Business Associations Flashcards
(12 cards)
I. (a) The issue is whether the man and woman’s relationship makes them partners.
A partnership as an agreement made by two or more people to manage a business for profit together. A partnership consists of managing the business together and sharing profits. There is a presumption that when profits are shared then the business is a partnership. This presumption is rebuttable though and does not exist in a normal employer-employee situation. The intent of the individuals governs whether a partnership exists and not any
formal writing.
Application
Here, the man and woman are not partners. The woman is operating the food truck business on her own and she speaks to the man about picking up produce for her. The man and woman go to the market together for a few days and then the man is solely responsible after that. The woman still fully operates the food truck, outside of the man getting her the produce, and decides which
vendors to use for the produce. The man is compensated by the woman in the form of reimbursement for his purchases and he receives $20 per day. He also receives 10 percent of the food truck’s profit. Because of this, there is a presumption that this is a partnership. However, this is rebutted because he does not participate in the management of the business and acts in a role
that an employee would. Thus, because of this, the man and woman are not partners.
(b) The issue is if the man and woman are partners would the woman be liable for the man’s negligent conduct.
When a partnership is created the partners are jointly and severally liable for the conduct of the other partners and also for the partnership when it is within the scope of the partnership. In order to satisfy a judgement against a partnership, all the partnership assets would first need to be exhausted and then the partners would become personally liable for the deficiency.
Application
Here, assuming that a valid partnership did exist, the woman would be liable for the man’s negligence. This is because the man was parking at the market when he hit the farmer’s stall. This means that the man was acting within the scope of the partnership because his job was to go to the market and pick up the produce for the partnership for the day. Also, the farmer could bring an action against the man, the woman, or the partnership because they are all
jointly and severally liable for the conduct of the partners. If the farmer brings an action against the partnership though, he would first need to satisfy the judgment using the assets of the partnership, he then can go after the partners personally for the remaining liability. Thus, if there was a valid partnership, the woman would be liable for the man’s negligence because he was acting within the scope of the partnership.
II. (a) The issue is whether the man is an employee of the woman.
An individual is considered an employee when the conduct of the individual is within the control of the employer. Some factors to look at when determining if an individual is an employee are how regular their conduct is, how much control the employer has over the employee, does the company provide the tools needed for the task, is the individual responsible for their own expenses incurred in relation to the task.
Application
Here, the woman has the man go to the produce market to pick up the produce she needs for the day. The woman goes to the market with the man to give him an idea of what she needs, but after a few times the man is responsible for going and picking the produce out himself. The man also provides his own transportation to and from the market. He pays for the produce and she reimburses him. Thus, because the woman does not control the man or provide the tools needed for the task, the man likely is not considered an employee of the woman.
(b) The issue is whether the woman would be liable for the man’s negligence if he was an employee.
An employer is responsible for the negligence of an employee when
the employee is acting within the scope of employment. The scope of
employment is when the employee is acting for the benefit of the employer and is conducting actions that are relative to their responsibility. A frolic is a deviation from this and is not considered part of the scope of employment. Respondeat superior is when an employer is vicariously liable for the negligence of an employee.
Application
Here, the man was parking at the market when he got into a wreck. This was because the man was going to pick up the produce for the woman. This was the man’s duty as an employee. The man was acting directly within the scope of employment because he was doing what was asked of him by the woman. Because of this, the doctrine of respondeat superior would cause the woman to be liable for the negligence of the man.
III. (a) The issue is whether the man was an independent contractor for the woman.
An independent contractor is someone who is hired by an employer to complete a task but is not considered an employee. The same factors as discussed above are used to distinguish an employee and independent contractor.
Application
Here, the man is likely to be considered an independent contractor. This is because the man had to provide his own vehicle to go pick up the produce. Also, the man was free to make his own decisions about which vendor and which produce to pick up for the woman. The man also had to cover his own expenses to get to and from the market. He also purchased the produce with his own money and the woman simply reimbursed the man. Thus, because of this the man is likely to be considered an independent contractor.
(b) The issue is whether the woman is liable for the conduct of the man as an independent contractor.
An employer is not likely to be found liable for the negligence of an
independent contractor. This is unless the conduct was ondelegable,
dangerous, or another situation in which the employer maintains liability because it is a nondelegable duty.
Application
Here, the man was an independent contractor for the woman whose job was to go to the market and pick up produce. This is not an inherently dangerous activity or a task that is nondelegable for some reason. Because this is an independent contractor relationship the woman will not be liable for the man’s negligence. Thus, because the man is an independent contractor the woman is not liable for the man’s negligence.
