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Flashcards in Agency & Partnerships Deck (16):
1

Structure?

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(Formation)

  1. Agency
    1. Formation of the Principal-Agent Relationship 
      1. By Agreement 
        1. Assent
        2. Benefit
        3. Right to Control Agent
      2. By Estoppel (Apparent Authority)
  2. General Partnerships
    1. Definition
      1. Sharing of Profits
    2. No Formalities Required for Formation
    3. Default Rules
      1. Management = Equal Control
      2. Salary = No Salary 
        1. Exception: Winding Up the Partnership Business 
      3. Profits & Losses 
        1. Profits = Shared Equally 
        2. Losses = Shared Like Profits

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(Authority: Actual, Apparent & Ratification)

  1. Actual Authority
    1. Actual Express Authority
      1. Narrowly Construed
      2. Equal Dignities Doctrine
        1. Statute of Frauds 
        2. Conveyance of Land 
      3. Actual Express Authority Revocable 
        1. By Either Party at Anytime, OR 
        2. Death or Incapacity of the Principal 
          1. Exception = Durable Power of Attorney
    2. Actual Implied Authority
      1. Necessity
      2. Custom
      3. Prior Dealings
  2. Apparent Authority
    1. Principal Cloaks Agent with Appearance Authority 
    2. Reliance by Third Party
      1. 3rd Party Cannot Have Notice of Revocation
  3. Ratification
    1. Knowledge of All Material Facts 
    2. Acceptance of the Contract's Benefits 
      1. Principal Must Ratify Entire Contract

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Topics? (6)

(Rights & Liabilities)

  1. Principal's Liability for Contracts and Torts of the Agent
  2. Agent's Liability for Contracts
  3. General Partnerships 
  4. Limited Partnerships 
  5. Limited Liability Companies
  6. Registered Limited Liability Partnerships (RLLP)

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(Rights & Liabilities: Principal's Liability for Contracts and Torts of the Agent)

  1. Tort Liability (Respondeat Superior)
    1. Principal-Agent Relationship 
    2. Tort Occurred in the Scope of the Principal-Agent Relationship = 3 Part Test
      1. Within the Agent's Job Description
      2. Tort Occurred on the Job
        1. Folic
        2. Detour
      3. Conduct Intended For Principal's Benefit
    3. Intentional Torts
      1. Exceptions
        1. Specifically Authorized by Principal 
        2. Part of the Nature of Employment, OR 
        3. Motivated by Desire to Serve the Principal 
    4. Sub-Agents
      1. Assent 
      2. Benefit 
      3. Right to Control Sub-Agent 
    5. Borrowed-Agents
      1. Assent 
      2. Benefit
      3. Right to Control Borrowed-Agent 
    6. Independent Contractors
      1. Ultra-Hazardous Activities
      2. Estoppel
      3. Nondelegable Duties
      4. Principal Knowingly Selected Incompetent Independent Contractor 
  2. Contract Liability 
    1. General Rule
      1. No Authority = Principal Not Liable
      2. Authority = Principal Liable
        1. Exception = Undisclosed Principal or Partially Disclosed Principal
    2. Authorization
      1. Actual Express Authority
        1. Narrowly Construed
        2. Equal Dignities Doctrine
          1. Statute of Frauds 
          2. Conveyance of Land 
        3. Actual Express Authority Revocable 
          1. By Either Party at Anytime, OR 
          2. Death or Incapacity of the Principal 
            1. Exception = Durable Power of Attorney
      2. Actual Implied Authority
        1. Necessity
        2. Custom
        3. Prior Dealings
      3. Apparent Authority
        1. Principal Cloaks Agent with Appearance Authority 
        2. Reliance by Third Party 
      4. Ratification
        1. Knowledge of All Material Facts 
        2. Acceptance of the Contract's Benefits 
          1. Principal Must Ratify Entire Contract

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(Rights & Liabilities: Agent's Liability for Contracts)

  1. Unauthorized Contracts = Agent Liable
  2. Authorized Contracts = Agent Not Liable
    1. Exception: Undisclosed Principal

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(Rights & Liabilities: General Partnerships)

  1. Powers of Partners to Bind the Partnership 
    1. Actual Authority = Yes
    2. Apparent Authority = Yes Unless: 
      1. No Authority 
      2. 3rd Party Knew or Had Received Notification of No Authority 
  2. Partnership Rights & Obligations 
    1. Rights & Obligations under the Terms of a Partnership Agreement
    2. Rights & Obligations in the Absence of Terms in a Partnership Agreement 
      1. Equal Control
      2. No Salaries
        1. Exception: Winding-Up the Partnership Business
      3. Profits & Losses 
        1. Profit Sharing
        2. Loss Sharing
  3. Personal Liability of General Partners for Partnership Obligations
    1. Torts
    2. Contracts
  4. Partnership by Estoppel
  5. Incoming & Outgoing Partner Liability 
    1. Incoming Partners' Liability for Prior Debts = Generally No
    2. Outgoing Partners' Liability for Future Debts = Yes Until
      1. Notice of Dissociation Given to Creditors, OR 
      2. 90 Days After Filing Notice of Dissociation with the State

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(Rights & Liabilities: Limited Partnerships)

  1. Formalities 
    1. At Least One General Partner 
    2. At Least One Limited Partner 
    3. Must File Limited Partnership Certificate 
      1. Names of General Partners
  2. General Partners Rights & Liabilities 
    1. Right to Manage
    2. General Partners = Personally Liable for Debts & Obligations of the Limited Partnership
      1. General Partners' Own Actions
      2. Authorized Contracts
      3. Co-Partners' Torts in Scope of Usual Partnership Business
      4. Actions of Employees
  3. Limited Partners Rights & Liabilities 
    1. No Right to Manage
    2. Limited Partners = Not Personally Liable for Debts & Obligations of the Limited Partnership

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(Rights & Liabilities: Limited Liability Companies)

  1. Formalities 
    1. Must File Articles of Organization 
      1. Statement that Entity is LLC 
      2. Name
      3. Address of Registered Office 
      4. Name of Registered Agent 
      5. Name of All Members 
    2. May Adopt Operating Agreement 
  2. Financial Rights & Obligations of LLC Members 
    1. Internal Allocation of Financial Interests
    2. Members Not Personally Liable for LLC's Debts & Obligations
  3. Management
  4. Limited Life 
  5. Limited Tax
  6. Limited Liquidity

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Structure?

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(Rights & Liabilities: Registered Limited Liability Partnerships (RLLP))

  1. Formalities 
    1. Must File Statement of Qualification 
      1. Executed By At Least 2 Partners 
      2. Name & Address
      3. Statement that Entity is LLP 
    2. Must File Annual Reports 
  2. Effective on Filing Date or Deferred Effective Date
  3. Liability of General & Limited Partners = No Personal Liability for Debts & Obligations of the RLLP

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Structure?

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(Fiduciary Duties)

  1. Fiduciary Duties of Agents 
    1. Duty to Exercise Reasonable Care 
    2. Duty to Obey Reasonable Instructions 
    3. Duty of Loyalty 
      1. Breaches of the Duty of Loyalty
        1. Self-Dealing
        2. Usurping Principal Opportunities, OR 
        3. Secret Profits 
    4. Principal Remedies for Breach 
      1. May Recover Losses Caused By Breach 
      2. Disgorge Profits Made by the Breaching Agent 
  2. Duties of Principals 
    1. Duties Imposed by Contract 
    2. Reasonable Compensation 
    3. Reimbursement for Expenses 
    4. Duty to Cooperate With Agent & Not Unreasonably Interfere 
  3. Fiduciary Duties of Partners 
    1. Duty of Care
    2. Duty of Loyalty
      1. No Secret Profits at Partnership's Expense = Account for All Profits & Benefits Derived in Connection With Partnership Business 
      2. No Self-Dealing = Refrain From Dealing With Partnership as an Adverse Interest 
      3. No Usurping Partnership Opportunities = Partners May Not Compete With Partnership 
    3. Partnership Remedies for Breach - Action for Accounting
      1. May Recover Losses Caused By Breach 
      2. Disgorge Profits Made by the Breaching Partner 

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Structure?

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(Property)

  1. Specific Partnership Assets
    1. Land 
    2. Leases 
    3. Equipment 
  2. Partner's Share of Profits & Surplus = Personal Property of Individual Partners
    1. Profit Sharing = Shared Equally without Agreement to Contrary
    2. Loss Sharing = Shared Like Profits without Agreement to Contrary
  3. Share in Management = Asset Owned Only by the Partnership
  4. Partnership or Personal Property? 
    1. Partnership Funds Used = Partnership Property 
    2. Personal Funds Used = Personal Property 
  5. Rights of Successors & Assignees 
    1. Successors
      1. Right to Join Partnership
      2. Right to Receive Share of Compensation
    2. Assignees 
      1. Limited Partners
      2. Right to Distributions & Allocation

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Structure?

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(Termination of Agency Relationship)

  1. Lapse of Time
  2. Occurrence of Specified Event 
  3. Change in Circumstances 
    1. Destruction of Subject Matter 
    2. Insolvency of Principal or Agent 
    3. Change in Law 
  4. Agent's Breach of Fiduciary Duty 
  5. Unilateral Termination by Either Party 
  6. Death or Incapacity of Principal or Agent 
    1. Exception: Durable Power of Attorney 

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Topics? (3)

(Dissociation & Dissolution of Partnerships)

  1. Dissociation
  2. Dissolution
  3. Winding-Up

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(Dissociation & Dissolution of Partnerships: Dissociation)

  1. Events 
    1. Withdrawal of Partner 
    2. Expulsion of Partner
    3. Partner's Bankruptcy 
    4. Partner's Death or Incapacity 
    5. Appointment of a Receiver 
    6. Termination of Business Entity That Was a Partner 
  2. Effect of Dissociation
    1. Dissociated Partner's Power to Bind
      1. Act Would Have Bound Partnership Prior to Dissociation
      2. 3rd Party Reasonably Believed Dissociated Partner Still Partner
      3. No Notice of Dissociation 
    2. Dissociated Partner's Liability Post Dissociation
      1. 3rd Party Reasonably Believed Dissociated Partner Still Partner 
      2. No Notice of Dissociation

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Structure?

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(Dissociation & Dissolution of Partnerships: Dissolution)

  1. Default Rule
  2. Other Events Causing Dissolution
    1. Lapse of Time 
    2. Occurrence of Specified Event 
    3. Change in Law 
    4. Court Order 
      1. Economic Purpose Frustrated 
      2. No Longer Reasonably Practicable to Continue Business 
      3. Business Cannot Be Continued in Conformity with Partnership Agreement 
  3. Dissolution - Termination

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Structure?

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(Dissociation & Dissolution of Partnerships: Winding-Up)

  1. Liability for Winding-Up
    1. Old Business Transactions = Retain Liability
    2. New Business Transactions = Retain Liability Until
      1. Notice of Dissolution Given to Creditors, OR 
      2. Until 90 Days After Filing a Statement of Dissolution 
  2. Compensation
  3. Priority of Distribution 
    1. Creditors 
      1. Outside 3rd Party Trade Creditors 
      2. All Partners Creditors
    2. Capital Contributions of Partners
    3. Profits & Surpluses
    4. Losses