Chpt 15-16 Flashcards
(25 cards)
Who is an “agent”?
a person appointed to act for another, usually to accomplish some particular goal via actions, used in contract matters.
How does a principal-agent relationship arise?
- By express agreement: oral or in writing
- By contact: inferred from the actions
- By estoppel: representation by words or conduct that a person is an agent cannot be later denied if a third party relies on the representation
What is agency by estoppel?
a representation by words or conduct that a person is an agent cannot be later denied if a third party relies on the representation.
What is agency by operation of law?
Agency that may arise out of necessity where it is not possible to obtain the authority from the principal (example: emergency situations)(agency by necessity)
Are agents employees?
No, there is a contractual relationship
Who is the “principal”?
A person on whose behalf an agent acts
What are the duties of the parties?
Act in good faith
Principal: Pay for services, compensate agents for reasonable expenses
Agent: obey lawful instructions of principal, keep information confidential, inform principal odd any important developments, maintain standards, duty to the principal and not to the third party
All employees are agents
Employees represent the company and may or may not act beyond the scope of their job possibly opening them to be sued
Explain estoppel - detrimental reliance
Rule whereby a person may not evade a promise or evade truth of a statement of fact made by him or her when another person has relied and acted upon the promise or statement
(Can apply if person relies on impression that someone is a principal’s agent)
What should a provincial do when they terminate a relationship with an agent?
They should notify the 3rd party of the termination
What is ratification?
When a principal wishes to take advantage of contract negotiated by their agent when their agent did not have the authority to negotiate, within reasonable time abcs for entire agreement
When is the principal held liable for tort committed by agent?
If committed in ordinary course of carrying out agency agreement (ex. fraudulent misrepresentation/tort of deceit)
What are ways that the agency relationship is terminated?
At expiry of fixed or implied notice period
Task is completed
Incapacity of either party
Bankruptcy if principal
(Must inform 3rd parties)
What is a sole proprietorship?
Business where the sole owner is responsible for the management, debts and liabilities of the business.
What is a partnership?
Legal relationship between two or more parties for the purpose of carrying on a business with a view to a profit (General partnership)
Unlimited liability for debts, usually has an active role in management)
Difference between partnership or co-ownership?
Partnerships are contractual, founded on trust, selling assets requires consent, both act as agents, subject to ‘partnership act’
Co-ownership can arise is several ways (ex inheritance), assets can be sold without consent, non-agents, dissolved through disposition of property
Can a sole proprietorship or partnership own assets?
No, assets are held in trust, it would be under a legal name and equitable interest and use would be for the entity
What are the rules in Partnership Act?
- Equal share in capital and profits, and must contribute equally to losses
- Indemnity (contractual promise) by the firm for personal payments and personal liabilities
- Every partner may take part in management
- No remuneration (pay) for acting in the business (i.e. no extra remuneration for acting as an employee / cannot be an employee)
What is joint and several liability?
Where partners individually and as a group have liability for a debt of the partnership.
How are sole proprietorship/partnership/corporation created?
SP: by starting to operate a business under your own name or a chosen business name. There are no formal legal steps required to establish it
Partnership: when two or more people agree to carry on a business together with a view to profit, which can be done through a verbal agreement, though a written agreement is recommended to outline the terms and conditions of the partnership.
Corp: file Articles of Incorporation with the Alberta Corporate Registry
Why would you set up SP vs. partnership vs. corporation??
A sole proprietorship is simplest for beginners with low-risk, low-growth plans, offering direct taxation and ease of setup.
A partnership is suitable when shared resources and decision-making are needed, but it comes with unlimited liability and potential for partner conflicts.
A corporation is ideal for businesses aiming for long-term growth, seeking limited liability, and needing access to capital, though it involves more complex record-keeping and compliance.
How is a partnership dissolved?
- Can be explicitly agreed in writing
- Can occur automatically at the end of a term set in an agreement
- When a partner dies or becomes insolvent
- When a partner is mentally unsound
- When there is a breach of trust
A COURT CAN DISSOLVE A PARTNERSHIP WHEN: - A partner’s conduct is prejudicial (harmful) to carrying on in business
- Business can only be carried at a loss
How may a limited liability partnership be registered?
limited partnership in Alberta, a certificate of limited partnership (CLP) must be filed with the Registrar of Corporations. This certificate needs to include information like the firm name, business character, partner details, and contributions from limited partners. The Partnership Act of Alberta governs these requirements.
Limited partner vs. limited liability partner?
Limited partner partner who may not actively participate in the management of the firm, but has liability limited to amount of investment.
Limited liability partnership (LLP)
partnership where individual partners are liable for the
general debts of the partnership and for personal negligence, but not personally liable for the
negligence of other partners
Mostly available only to eligible professions
Negligent partner and firm itself liable for loss
Remaining partners not held personally liable
Most provinces have created LLP legislation
