Agency/Partnership

Question 1

Creation of an Agency

Answer 1

1) manifestation of the principal’s intent to grant authority to act on behalf and subject to the principal’s control; and
2) the agent’s consent to the principal’s grant of authority (act on behalf and subject to control)

Question 2

Agency analysis

Answer 2

1) Identify principal/agent
2) Capacity (min for agent; transactional capacity for principal)
3)

Question 3

Distinguishing Employees from independent contractors

Answer 3

Employee - employer controls the result and the means to achieve the result

Independent K - Employer controls the result but contractor controls the means to achieve the result (how)

Question 4

Factors for determining independent contractor

Answer 4

(1) the extent to which the agent’s work is typically performed by specialists without supervision;
(2) who supplies the agent with tools and a place for performing the work;
(3) the length and exclusivity of the employment relationship;
(4) whether the agent is paid by the job or at regularly timed intervals; and
(5) whether the agent’s work is part of the regular business of the employer

Question 5

Agency by ratification

Answer 5

1) Knowledge of all material facts at time of ratification
2) Manifest asset to bind transaction
3) Competency at time of transaction (not ratification)

Question 6

Agent’s duty of care to principal

Answer 6

1) Follow principal’s instructions
2) perform w/ reasonable care
3) indemnify for loss caused by breach of duty (w/in scope of an agency

Question 7

When does an agent not have to indemnify the principal for breaching duty of care?

Answer 7

When the actions were outside the scope of the agency relationship.

Question 8

Agent’s duty of loyalty

Answer 8

1) prefer the interests of the principal over others
2) avoid self dealing
3) can’t compete or usurp principal’s business opportunities

Question 9

Agent’s ACTUAL authority

Answer 9

Express - Oral/written communication that directly authorizes agent to act

implied - Conduct transactions that are reasonably necessary to fulfill broader responsibilities.

Question 10

When is an employee acting within the scope of the agency relationship?

Answer 10

1) Performing authorized tasks; or

2) incidental tasks (even if disobedient)

Question 11

Factors for scope of employment

Answer 11

1) hired to perform
2) w/in time and space authorized by employer
3) conduct serves interest of employment.

Question 12

When is an agent contractually liable to a third party?

Answer 12

If the principal is not disclosed - agent
If disclosed or partially disclosed - principal and agent.
If fully disclosed - principal

Question 13

when is a principal liable to a third party in tort b/c of principal’s conduct?

Answer 13

Principal Is liable to a third party for harm caused by principal’s negligence in selecting, training, retaining, supervising, or otherwise controlling an agent.

Question 14

When is principal vicariously liable to a third party?

Answer 14

the principal has a right to control the agent and the agent’s action are w/in the scope of the agency.

Question 15

When are employers not vicariously liable to third parties?

Answer 15

1) outside scope of agency/employment

2) intentional torts of employees

Question 16

What is the exception to no vicarious liability when the employer commits and intentional tort?

Answer 16

1) intentional tort was done in course of work and for the purpose of accomplishing work; 2) no defense that employer instructed employee not to use force.

Question 17

Are principal’s liable for the tortious conduct of independent contractors?

Answer 17

Generally, no; exception inherently dangerous activities.

Question 18

Apparent Authority

Answer 18

1) injured party reasonably believes party acted as an authorized agent; AND
2) Belief is based on actions/ommissions of supposed principal

Question 19

Does apparent authority exist if the principal is undisclosed?

Answer 19

No because they can’t grant authority

Question 20

General Partnership formation requirements

Answer 20

Association of two or more persons to carry on as co-owners, a business for profit.

Question 21

What is prima facie evidence that a partnership exists?

Answer 21

Sharing of profits

rebuttable by evidence that losses, management, were not shared.

Question 22

Limited Partnership Formation

Answer 22

1) file LP certificate

2) signed by all general partners

Question 23

What happens if partners fail to meet the filing requirements?

Answer 23

General partnership analysis

Question 24

How to convert a GP into a LLP?

Answer 24

Majority vote of partners (unless otherwise stated in partnership agreement); and

1) filing w/ secretary of state; and
2) payment of fee

Question 25

What UPA provisions are non-waivable

Answer 25

Duty of loyalty/care
Right to dissociate
Access to books and records

(they can be limited)

Question 26

What is the rights of general partners in managing/conducting partnership business

Answer 26

Within ordinary course of business - Absent an agreement otherwise, each general partner has an equal right to manage and conduct the partnership business. Majority vote if disagreement.

If outside ordinary course of business -> all partners must consent

Question 27

Rights of limited partners

Answer 27

1) seek information
2) inspect and copy records
3) obtain information about financial condition

Question 28

What CAN’T Limited partners do

Answer 28

1) co-manage the business

2) bind the partnership (no power to bind)

Question 29

Partnership duty of care

Answer 29

Owed to the partnership and each partner. May not engage in:

1) grossly negligent or wreckless conduct
2) intentional misconduct; or
3) knowing violation of law.

Question 30

Partnership Duty of loyalty

Answer 30

1) not to compete or appropriate partnership opportunity
2) not engage in adverse dealings
3) to account for any transaction connected w/ partnership

Question 31

Partnership Duty to disclose

Answer 31

Without demand - any information that: is related to the partnership business and reasonably required for the proper exercise of a partners rights and duties under the agreement

on Demand - Any reasonable information that concerns the partnership business

Question 32

Limited partnership Duties

Answer 32

Good faith and fair dealing.

Question 33

How do partners share profits and losses (what %)

Answer 33

Profits: Absent an agreement, each partner shares equally in the profits.

losses: absent an agreement, same percentage as profits.

Question 34

What does a transfer in partnership interest entitle the transferee to?

Answer 34

Profits, losses, and distribution NOT management or access to records.

Question 35

Events causing dissociation

Answer 35

1) death
2) bankruptcy
3) appointment of guardian
4) judicial determination
5) some specific event articulated in agreement

Question 36

How can a partner be dispelled from the partnership

Answer 36

1) provision in agreement
2) unamimous vote
3) judicial determination

Question 37

What are the tree reasons a court can dissolve a partnership?

Answer 37

1) frustrated economic purpose
2) impractical based on partnership agreement
3) impractical based on individual partners conduct.