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Flashcards in Agency/Partnership Deck (77)
1

Agency

Agent is authorized to represent principal with third parties

2

Agency Creation Elements

(1) Consensual by both parties -No consideration required -No writing required (except SOF) (2) Principal must have contractual capacity (3) Agent only needs minimum capacity

3

Agent's Duties

(1) Loyalty (2) Obedience (3) Reasonable care

4

Principals Legal Actions against Agent

(1) Breach of contract (2) Tort (3) Equity (4) Withhold compensation

5

Subagents versus Coagents

Subagent - appointed by agent to perform agent's functions Coagnet - appointed by agent to perform on behalf of principal (no sharing)

6

Subagent's Duties

If authorized - owes principal same duties as agent If unauthorized - owes no duties to principal, owes duties to agent

7

Principal's Duties

Reasonable compensation and reimbursement for expenses.

8

Agent's Legal Actions against Principals

(1) Contract remedies (2) Lien

9

Actual Authority

Agent reasonably believes she possesses based on Principal's dealings with her (express or implied).

10

Apparent Authority

Third party reasonably believes agent has authority based on third party's dealings with the principal.

11

Will Principal be bound: Agent has actual authority

Yes

12

Will Principal be bound: Agent has apparent authority

Yes

13

Will Principal be bound: Agent does not have actual or apparent authority

Ask if principal ratified the contract after agent entered into it - if yes then bound if no then not bound.

14

How do you terminate actual authority

(1) Lapse of time (2) Specific event (3) Change in circumstance (4) Agent's breach of duty (5) Unilateral termination (6) Operation of Law

15

Does death terminate P/A relationship?

Yes - unless it was coupled with a valid contract

16

Does apparent authority linger?

Yes - and P can still be bound by A's actions even if the P/A terminated but third parties didn't know it terminated and P makes it seem A is still an agent to third parties.

17

P bound if A exceeds actual authority?

No - unless P permitted the agent to exceed it or A committing acts that come within customary responsibilities.

18

Ratification

A had no authority to act but P validates and becomes bound. (1) P must know all material facts (2) P must accept entire transaction (express/implied) (3) P must have capacity

19

Cannot Ratify When..

(1) Performance was illegal (2) Third party withdrew (3) Material change to circumstances

20

Liability: Principal

Bound if authority existed (actual, apparent, ratification)

21

Liability: Agent

Bound unless P's existence and identity disclosed

22

Liability: Third Party

Bound to P if valid authority existed; Bound to A if P unidentified or undisclosed and agent enforces contract, but P entitled to contract benefits.

23

Vicarious Liability

Joint and several liability for agent's tort imputed to P.

24

Respondeat Superior - employee

(1) Employer/Employee relationship existed (control means employee no control mean IC) (2) Was within employee's scope of employment

25

Respondeat Superior - Independent contractor

(1) If activity was inherently dangerous or knowingly incompetent, then P liable.

26

Detour or Frolic?

Detour - small deviation and authorized in scope of employment Frolic - major deviation and not authorized - P not liable until back within scope of employment

27

Partnership

Association of two or more persons to carry on as co-owners of a business

28

Act that governs partnerships

Revised Uniform Partnership Act - or a separate agreement

29

Partnership formation

All you need is intent capacity consent - doesn't have to be in writing

30

If no agreement in writing what will a court look at to determine whether it existed?

Intent, or Sharing profits - presumption of partnership

31

Titled Property (RUPA) - Property Deemed Part of Partnership

(1) titled in the partnership name, or (2) Titled in name of one of the partners and instrument transferring notes title of transferee as partner

32

Titled Property (RUPA) - Property Presumed Part of Partnership

(1) Purchased with partnership funds

33

Common Law Criteria for Property of Partnership

(1) Use of partnership funds (2) Use of property by partnership (3) Relationship between property and business (4) Improvement with partnership funds (5) Mainteance with partnership funds

34

Partner's right to use property

Only can use can - cannot transfer it or use outside benefit of partnership

35

Partner's interest in partnership

(1) Treated as personal property (2) Transferrable without dissolving partnership (3) Attachable

36

Rights of Partners in general partnership

(1) Management participation (2) Fiduciary duties (3) Accounting (4) Indemnification (5) Inspect books (6) Sue his partnership

37

Authority of Partners

Only have apparent authority for purposes of business: (1) Act of any partner (2) binds the partnership for carrying on in the original course of business, unless (3) partner had no authority (4) person dealing with partner knew this

38

When is actual authority given to partners

For extraordinary acts - unanimous vote. Or if there was a vote or communication between the partners.

39

Liability of Partners

(1) Liable for all contracts within scope of business (2) Liable for all torts within scope of business (3) It's joint and several (4) Individually liable (5) Not retrospective once a partner (6) Outgoing partner liable for all time he was a partner unless a release, payment or novation

40

Disassociation of Partner

(1) Partner expressly states (also triggers dissolution - otherwise does not) (2) Agreed event (3) Expulsion (4) Partner's bankruptcy (5) Partner's death/incapacity (6) appointment of receiver

41

Consequences of disassociation

(1) Right to participate in management ceases (2) Partnership must buy out partner (3) Indemnify (4) Partnership can hold liable for damages if disassociating against an agreement

42

Disassociate Partner's Power to Bind Partnership

Can still bind (1) Within 2 years of disassociation (2) Third party didn't know he wasn't a partner (3) Act would have bound the partnership before disassociation

43

Dissolution Triggers (RUPA)

(1) Notification by any partner to withdraw (2) Expiration if definte term of partnership (3) Consent of all partners (4) Within 90 days of partner's death - at least 1/2 of partners wish to dissolve (5) Unlawful to continue (6) Issuance of judicial decree

44

Powers to Bind Partnership After Dissolution

File with secretary of state to get 90 day notice and prevent further binding. Partnership can be bound by any act of partner for winding up business and whoever partner dealt with and had no notice

45

Does Partnership continue after dissolution?

Yes - until it is wound up

46

Who can wind up a partnership

All living partners except if partner wrongfully dissolved or bankrupt partners

47

How do you distribute partnership assets after dissolution and windup?

(1) Reduce all assets to cash (2) Pay in following order: (3) Creditors, including partner creditors (4) Partner accounts - partner who pays more entitled to contribution.

48

Benefits of a Limited Liability Partnership (RUPA)?

Partners not personally liable from contract, tort or otherwise. DOES NOT SHIELD FROM OWN WRONGFUL ACTS.

49

How do you become an LLP?

(1) Amendment partnership agreement to include it (2) File statement with secretary of state

50

What information must you provide secretary of state for an LLP?

(1) Agreement by two or more partners (2) Name and address of partnership (3) Statement of intent to be an LLP (4) Deferred effective date, if any. (5) Name must end with LLP

51

What is a Limited Partnership (RUPA)?

Consists of general and limited partners. General - personally liable Limited - not personally liable - liability limited to your contribution

52

How do you become an LP?

Creation of statute - just follow the LP statute for that state and then just file with secretary of state

53

What duties to a partner owe to the partnership?

Loyalty Care

54

Does general partner violate duty of loyalty if conduct futhers own interests?

Not necessarily

55

Duties of general partner

Loyalty and Care

56

Duties of limited partner

No duty unless partnership says otherwise

57

Liable for improper distribution?

No - unless knowingly took it or was not reasonable

58

Rights of All Partners in Limited Partnership

(1) Distribution (2) Assignment - but entire transfer grounds for expulsion (3) Transact business with partnership (4) Dissolve (5) Sue

59

Rights of General Partners in Limited Partnership

(1) Management -Must get consent from all general and limited partners to amend agreement, convert partnership, dispose of substantial amount of property, admit a new partner (2) Right to information (3) Indemnification

60

Rights of Limited Partners in Limited Partnership

(1) Management only if partnership agreement allows (2) Right to information

61

Dissolution of Limited Partnership

(1) Failure to pay fees (can be reinstated) (2) Application of partner if no longer practical to carry on (3) Specific time frame (4) Consent of all general and limited partners holding a majority (5) Disassociation of general partner and then consent of majority - or no new general partner after 90 days (6) 90 days after last limited partner

62

Conversion or merger of limited partnership

(1) Consent of all partners (2) Filing a certificate with secretary of state

63

Limited Liability Company

(1) Hybrid organization (2) Taxed like a partnership (3) Offers owners limited liability of shareholders of corporation (4) Can run either like a partnership or corporation (5) No one has to accept personal liability

64

Formation of LLC

(1) File certificate with secretary of state (2) Must have at least one member (3) Name of LLC (4) Address of registered office (5) Name of registered agent

65

Member managed LLC

Members owe each other duty of care and loyalty

66

Manager managed LLC

Only managers owe duty of care and loyalty Only members may authorize an act of manager that would otherwise violate duty of loyalty

67

Piercing corporate veil

Managers and members only personally liable if court pierces corporate veil

68

Distributions in an LLC

Must be equal unless operating agreement provides otherwise

69

Indemnification of an LLC

Members of member managed indemnified Managers of manager managed indemnified

70

Right to Information in an LLC

Member managed: Member has right to inspect. Manager managed: Manager has right to inspect. Member can inspect if (1) member seeks info for purpose material to member's interest, (2) makes demand with reasonable paticularity

71

Who can bring action against an LLC?

Member injured personally

72

Transfer of interests of an LLC

Only transfer right to receive distribution

73

Dissociation of LLC

Member can disassociate at any time but may be liable for damages to LLC per agreement

74

Dissolution of LLC

(1) Event in operating agreement transpires (2) Consent of all members (3) 90 days in which there are no members (4) Judicially (5) Administratively (failure to pay fees - comes back like it never went away once fee repaid)

75

When can partner bind partnership

Within ordinary course of business: majority vote for actual authority, or apparent authority with no knowledge by seller that he did not. 

Outside ordinary course of business: unanimous vote for actual authority, no apparent authority. 

76

77

How does a corporation share profits and losses

Profits shared equally, and losses are split in the same ratio as profits