Final

Question 1

Agency Relationship

Answer 1

The parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties.

Question 2

Fiduciary Relationship

Answer 2

Means that the relationship involves trust and confidence.

Question 3

Independent Contractor

Answer 3

A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.

Question 4

Questions asked by the court

Answer 4

1- how much control does the employees exercise over the details of the work?
2- Is the worker engaged in an occupation or business distinct from that of the employer?
3- is the work done under the employer’s direction or by a specialist without supervision?
4- Does the employer supply the tools at the place of work?
5- For how long is the person employed?
6- what is the method of payment ? by time or completion?
7- what degree of skill is required of the worker?

Question 5

Formation of the agency relationship

Answer 5

• by Agreement: can be written, oral, or implied by conduct.
• By Ratification: happens when an agent acting outside of his scope of authority make a contract on behalf of the principal, and the principal approves this contract by word or action.
• By Estoppel: when the principal causes a third person to believe that another person is the principal’s agent.
• By Operation of Law: in situations of emergency.

Question 6

Agent’s Duties to the Principal

Answer 6

Performance
Notification
Loyalty
Obedience
Accounting.

Question 7

Principal’s duties to the Agent

Answer 7

Compensation
Reimbursement and Indemnification
Cooperation
Safe Working conditions

Question 8

Agent’s right and remedies against the principal

Answer 8

Tort and contract remedies: remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.
Demand for an accounting:
No right to specific performance:

Question 9

Principal’s rights and remedies against the Agent

Answer 9

Constructie trust: anything that an agent obtains by virtue of the employment or agency relationship belongs to the principal.
Avoidance: when the agent breaches the agency agreement, the principal has the right to void any contract into with the agent.
Indemnification:

Question 10

Scope of Agent’s Authority

Answer 10

Express Authority: is authority declared in clear , direct and definite terms (Power of attorney).
Implied Authority: to do what is reasonably necessary to carry out express authority and accomplish the objectives of the agency.
Apparent Authority: when a principal causes a third party reasonably to believe that the agent has authority to act, even though the agent has no express or implied authority.

Question 11

Principal Classification

Answer 11

Disclosed Principal: identity is known by the third party at the time the contract is made.

• Partially disclosed: identity is unknown by the third party, but the third party knows that the agent is or may be acting for a principal at the time the contract is made.
• Undisclosed principal: identity is totally unknown by the third party, and the third party does not know if the agent is acting in an agency capacity at the time the contract is made.

Question 12

Liability for Agent’s Negligence

Answer 12

Under the doctrine of respondeat superior, the principal-employer is liable for any harm caused to a third party by an agent-employee within the scope of employment. The doctrine impose Vacarious liability or indirect liability, on the employer (liability without regard to the personal fault of the employer for worst committed by an employee in the course or scope of employment.

Question 13

Scope of employment

Answer 13

1- Was the act authorized?
2- The time, place and purpose of the act
3- was the act a commonly performance by the employees on behalf of the employer
4- the extent to which the employers interest was advanced by the act.
5- extent of employee’s interest.
6- whether the employer furnished the means or instrumentality by which an injury was inflicted
7- did the employer had reason to know that the employee would performed the act.
8- whether the act involved the commission of a serious crime.

Question 14

Termination by act of the parties

Answer 14

• Lapse of time
• Purpose Achieve
• Occurence of a specific event
• Mutual agreement
• Termination by one party

Question 15

Termination by Operation of law

Answer 15

1- death of insanity
2- impossibility
3- changed circumstances
4- bankruptcy
5- war

Question 16

Advantages Sole Proprietorships

Answer 16

• Owns the entire business and receives all of the profits.
• easy to start.
  the proprietor can sell or transfer all or part of the business to another party at any time.
• pays only personal income taxes on the business’s profit.

Question 17

Disadvantages of Sole proprietorships

Answer 17

• bears the burden of any of losses or liabilities incurred by the business enterprises.
• creditors can go after the owner’s personal assets.
• lacking continuity on the death of the proprietor.

Question 18

Franchises

Answer 18

an arrangement in which the owner of a trademark, a trade name, or a copyright licenses others to use the trademark, trade name, or copyright in the selling of goods or services.

Question 19

Franchisee

Answer 19

Legally independent of the Franchisor. At the same time, the franchise is economically dependent on the franchisor’s integrated business system.
A Franchisee can operate as an independent businessperson but still obtain the advantages of a regional or national organization.

Question 20

Types of Franchises

Answer 20

• Distributorship
• Chain- style business operation
• Manufacturing arrangement

Question 21

Partnership

Answer 21

An association of two or more persons (or corporations) to carry on as co-owners a business for profit.

Question 22

Partnership Formation

Answer 22

Can be oral, written, or implied by conduct.

Question 23

The partnership Agreement

Answer 23

also known as Articles of Partnership, can include almost any terms that the parties wish, unless they are illegal or contrary to public policy or statute.
It can specify the duration of the partnership.
- partnership for a term
- partnership at will.

Question 24

Rights of Partners

Answer 24

Management: rights in managing the partnership.
Interest in the partnership: entitled to the proportion of business profits and losses that is specified in the partnership agreement.
Compensation:
Inspection of the books:
Accounting of partnership assets or profits : to determine the value of each partner’s share in the partnership.
property rights:

Question 25

Duties and Liabilities of Partnership

Answer 25

* Fiduciary Duties: duty of care and the duty of loyalty. * Breach and waiver of fiduciary duties: * Authority of Partners:

Question 26

Liability of Partners

Answer 26

One significant disadvantage associated with a traditional partnership is that the partners are personally liable for the debts of the partnership. * joint liability: a third party bus sue all of the partners as a gourd, but each partner can be held liable for the full amount. * joint and several liability: a third party has the option of suing all of there partners separately. * liability of incoming partners: a newly accepted partner is not held liable for any partnership obligation incurred before the person became a partner.

Question 27

Dissociation of a partner

Answer 27

occurs when a partner ceases to be associated in the carrying on of the partnership business.

Question 28

Events that cause dissociation of a partner

Answer 28

- voluntarily - by the occurrence of an event specified in a partnership agreement - by a unanimous vote of the other partners under certain circumstances - by order of a court - by the partner's declaring bankruptcy.

Question 29

Limited Liability Partnerships

Answer 29

is a hybrid form of business designed mostly for professionals who normally do business as partners in a partnership. the major advantage is that it allows a partnership to continue as a pass-through entity for tax purposes but limits the personal liability of the partners. An LLP allows professionals, such as attorneys and accountants, to avoid personal liability for the malpractice of other partners.

Question 30

Limited Partnership

Answer 30

Consist of at least one general partner and one or more limited partners. a general partner assumes management responsibility for the partnership and has full responsibility for the partnership and for all its debts.

Question 31

Formation of LP

Answer 31

the partners bus sign a certificate of limited partnership which requires personal information. the certificate must be filed with the designated state official.

Question 32

Limited Liability Company (LLC)

Answer 32

Is a hybrid form that combines the limited liability aspects of the corporation and the tax advantages of a partnership. The owners are called Members, and enjoy limited liability. The liability of members is limited to the amount of their investments.

Question 33

Formation of an LLC

Answer 33

articles of organization must be filed with a central state agency, usually the secretary of state's office.

Question 34

Advantages of an LLC

Answer 34

Limited Liability | Flexibility in Taxation: they can choose to be tax as either a partnership or a corporation.

Question 35

Operation and Management of an LLC

Answer 35

Operating agreement: contains provisions relating to management, how profits will be decided, the transfer of membership interest, whether the LLC will be dissolved on the death or departure of a member, etc. Management of an LLC: It can be either a "MEMBER MANAGED" (all of the members participate in management) or a "MANAGER-MANAGED"(the members designate a group of persons to manage the firm). Operating procedures.

Question 36

Special business forms

Answer 36

Joint Venture: is a relationship which two or more persons or business entities combine their efforts or their property for a single transaction or project or a related series of transactions or project. Syndicate: or investment group, several individuals or firms join together to finance a particular project. It may be organize as a corporation or as a general or Limited partnership. Joint Stock Company: it is a true hybrid of a partnership and a corporation. Business trust: created by a written trust agreement that sets forth the interests of the beneficiaries and the obligations and powers of the trustees. Cooperative: is an association that is organized to provide an economic service to its members. it may or may not be incorporated.