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Flashcards in Agency and Partnership Deck (32):
1

Agency

The fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his control and subject to his control, and consent by the other to act.

2

Requirements for Agency to be Established

1. Consent
2. on behalf of
3. Control

3

Actual Authority

Actual authority is authority that the agent recently thinks she possesses based on the principal's dealings with her. May be express or implied.

4

Express Actual Authority

Authority conveyed by the principal in words (oral or written)

5

Implied Authority

Authority the agent reasonably believes she has as a result of the principal's actions.

6

Termination of Actual Authority

Authority will be revoked:
1. after a specified time or event or after a reasonable time;
2. by change of circumstances;
3. by a breach of the agent's fiduciary duty;
4. by a unilateral act of either the principal or the agent; or
5. by death or incapacity of the principal or the agent.

7

Apparent Authority

Apparent Authority exists when the principal "holds out" another as possessing authority and a third party is reasonably led to believe the authority exists.

8

Ratification Requirements

1. the principal must have knowledge or all material facts regarding the contract;
2. the principal must accept the entire transaction. The principal cannot merely ratify a portion of the transaction;
3. Ratification cannot be used to alter the rights of intervening parties.

9

Principal liability on a Contract

If actual authority, apparent authority, or ratification is present, the principal is liable on the contract and the agent is not.

10

Agent's Duties to the Principal

An agent is a fiduciary of its principal, and owes corresponding fiduciary duties to its principals.
1. Duty of Care
2. Duty of Loyalty

11

Remedies for Breach of Fiduciary Duty

The principal may sue for damages as well as disgorgement of the profits made by the agent.

12

Principal's Duties to an Agent

Not Fiduciary in nature
The principal has a duty to indemnify the agent.

13

Master (Employer)

A principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in performance of the service.

14

Servant (Employee)

A servant is an agent so employed y a master.

15

Independent Contractor

An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking.

16

Servent v. Independent Contractor

In general, if a person is subject to control of another as to the means used to achieve a particular result, he is a servant. By contrast, if a person is subject to the control of another as to his results only, he is an independent contractor.

17

Detour

Minor deviation from the employer's directions- still within scope of employment

18

Frolic

A substantial deviation from the employer's directions is usually outside of the scope of employment

19

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 the parties subjectively intent to form a partnership. No state filing or other formalities are required.

20

Voting in a General partnership

Unless otherwise agreed, all partners have equal rights in the management of the business and equal votes. Decisions regarding matters within the ordinary course of the partnership business require a majority vote of the partners. Matters outside of the ordinary course of business require the consent of all partners.

21

Sharing Profits and Losses in General Partnership

Unless otherwise agreed, profits are shared equally among the partners. Unless agreed, loses are shared in the same manner as profits.

22

Liability of Partnership in Contract

A partnership is liable for contracts entered into on its own behalf by partners with actual or apparent authority.

23

Actual Authority in Partnership

Can be created by the partnership agreement, by requisite vote of the partners or by filing a statement of partnership authority with the Secretary of State.

24

Apparent Authority in Partnership

A partner is an agent of the partnership, and a partner has apparent authority to bind the partnership to transactions within the ordinary course of the partnership's business.

25

Liability of Partners in General Partnership

Each partner is jointly and severally liable for all obligations of the partnership, but the plaintiff must first exhaust partnership resources before seeking to collect from an individual partner's assets.

26

Duties of Partners in General Partnerships

Partners in general partnerships owe fiduciary duties of care and loyalty to each other and to the partnership. they also owe a statutory duty of disclosure

27

Duty of Disclosure

Each partner and the partnership shall furnish to a partner (1) without demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the partner's rights and duties; and (2) on demand, any other information concerning the partnership's business and affairs.

28

Pick your Partner Rule

Unless otherwise agreed, a partner cannot unilaterally transfer his management rights and thereby make the transferee a "partner". the default rule for the admission of a new partner is that it requires a unanimous vote of the existing partners.

29

Dissociation

When a partner dissociates from a partnership, the partner withdraws or "bows out" of the partnership.

30

Events of Dissociation

1. a partner giving notice to the partnership of his desire to withdraw;
2. a partner's expulsion, death or bankruptcy;
3. an agreed upon event; and
4. the appointment of a receiver for a partner

31

At-Will Partnership

One where the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking. It is the default form of partnership.

32

Term Partnership

a partnership where the partners have agreed, explicitly or implicitly, to remain partners for a definite term or until the completion of a particular undertaking.