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Flashcards in Agency/Partnership Deck (56):
1

When is a principal vicariously liable for an agent's torts?

If there exists:
1) A principal-Agent relationship
*Assent, Benefit & Control; AND
2) Tort was committed by agent within scope of that relationship
* NO vicarious liability for Independant
contractors;
*intentional torts are generally outside scope

2

How is assent, benefit and control defined for purposes of a principal-agent relationship?

Assent: P, who has capacity, and the A enter into an informal agreement

Benefit: A's conduct must be for P's benefit

Control: P must have the right to CONTROL the A by having the power to SUPERVISE the MANNER of the agents performance

3

There is no vicarious liability for independent contractors, except when:

1) IC is involved in INHERENTLY DANGEROUS ACTIVITIES; OR
2) Estoppel - if you hold out you IC with the appearance of Agency you will be estopped from denying liability

4

Generally, intentional torts are outside the scope of agency what are the exceptions to this:

1) Authroized by the principal
2) Natural from the nature of employment
3) Motivated by a desire to serve the principal

5

When is the principal liable for contracts entered into by its agen?

Only if the principal authorized the agent to enter the contract:

4 types of authorization:

*Actual Express Authority -> (can be oral, except land, revocable (unless durable, and narrow

*Actual Implied Authority -> Necessity, custom, or prior acquiescence (agent believed ok from prior acquiescence)

*Apparent Authority -> 1) principal "cloaked" agent w/ appearance of authority 2) 3rd party reasonably relies on appearance of authority

*Ratification -> P has knowledge + accepts benefits (except, cannot alter terms of agreement)

6

What are the duties an agent owes to a principal?

1) Duty of Care
2) Duty to obey instructions that are reasonable - obedience
3) Duty of Loyalty ( agent can never - self-deal, usurp P's opportunity, make secret proftis at the principal's expense w/o disclosing.

7

What is a general partnership, and how is it formed?

An ASSOCIATION of 2 or MORE persons who are carrying on as CO-OWNERS of a business for profit.

Contribution of money or services in return for SHARE OF PROFITS creates PRESUMPTION that a GP exists

No formation requirements

8

What liabilities do General Partners have to 3rd parties?

1) EACH partner is liable for ALL partnerhip obligations
2) *Estoppel - Representations of General partnership, even if not really a GP, are liable as if GP

9

What are the rights and liabilities between general partners/

1) Partners are fiduciaries to eachother and the partnership -> can give rise to remedy of action ofr accounting

2) Share of Profits are only asset of partnership that is liquid and freely transferable to 3rd parties (share in management and tangible assets are not)

3) Absent an agreement:
*partners are entitled to EQUAL control (1 vote)
* No salary
* profits shared equally
* losses shared like profits

10

What's an action for accounting?

Partnership may recover losses that are caused by the breach and also may recover profits made by breaching party

11

What is a Limited Partnership?

A partnership w/ at least 1 general partner. To form must file statement naming all general partners with the state. GPs are liable for all LP obligations . LPs have limited liability, not liable for the debt obligation of the partnership itself.

BUT, an LP who manages the business becomes liable to 3rd parties who believe that LP was GP.

12

What is Registered Limited Liability Partnership?

NO partner is liable for debts and obligations of RLLP. To form, register with the state by filing statement of qualification and annual report.

13

Under RUPA, a partnership may sue or be sued in the name of the partnership or in the names of the _____________, or both.

individual partners

14

Partners may NOT agree to waive which of the following provisions of the Revised Uniform Partnership Act ("RUPA")?

A All partners have the right to inspect the books and records of the partnership.
B All partners must consent to the admittance of a new partner.
C All partners must share partnership profits equally.
D All partners must bear partnership losses equally.

A All partners have the right to inspect the books and records of the partnership.

15

Which of the following statements is true regarding a limited liability partnership (“LLP”)?

A An LLP need only have one general partner with unlimited personal liability.
B An LLP need not file a statement of registration with the State Corporate Commission ("SCC").
C Partners in an LLP are not individually liable for obligations of the partnership.
D Partners in an LLP are liable for each others' wrongful acts.

C Partners in an LLP are not individually liable for obligations of the partnership.

16

Which of the following interests of a partner in a partnership may NOT be transferred to another person?

A Rights to profits.
B Rights to losses.
C Rights to receive distributions.
D Rights of management.

Rights of management

17

Matters within the ordinary course of partnership business may ____________________, and matters outside the ordinary course of business may ____________________.

Be decided by a MARJORITY vote of the partners; be decided only by the consent of ALL partners.

18

Which of the following statements regarding remuneration of a partner is correct?

A A partner is entitled to remuneration for all services rendered.
B
A partner is not entitled to remuneration for any services rendered.


C A partner is not entitled to remuneration except for services rendered in winding up the partnership’s business.
D A partner is entitled to remuneration for all services rendered except for those services rendered in winding up the partnership’s business.

C A partner is not entitled to remuneration except for services rendered in winding up the partnership’s business.

19

What must occur for a judgment to be personally binding on a partner?

The partner must have been served

20

A transfer of a partner’s transferable interest in the partnership entitles the transferee to:

Receive distributions to which the transferring partner would otherwise be entitled.

21

Upon dissociation, the partner’s right to participate in management ________, and the partner’s duties of care and loyalty generally are ____________. Dissociation of the partner sometimes causes a dissolution (and eventual termination) of the partnership, but does not always do so.

ceases; terminated

22

A dissociated partner continues to be liable for __________________ while he was a partner, but is not liable for any partnership obligations incurred more than ______after the partnership files notice of dissociation with the State Corporation Commission.

obligations incurred; 90 days

23

A partner who wrongfully dissociates is not entitled to _______________ of the partnership.

wind up the affairs

24

In a limited partnership, a limited partner ____________________; and withdrawal ____________________.

May only withdraw in accordance with the partnership agreement; does not trigger a dissolution.

25

Is a limited partner who participates in the control of the business liable to persons who transact business with the partnership?

No, unless the transacting party reasonably believes, based on the limited partner’s conduct, that the limited partner is a general partner.

26

he Revised Uniform Limited Partnership Act ("RULPA") provides that a circuit court may dissolve a limited partnership ____________________.

If it is no longer reasonably practicable to carry on the partnership business.

27

____________________ authority results in 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 third party with whom the agent dealt was unaware of the limitation.

Apparent

28

The fact that the agent has possession of the principal’s goods does not entitle the agent to sell them or transfer good title. For the possessor of goods to be able to transfer good title without authority, she must have either ____________________ or ____________________.

Some indicia of ownership; be a dealer in the goods.

29

n a few jurisdictions, where a general agent exceeds her actual authority (i.e., violates orders) but the act performed is similar to the act authorized, the principal will be held liable. This is an example of:

inherent authority

30

Who can be bound to a contract when the principal’s identity is disclosed to the third party and the agent had authority to enter the contract?

The principal and, if the parties intended the agent to be a party to the contract, the agent.

31

A principal gives his agent authority to enter a contract with a third party. The agent discloses to the third party that a principal exists, but does not disclose the principal’s identity. Who can be bound to the contract?

Both the principal and the agent.

32

Who can be bound on a contract when the principal is undisclosed to the third party and the agent had authority to enter the contract?

Both the principal and the agent.

33

If a principal negligently selects an incompetent independent contractor, the principal will be liable to the injured third party for:

Her own negligence in selection (not the independant contractors negligence)

34

If the law requires an agent to have a license (e.g., brokers, insurance agents), ____________. Any person may be an agent, even a minor or a person with minimal mental competency. A person is not required to have contractual capacity to act as an agent.

she cannot act without one

35

An ______ will be held liable to the principal for breaches of the __________.

agent; subagent

36

Unless otherwise agreed, a princpal owes an agent a duty of:

compensation

37

An agency relationship may NOT be unilaterally terminated by the principal where:

The agent has an interest in the subject matter of the agency.

38

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?

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

39

An agent with authority to sell personal property may give________________________.

General warranties for quality

40

The principal owes the agent a ______________ her reasonably for her services unless the agent has agreed to act gratuitously. A principal has no________, even if the agent was authorized to hire subagents, unless the principal agrees otherwise.

duty to compensate; duty to compensate a subagent

41

How is a partnership terminated?

*When 1 partner dissociates himself from the partnership. (does so by giving notice of express intent to withdraw to other partners)

42

An agent has a _________ duty to notify the principle of all matters that come to the agent’s knowledge affecting the ____________.

fiduciary; subject of the agency

43

When is an agent liable for attorney feeds suffered by the principle?

when an agent breaches his fiduciary duty. (BUT, if the claim is against the agent, each side pays their own fees)

44

In an action between partners for settlement of the partnership account, the claim must be brought within_____years from the ________________ which they are interested.

5; cessation of the dealings

45

Unless th epartnership agreement provides otherwise, no one can become a partner in a partnership without the express or implied consent of how many of the existing partners?

All of the partners

46

When an employee is given authority to use force in the conduct of his duties, when will the employer be held liable?

If the employee uses any improper (negligent) or intentional but excessive use of force (security guard who misuses a gun)

47

what is the borrowed employee doctrine?

Think BAE Systems and Securitas

48

To RATIFY a contract, a principle must:

1) know or have reason to know ALL the material facts regarding the contract AND

2) accept the benefits of the contract.

49

When does a Joint Venture partnership exist?

A joint venture exists when TWO OR MORE PERSONS OR ENTITIES form a joint business enterprise for
their MUTUAL BENEFIT, with an express or implied agreement that they are to SHARE IN THE PROFITS AND LOSSES of the enterprise and that each is to have a voice in its control and management.

50

What duties to co-adventures owe eachother in a joint venture partnership?

1) fiduciary duties of care and loyalty
and
2) a duty of disclosure.

51

When is a principal liable for deals made by an agent who had been specifically assigned to work on a deal?

Generally imputed to his principal, unless:

1) the agent's behavior raises a presumption that the offers would not be reported to the prinipal OR
2) the agent is acting out of a personal motive or interest adverse to the principal's interest

52

How can a limited partner effectuate change in a partnership, without exposing themselves to liability as a general partner?

1) consulting with a and advising a GP
2) pursuing a derivative action
3) requesting or attending GP meetings;
4) proposing, approving, or disapproving changes in the nature of the business or admission or removal of a GP

A LP who participates in the control of the business is liable as a GP to persons who transact business with the partnership reasonable believing, based on the limited partner's conduct, that the limited partner is a GP.

53

When can a LP withdraw, disassociate or dissolve a partnership?

Can only withdraw or disassociate pursuant to the terms of the partnership agreement.
Can seek a judicial dissolution. The circuit court may disolve a LP if it is NO LONGER REASONABLY PRACTICAL TO CARRY ON the partnership business

54

How long are General Partners liable on all debts and obligations incurred by a partnership?

While they are a member, and for 90 days after they disassociate.

55

When are limited partners liable as general partners?

when they participate in CONTROL OF THE BUSINESS, they are liable to persons who TRANSACT WITH THE BUSINESS with the partnership reasonably believing, based upon the LPs conduct, that the LP is a GP.

56

A substitute limited partner is not liable for the assignor's unpaid capital contribution unless:

he knew of the unpaid contribution at the time he became a substitute limited partner.