Business Law Tst 4

Question 1

Agency relationship

Answer 1

Association between one party and agent who acts on behalf of that party

Question 2

Expressed Agency

Answer 2

Agency created in a written or oral agreement

Question 3

Implied Agency

Answer 3

Not written but implied through conduct of the parties

Question 4

How to tell difference between implied and express agency?

Answer 4

See how 3rd party views it

Question 5

Ratification

Answer 5

Acknowledge the action of agent by principle. Must take all actions can’t pick and chose

Question 6

Express authority

Answer 6

Directly told to take action.

Told to sell house

Question 7

Implied authority

Answer 7

Because you have the right to do specific actions (sell house) you may have other authority too (like show house, contact home owners)

Question 8

Disclosed Principal

Answer 8

3rd party aware dealing with agent. Knows who principal is. Agent not liable principle liable contractually.

Question 9

Partially Disclosed Principal

Answer 9

3rd party think he’s dealing with agent. Doesn’t know who principal is. Agent maybe liable and principal is liable contractually.

Question 10

Undisclosed Principal

Answer 10

3rd party is unaware they are dealing with an agent. Both agent and principal are liable for contracts.

Question 11

Types of principal tortious conduct

Answer 11

Respondeat superior= Latin for “let superior speak” principal held liable for harm done by agent

Negligent Hiring
Companies may also be held liable for intentional torts committed by agents

Question 12

Principal duty to agent

Answer 12

Compensation
Indemnification= reimbursements for any thing lost by agent on principal behalf
Cooperation
Safe working conditions

Question 13

Agents duties to principal

Answer 13

Loyalty
Notification
Performance 
Obedience 
Accounting

Question 14

Termination of agency relationships

Answer 14

Lapse of time
Fulfillment of purpose
Occurrence of specific event

Question 15

Some proprietorship

Answer 15

Just a dude doing business

Question 16

Partnership

Answer 16

Voluntary association between 2 or more people

Question 17

Types of partnerships

Answer 17

General- share unlimited personal liability of partnership debts
Limited Partnership- one general partner and one limited one who isn’t responsible for debts of business
Limited Liability Partnership- both partners only responsible to the extent of partnerships assets

Question 18

LLC

Answer 18

Unincorporated business that is taxed like a partnership with members paying personal income taxes. And has limited liability of a corporation

Question 19

Corporation

Answer 19

Legal entity formed by issuing stock to investors who are the owners of the corporation

Question 20

How to form corporation?

Answer 20

File with Secretary of State office, stock holders are able to buy and sell stocks.

Question 21

Who elects board of directors in a corporation? What do board of directors do?

Answer 21

Stock holders elect board of directors. Directors run business and make decisions, and hire officers to carry out Day to day tasks.

Question 22

Duties of directors and officers

Answer 22

Duty of care
Loyalty
Disclose conflict of interest

Question 23

Duties of shareholders

Answer 23

Not oppress minority share holders

Question 24

Liability of directors and officers

Answer 24

Torts and crimes

Business Judgement Rule

Question 25

Liability of share holder

Answer 25

Only liable for the amount invested

Question 26

Rights of directors

Answer 26

Compensation
Participation and inspection
Indemnification (reimbursement for legal fees)

Question 27

Officer rights

Answer 27

Any thing listed in employee contract

Question 28

Shareholder rights

Answer 28

Dividends
Preemptive rights to buy new stock first
Stock Certificates
Transfer shares

Question 29

How are profits paid in LLC

Answer 29

Depends on type

• Sole proprietorship flows through to owner
• Partnership is divided by parters as listed in partnership agreements
• Coorporations is given in dividends