Agency Flashcards
(5 cards)
Forming agency relationship
An agency relationship is created when one person (the principal) manifests an intent that another person (the agent) act on his behalf and both parties consent to the agreement.
Principal bound in contract
A principal is contractually bound to the acts of the agent if the agent acted with actual or apparent authority.
Actual authority can be express, i.e. contained within the agreement between the parties, or implied from the actions of the principal.
Apparent authority arises when the principal “holds out” the agent as having certain authority, causing third parties to reasonably believe the agent has such authority.
Partner’s Authority to Bind Partnership
Each partner is an agent of the partnership for the purpose of its business. A partnership is liable for all contracts entered into by a partner in the scope of partnership business or with actual or apparent authority.
Actual authority is the authority a partner reasonably believes they have based on the communications between the partnership and the partner, which can come from a vote. A majority vote of the partners is required to authorize ordinary business; an unanimous vote is required to authorize extraordinary acts.
A partner has apparent authority to bind the partnership to transactions within the ordinary course of the partnership’s business or business of the kind carried out by the partnership unless the third party is aware that the partner lacks actual authority to act.
Business of the kind includes acts that would apparently be for carrying on of the business of the kind run by the partnership.
Partnership Liability
A partnership may be sued in its own name. A partnership may sue a partner for breach of the partnership agreement of breach of a duty owed to the partnership.
Each partner is jointly and severally liable for all obligations of the partnership. But the partners’ individual assets will only be on the line once all partnership resources are exhausted
Formation of Partnership
A partnership is formed when two or more persons associate to carry on as co-owners a business for profit.
A person who receives a share of the profits from a business is presumed to be a partner.
