosed (don’t know who it is)
Types of Authority (agency)
- Actual Authority- authoirty agent thinks it has based on pricipals actions- can be express or implied
- Apparent Authority: authority makes third parites think the agetnt has based on principal’s actions- may be established by power of position, or lingering apparent authority
- Ratification: of agent’s action after the fact- can be express or implied by accepting benefits, principal must have knowledge of all the material facts of contract and accept entire transaction
Agent’s Duties to Principal
- Duty of Care: reasonable care
- Duty of Loyalty: undivided loyalty to principal, including
- following instructions (duty of obedience)
- no self dealing
- no competition
-care for principals property
on Breach principal may sue for damages and disgorgement
Liability for Torts of Agent
- resondeat superior/vicarious liability
- a master is liable for the torts of the servant if committed within the scope of employment
- not generally liable for torts of independant contractor
Employee or IC? - consider who has right to control
- skill? period of employment? basis of compensation? business purpose? distinct business?
-Scope of employment? Frolic or Detour?
Intentional Torts- principal not liable unless
natural from nature of job
motivated to serve employer
authorized or ratified by employer
Formation of General Partnership
A partnership is formed as soon as Two or more persons associate to carry on as co-owners a business for profit, regardless of whether they inteded to form partnership
- key factor- sharing a profit
unlesss received in payment of a debt, wages, rent, or interest on a loan
-partnership by estoppel: if a third party reasonably relies on a partnership, een if none was actually formed
Management of a Partnership
- in ordinary course of business: majority vote required
2. outside ordinary course: unanimity required
Sharing Profits and Losses (partnership)
sharing profits and losses: shared equally unless there is an agreement and losses follow profits
Liability of the Partnership
- liability in Tort: partnership is liable for torts committed by partner or employee acting in ordinary course of business with authority of partnership
- Liability in Contract: liable for contrats entered into by partners with actual or apparent authority
Each parnter is jointly and severally liable for the obligations of the partnership, but the plaintiff must first exhaust the partnership resourches before seeking to collect from individual
Partner’s fiduciary duties to Partnership
- Loyalty
- Care
- Disclosure
Partner’s Ownership interest in partnership
Partner has management (voting) rights and financial rights (to a share of profits)
Cannot unilaterally transfer management rights
Disassociation of a Partnership
Withdrawal from partnership
Examples:
- a partner gives notices and withdraws ((express will)
- expulsion, death, or bankruptcy
- n agreed upon event
if withdrawal is wrongful, that partner is liable for damages however, partnerships are presumed to be at weill
- partnership is disolved and liquidated or
- partner is bought out
Dissolution of a partnership
Required in limited circumstances
- partner who dissociates by express will may compel disslution and winding up
- in a term partnership, if one partner dissociates wrongfully or dies, dissolution may be required if, within 90 days, 1/2 of remaining partners agree to dissolve and wind up
partnership assets must be applied to discharge partnersihp liabilites; partnership must pay
1. all creditors, including partner creditors
2. then, may pay profits and losses to partners
may require contribution from partners to meet obligations
Liability of a Dissociated Partner and apparent authority of a dissociated partner
- Liable for pre-dissociation obligations and possible post-dissociation obligations incurred within 2 years (but can protect himself by fuiling a public statement of dissociation)
- partnership liable for contracts entered with by dossociated partner with apparent authority (can protect by providing notice to creidtors or filing a public statemetn of dissociation)
Limited Partnership
Partnership with at least one General and one limited partner
- must file certificate of lp with sec of state and include LP in the name
- general partners manages the partnership
- limited partners receive distributions limited by their contributions
- limited partners have limited liability
