Agency and Partnerships

Question 1

who must have contractual capacity to enter into an agency relationship

Answer 1

the principal

Question 2

to create an agency relationship _____ by both the principal and agent is needed

Answer 2

consent

Question 3

_____ is created where a principal holds another out as his agent to a 3rd party

Answer 3

apparent authority

- makes the principal a party to the K with contractual rights and liabilities

Question 4

duties owed by an agent to a principal

Answer 4

• to carry out the agency with reasonable care
• to obey all reasonable directions of the principal
• to notify the principal of all matters that come to the agent’s knowledge affecting the subject of the agency

Question 5

implied actual authority is…

Answer 5

the authority an agent believes she has based on her communications and relationship with the principal

Question 6

primary overriding factor in determining whether a person is an employee

Answer 6

whether the principal has the right to control the manner and method of performance

Question 7

elements to establish a principal’s liability under the doctrine of respondeat superior

Answer 7

• employer-employee relationship AND

- conduct within the scope of employment

Question 8

detour

Answer 8

minor deviation from an employer’s directions generally falls within the scope of employment

Question 9

frolic

Answer 9

major deviation from an employer’s directions falls outside the scope of employment

Question 10

what kind of authority results from a situation where a principal limits the actual authority of his agent to act, the agent acts beyond the scope of the limitation, and a 3rd party with whom the agent dealt was unaware of the limitation

Answer 10

apparent

Question 11

for the possessor of goods to be able to transfer good title without authority, she must have either…

Answer 11

some indicia or ownership OR be a dealer in the goods

Question 12

the type of actual authority contained within the four corners of an agency agreement is…

Answer 12

express authority

Question 13

who can be bound to a K when the principal’s ID is disclosed to the 3rd party and the agent had authority to enter the K

Answer 13

the principal and, if the parties intended the agent to be a party to the K, the agent

Question 14

a principal gives his agent authority to enter a K with a 3rd party. the agent discloses to the 3rd party that a principal exists, but does not disclose the principal’s ID. who is bound

Answer 14

both the principal and agent

Question 15

who can be bound on a K when the principal is undisclosed to the 3rd party and the agent had authority to enter the K

Answer 15

both the principal and agent

Question 16

if a principal negligently selects an incompetent independent contractor, the principal will be liable to the injured 3rd party for

Answer 16

her own negligence in selection

Question 17

duty implied by law that an agent owes to a principal

Answer 17

• duty of loyalty
• duty of obedience
• duty of reasonable care

Question 18

an agent will be held liable to the principal for breaches of a…

Answer 18

subagent - even if agent exercised diligence and good faith in appointing the subagent

Question 19

unless otherwise agreed, a principal owes an agent a duty of…

Answer 19

• compensation
• duty to indemnify her for all expenses or losses reasonably incurred in discharging any authorized duties
• duty to cooperate
• whatever duties may be imposed by a K with an agent

Question 20

two types of agency relationship that may not be unilaterally terminated by the principal

Answer 20

• agent has an interest in the subject matter of the agency

- power is given for security

Question 21

the existence of apparent authority usually requires

Answer 21

the reasonable belief by a 3rd party that the agent had authority to act

Question 22

a principal will NOT be bound by the agent’s acts where the principal limits the actual authority of the agent to act, and a…

Answer 22

third party with whom the agent deals knows of the limitation but the agent acts beyond the scope of the limitation anyway

Question 23

a principal may hold out another as possessing authority, inducing a 3rd party to reasonably believe authority exists by

Answer 23

• words stated by the principal
• conduct on the part of the principal
• inaction on the part of the principal

Question 24

an employer will be liable for the torts that result from friction naturally engendered by the…

Answer 24

employer’s business

Question 25

if an employer lends the services of her employee to another and the employee commits a tort while performing in his loaned role, who is liable

Answer 25

the loaning employer, if the employee remains under the right of control of the loaning employer

Question 26

what is required to form a partnership

Answer 26

intent to run a business as co-owners

Question 27

a partner is not entitled to remuneration except for services rendered in....

Answer 27

winding up the partnership's business

Question 28

apparent authority is authority a 3rd party reasonably believes a partner has based on...

Answer 28

him being held out by the partnership as a partner

Question 29

under the TBOC, at what point may a creditor proceed directly against a partner on a partnership

Answer 29

when the partnership is bankrupt

Question 30

a partner in an LLP is personally liable for...

Answer 30

her own acts of negligence

Question 31

an affirmative vote of a majority of all members of an LLC is required to approve actions that would...

Answer 31

make it impossible for the company to carry on ordinary business

Question 32

what actions require the affirmative vote of ALL LLC members

Answer 32

- amending the certificate of formation or company agreement - issuing new membership interests in LLC - changing the structure of the LLC from member-run to manager run or vice versa

Question 33

what is necessary to form an LLC

Answer 33

the filing of a certificate of formation with the secretary of state

Question 34

factors that indicate the existence of a partnership

Answer 34

- agreement to share losses or liabilities for claims by 3rd parties against the business - right to receive a share of the profits - participation in control of the business

Question 35

partnership by estoppel

Answer 35

when a person, by words or conduct, represents herself or permits another to represent her as a partner, she will be liable to 3rd parties who extend credit to the actual or apparent partnership

Question 36

general partner liability

Answer 36

- partners are jointly and severally liable for all obligations of the partnership - partners are personally and individually liable for the entire amount of all partnership obligations - incoming partners are not personally liable for any partnership obligation incurred before their admission to the partnership

Question 37

required to form a limited partnership

Answer 37

- certificate of formation filed with the secretary of state - office where records are maintained - agent in the state to receive service of process - written partnership agreement or some other record must contain info about partner's contributions, the events that will require winding up of the partnership, and the date on which each partner became a partner

Question 38

a person who erroneously believes herself to be a limited partner can avoid being held liable as a general partner if, on ascertaining the mistake, she files a certificate of formation or amendment with the secretary of state or...

Answer 38

withdraws from future equity participation in the enterprise and files a certificate to that effect with the secretary of state

Question 39

a limited partner is liable as a general partner if she participates in the control of the business and the person dealing with the limited partnership...

Answer 39

reasonably believes that the limited partner is a general partner

Question 40

a member or manager of an LLC is generally liable for..

Answer 40

- any distribution made to the member that the member knows caused the liabilities of the company to exceed the fair value of its assets - the debts, obligations and liabilities of the LLC set out in the company agreement - contributions of cash or property that the member promises to the LLC

Question 41

transferability of an LLC interest

Answer 41

- membership interest in an LLC is assignable - assignee of an LLC membership interest becomes full member if all members of the LLC consent - a person may become an assignee of an LLC membership interest through divorce or upon a member's death

Question 42

management of an LLC

Answer 42

- presumed that managers will manage an LLC - company agreement may limit the ability of a manager or member - certificate of formation may not limit liability for breach of the duty of loyalty

Question 43

partner's fiduciary duty to the partnership

Answer 43

- refrain from competing with the partnership - exercise the degree of care an ordinarily prudent person when acting on behalf of the partnership - account to the partnership for any benefit derived by her use of the partnership property

Question 44

PLLC

Answer 44

every member must be licensed to render the professional service

Question 45

when is a member of an LLC also an agent of the LLC for purposes of the LLC's business

Answer 45

when the certificate of the formation vests mgmt of the company in its members