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GMGT: 3300 Comm Law Final > Agency Principle, Limited Partnership, Limited Liability Partnership > Flashcards

Agency Principle, Limited Partnership, Limited Liability Partnership Flashcards

1
Q

Agent:
What do they create
How do they exist (2)
Work they do and what they have to disclose

A

create contractual liability for the principle
Exist by contract or estoppels
contractual work and must always disclose they are an agent

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2
Q

Not real agents example and why

A

real estate, sport agent, fashion agency. They are representatives as they don’t sign contracts on behalf of principle

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3
Q

Agents examples and what power do they get

A

stock broker, lawyer, person gets power of attorney

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4
Q

Discuss Principle, Agent and third party

A

Principle enters into an agency contract with parameters. Agent enters deal with third party. If agency contract is functioning properly, liability exists between principle and third party

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5
Q

Implied terms of partnership act

A

a term that does not exist in a contract but the courts will insert it into the contract even though parties didn’t agree to it

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6
Q

Agency Law

A

principle has authorized the agent to enter into contract with third parties on their behalf

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7
Q

How are agency laws created?

A

Getting into contract, verbal or written, clearly define boundaries of the agency etc binding authority and types of contracts

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8
Q

Common law implied laws and one example

A

courts over time have completed or created implied terms. Wrongful dismissal <- every employee entitled to reasonable notice

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9
Q

Statutory Implied partner terms in respect to partnership act - Section 27 (4)

A
  1. all partners may take part in management of partnership
  2. need the consent of all existing partners before bring in new partner
  3. All partners are liable to share equally in contributions to capital, losses and profits of partnership
  4. No partner entitled to remuneration in acting in partnership business (not employee)
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10
Q

remuneration

A

money paid for work or a service

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11
Q

Partnership act Section 32
type of paragraph
description

A

Partner fiduciary paragraph
in position of trustee or agent and therefore part of partnership - partners liable for all liabilities derived from them for any transaction of the partnership or use of them

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12
Q

Partnership act Section 33
type of paragraph
description

A

Non Competition Paragraph
if partner competes with partnership, they must pay over to the firm an account for all profits made for them in that business

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13
Q

Partnership act Section 29
title
description

A

‘if no fixed time period upon duration of business’
any partner may terminate partnership at any time on given notice of intention

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14
Q

Partnership act Section 30
description

A

if partnership ends but still continues business, notice is required

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15
Q

Partnership act Section 35-36
description

A

there will be dissolution of the partnership by death or mental incapacity of one of the partners

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16
Q

Shotgun clause

A

Up to recipient to accept and sell, or accept and buy their share of the firm. Allows to extricate yourself as shareholder or partner

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17
Q

Shotgun clause is a tool, why (2) and 1 disadvantage

A
  1. Method of getting out of partnership if can’t handle partner
  2. You buy them out or partner buys you out
  3. Ones with no capital are at disadvantage
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18
Q

Power of attorney

A

someone is chosen to do the bidding of a person incapable to carry out day-to-day legal tasks. Power of agency, determined by statute

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19
Q

Ratification

A

If agent exceeds their authority, principle is not held liable and can ratify contract to dissolve. Does not ratify then agent held liable for contract

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20
Q

estoppels

A

barrier that prevents a person from denying truth of certain facts. Prevent from someone going back on their word (what they said is truth)

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21
Q

Agent by estoppels - Apparent authority

A

act on behalf of the principal on account of past matter of transacting business or practices in trade

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22
Q

Agent by estoppels - Holding Out
2 ways

A

Principle has behaved in manner that represented the other person as their agent
or
Agent says they are agent and principal does nothing to reject it

23
Q

Agency by necessity

A

agent enters into contract with third party for benefit of the principal without consent of principal, and to limit losses that principal could experience

24
Q

Test Agency of principal
(principle is responsibility of agent)

A

if a reasonable person could assume agent is acting within scope of authority, principle bound to agent

25
Q

Termination of Agency

A

if not mentioned in contract, terminated by notice

26
Q

5 Duties of the agent to the principal

A
  1. Comply with contract establishing agency
  2. Diligent in reprising
  3. Duty of care implied: whether paid or not
  4. Personal performance, can’t sub delegate
  5. Good Faith
27
Q

Fiduciary

A

person in position of trustee, duty and loyalty to principle, candid to trustee. Represented by undertaking for another’s benefit

28
Q

Fiduciary Duties (6)

A
  1. Personal Performance
  2. No conflict of interest
  3. No secret commissions or deals
  4. Good faith
  5. Cannot represent both third party and principal
  6. cannot intercept opportunities for principal unless given permission
29
Q

Duties of principle to agent (3)

A

Remuneration
Reimbursed for expenses
Fee for service

30
Q

Quantum meruit

A

you are entitled to be paid

31
Q

Limited Partnership
Composed of 2 roles and describe liability

A

Limited partners with limited liability and general partner with majority of liabilities

32
Q

Limited Partnership:
1. Why is it not utilized as much
2. Converting to General Partner

A

Tax advantages eliminated in 90s
If limited partner participates in a manager function, can convert to general partner with limited liability

33
Q

Partnership Amendment Act and LLP

A

Provision for limited liability partnerships

34
Q

Limited Liability Partnership

A

Provides protection for personal assets of an innocent partner from liability arising from another partner, in which innocent partner not involved

35
Q

Texas 1991 and events

A

First LLP statute following claim from law, accounting firm in 1980
1. Collapse of law/accounting firm
2. Adopted LLP legislation
3. Ontario adopted and other provinces followed

36
Q

3 Professionals jobs that are permitted to run as LLP

A

Lawyers, Chartered Accountants and Certified General Accountants

37
Q

Once a LLP, not responsible for (3) things that arise from…..

A

Debts, Obligations negligence, arising from another’s partner of the partnership

38
Q

Limitations of LLP with negligence (2)

A
  1. Partner knew of negligence and failed to take reasonable steps
  2. Negligence was committed by an employee, agent, representative of the partnership for whom the partner was directly responsible in supervisory role
39
Q

Partial Shield what does and it doesn’t protect

A

protect innocent party from the negligence, wrongful acts…etc but DOESN’T provide any protection for contractual or trade debts

40
Q

Full Shield and which province has this?

A

protect innocent party from the negligence, wrongful acts and DOES provide protection for contractual or trade debts (Saskatchewan)

41
Q

Notwithstanding protection given to innocent partners…

A

Their interest in partnership still available to creditors (same with insurance) but cannot go after personal assets, so like limited liability

42
Q

Corporation
- Numerous or dominant
- What principle

A

Not most numerous but dominant
Separate entity principle

43
Q

Separate entity principle and what this means for investors for liability and suing

A

corporation is separate person from the investors (shareholders), therefore investors not responsible for actions of the corporation and thus have limited liability and cannot be sued for entity of corporation

44
Q

Big Reason for Separate entity provisions

A

Corporation have separate existence, are separate entities, and are legal persons

45
Q

Corporations and separate entity or “person” -> artificial caveat and importance of what law

A

Can’t do anything by themselves as artificial. Act through human agents. Activities conducted by humans so importation of agency law

46
Q

Characteristics of Corporate LLP Organizations (7)

A
  1. Limited Liability
  2. Tax Advantage
  3. Management Advantages
  4. Ease of transfer of ownership
  5. Continuous Existence
  6. Absence of fidelity (Loyalty)
  7. Separation of ownership and Management
47
Q

Characteristics of Organizations - Limited Liability
critical feature of corporation
Description
2 Benefits compared to industrial revolution

A
  • Shareholder only liable to lose their investment or amount of shares (protection of assets)
  • routinely incorporate business, emboldened NA Investors so large prosperity
  • Vital to economy with wealth generated
48
Q

Characteristics of Organizations - Tax Advantages (2) plus dividend sprinklng

A
  1. Payments of salary to spouse and children easily facilitated
  2. Dividend Sprinkling: giving dividends to family members who are in lower tax brackets for marginal lower tax rates
  3. Small Business Tax Deductions: Eligible for tax savings for corporate tax rate (MB 11% < $500000)
49
Q

Characteristics of Organizations - Tax Advantages (4-7)

A
  1. Preferential Tax breaks for dividends
  2. Capital Gains exemption for the sale of shares for the first $750,000
  3. Estate Freeze: Pass active Shares to your heirs without tax consequences
  4. Independent Pension Plan: deduct income but not same limit (gain tax deferral)
50
Q

Characteristics of Organizations - Management elections of shareholders

A

partnership unsuitable with lots of investors. Shareholders have no authority to participate in management with Corporation, only right is elect board of directors

51
Q

Characteristics of Organizations - Ease of transfer of ownership

A

difficult in partnership but with corporation, shareholder has no difficulty (transfer allowed and ends relationship)

52
Q

Characteristics of Organizations - Continuous Existence

A

Artificially entity that can live for ever. If someone dies, corporation doesn’t have to dissolve. Annual fees

53
Q

Characteristics of Organizations - Absence of Fidelity (Loyalty)

A

Partners cannot compete due to fiduciaries. Shareholders not fiduciaries so can have shares with other companies

54
Q

Characteristics of Organizations - Separation of ownership and management with companies based on size

A

2 types of organizations Small companies and large companies. Size will depict ownership and management duties

GMGT: 3300 Comm Law Final (12 decks)

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