Agency, PS Flashcards
(29 cards)
Limited Liability PS
- ALL ps have lim liability
Formation:
1) MUST file statement of qualification w/SoS (includes effective date, names and addresses of Gen ps and agents of service)
2) MUST have name and LLP, RLLP
LLPS agreement: written or oral but SoF may apply (MOLES)
Agent’s duty to Principal
Fiduciary Duty: A (even if unpaid) owes fiduciary duties to P:
1) Duty of Care: A must carry out agency w/reasonable care under the circumstances and A’s skills
2) Duty of Loyalty: UNDIVIDED loyalty to P so A must:
- Account to P for profits
- Act solely to benefit P (not A or TP)
- No self-dealing against P
- No compete w/P
- Not use P’s property for A’s own purpose
3) Duty of Obedience: A must obey all reasonable directions of P
Capacity (Agency)
- P must have contractual capacity
- A does not
Agency
Fiduciary relation resulting from a manifestation of MUTUAL consent by P and A that A will act on P’s behalf and subject to P’s control
- NO writing required
- NO consideration required
- REQUIRES consent by BOTH P and A
- A MUST act primarily for the benefit of P
- A acts subject to P’s control
Members Rights Duties and Liabilities in LLC
1) Voting and management
Members: all have equal right to manage
- Acts w/in ordinary course of LLC: ONLY majority vote of members
- Acts outside: requires unanimous vote from all members (e.g. admit new ps, amend PS agreement, sale of all PS prop)
2) Financials: based on member contribution
3) Liability: members NOT personally liable for LLC. ONLY lose investment in LLC
Ratification of K (Agency)
If A has no autho at time of making K, P is bound by A’s actions if P ratifies K by:
- Express: oral or written
- Implied: P accepts benefits
Elements:
- P has knowledge of ALL material facts of K
- P accepts ENTIRE K (cannot ratify portion)
- Cannot alter rights of TP
Limited Liability Companies LLC
- owners called members
Formation:
1) MUST file articles of organization w/SoS (includes effective date, names and addresses of Gen ps and agents of service)
2) MUST have name and LLC
LLC agreement: written agreement can displace almost all statutory provisions
Procedure of dissociation (Gen PS)
Depending on type of dissociation, two options:
- Liquidation: PS is dissolved and buss must be wound up (sold off)
- Buyout: PS continues by buying out dissociated ps
Liability of dissociated partner (Gen PS)
- Dissociated ps remains liable for pre-dissociation PS obligations AND possibly for post-dissociation up to two years UNLESS dissociated ps give notice to creditors directly
- Apparent autho: dissociated ps has apparent autho to bind PS but cannot exceed two yrs UNLESS PS gives notice to creditors directly
- Distribution of liabilities:
1) Creditors: outside (e.g. lenders, suppliers) and inside (e.g. ps gave loan to PS)
2) Repay ALL capital contributions paid by ps into PS
3) Profits or losses
Partnership
Elements:
1) Two or more persons
2) Intend to carry buss for profit
- Subjective intent to NOT form (even if written in K) a PS is irrelevant
- NO formal filing required
- NO writing required BUT SoF may require it (MOLES)
- If PS agreement follow terms otherwise default rules
- At-will PS (no agreed-upon term to remain ps): e.g.: forming a PS to just to conduct a buss w/no time restriction
- Term PS: agreed-upon in PS agreement
- Presumed PS if:
1) Sharing of profits (revenue-expenses=profits) unless payment for deb, wages, rent, interest on loan
2) Right to control buss EVEN if never actually exercised - PS by Estoppel: ps held out as PS to the world and TP reasonably relies to TP’s detriment
Limited Partnerships
- At least one Gen ps and at least one lim ps
Formation:
1) MUST file certificate of LP w/SoS (includes names and addresses of Gen ps and agents of service)
2) MUST have name and LP
LPS agreement: written or oral but SoF may apply (MOLES)
Partnership Dissociation and dissolution (Gen PS)
- Dissociation: withdrawal from PS by:
1) notice to ps
2) ps expulsion, death, of BK
3) agreed-upon event
4) appointment of a receiver for a ps - Wrongful dissociation: withdrawal by
1) breach of express terms in PS agreement
2) withdrawal, expelled, or BK before end of term
a) At-will PS (no agreed-upon term to remain ps): e.g.: forming a PS to just to conduct a buss w/no time restriction
b) Term PS: agreed-upon in PS agreement - ps is liab to PS for damages caused by wrongful dissociation
Gen PS and LLP rights and obligations
1) Voting and management
- ALL ps have equal rights to manage and vote
- Acts w/in ordinary course of PS: ONLY majority vote
- Acts outside: requires all ps to vote unanimously (e.g. admit new ps, amend PS agreement, sale of all PS prop)
2) Salary/compensation
- NO right to salary or compensation unless otherwise agreed
3) Financials
- Profits: shared equally unless otherwise agreed
- Losses: share in same manner as profits (not necessarily equally)
Ownership Interest and transferability in LLC
Member ownership in LLC
- New member MUST be admitted by unanimous vote
- Management rights
Limitations: members CANNOT unilaterally transfer management rights to make a TP a member (need unanimous vote)
- Financial rights: rights to profit distribution from LLC may be transferred to TP BUT member remains a member
Types of Autho (Agency)
1) Actual: autho that A actually thinks A possesses based on P’s acts w/A
- Express Actual
- Implied Actual: A reasonably believes A has autho based on P’s acts
- Termination by: specified time, reasonable time if not specified, change of circumstances, breach of A’s fiduciary duty, unilateral act by P or A, death/incapacity of P or A
- After termination: Actual autho can linger creating apparent autho
2) Apparent autho: P holds out A as having autho to TP
- Apparent autho by title or position: A has actual autho to the extent that A reasonably believes A has autho
- A CANNOT create apparent autho (P holds out A to have autho)
Partnership liability in LLP or RLLP
- ps in LLP is NOT personally liab (directly or indirectly) for LLP obligations whether in tort, K, or otherwise
- Lim ps liable for its own wrongful act
LLC and all PS Taxation
- Taxed on “pass-through” basis: buss income is pass-through to owners and reported on owner’s individual tax returns regardless of whether buss income is actually distributed to ps
Lim PS Rights, Duties and Liability
1) Voting and management
Gen ps: each has equal right to manage
- Acts w/in ordinary course of PS: ONLY majority vote of Gen ps
- Acts outside: requires all Gen ps and lim ps to vote unanimously (e.g. admit new ps, amend PS agreement, sale of all PS prop)
Lim ps: NO management rights unless in PS agreement
2) Financials: based on ps contribution
3) Liab:
- Gen ps: liab for obligations of LP just in general PS
- Lim ps: NOT personally liab for LP obligations. ONLY lose value of investment
Partners liabilities
- Apparent autho: PS is P and ps are A of PS thus ps has apparent autho to bind PS unless TP is aware of restricted autho
- Actual autho: by PS agreement, vote of ps, or filing “Statement of autho” w/SoS
1) Tort liab: PS liable to TP for conduct of ps or employee w/in scope of buss of PS or w/in autho of PS
2) K liab:
- ONLY PS is liable if: actual, apparent, or ratification
- Restricting or granting autho to deal w/RealProp: filing “statement of autho” w/SoS AND recording in county gives TP constructive notice
- Granting autho to deal w/anything other than RealProp: filing “statement of autho” w/SoS binds TP
- Restricting autho to deal w/anything other than RealProp: NOT binding on TP
3) Liab of ps: ALL gernal ps are each jointly and severally liab for ALL PS obligations (tort and K) but MUST exhaust PS resources before collecting individually from ps
4) Liab of new ps (admitted by unanimous vote by ps): NOT liab for PS obligations before admission, ONLY loses amount of investment in PS
Members Duties in LLC
- Gen ps owes LP AND other ps fiduciary duties
- Managing members owe fiduciary duty to LLC AND other members
1) Duty of Care: managing members must not be Grossly Neg, reckless, intentional misconduct (NO breach if merely Neg = BJR is a defense)
2) Duty of Loyalty: UNDIVIDED loyalty to LLC so managing members must:
- Account to LLC for profits
- Act solely to benefit LLC
- No self-dealing against LLC
- No compete w/LLC
Partners Duties in LP
- Gen ps owes LP AND other ps fiduciary duties
- Lim ps: NO duty to LP or other ps
1) Duty of Care: Gen ps must not be Grossly Neg, reckless, intentional misconduct (NO breach if merely Neg = BJR is a defense)
2) Duty of Loyalty: UNDIVIDED loyalty to LP so Gen ps must:
- Account to LP for profits
- Act solely to benefit LP
- No self-dealing against LP
- No compete w/LP
Statutory Duty:
3) Duty of disclosure: Gen ps and LP shall provide Gen ps
- w/o demand: info concerning LP’s buss reasonably required to exercise rights and duties
- on demand: info concerning LP’s buss
-*- LPS agreement CANNOT eliminate fiduciary duties (loyalty and care). Duty of disclosure may be eliminated
Dissolution of LLC, LP
LLC may be dissolved by:
- according to operating agreement
- consent from ALL members
- Judicial dissolution: Ct may order if LLC’s activities are unlawful, OR not reasonably practicable to carry company’s activities in conformity w/operating agreement, OR for management misconduct (managing members acted illegally, fraudulently, in oppressive manner to other members)
Principal obligations to Agent
- NO Fiduciary duties
- Obligation to indemnify A for costs in carrying out A’s duties for P
- Obligation to compensate A unless otherwise agreed
Remuneration (Gen PS)
A ps is NOT entitled to remuneration except for services rendered in winding up the PS
