MEE Flashcards
(279 cards)
1
Q
Agency
A
A fiduciary relationship where an agent acts for and under the control of a principal.
2
Q
Agency Creation
A
ABC Assent, Benefit, Control. Principal must have legal capacity; agent needs minimal capacity.
3
Q
Authority Types
A
Actual (expressed or implied), Apparent (based on reasonable third-party reliance), Implied (resulting from necessity, prior actions, or custom/title).
4
Q
Undisclosed Principal
A
Can’t create apparent authority. Liable if agent induces change in third party’s position, principal knew but didn’t notify.
5
Q
Duties of Loyalty
A
No competition, usurping opportunities, self-dealing, secret profits.
6
Q
Remedies for Breach
A
Principal can recover agent’s profits or impose a constructive trust.
7
Q
Consequences of Agency
A
Duties arise, agent can bind principal, liability for agent’s actions, agent’s knowledge imputed.
8
Q
Principal’s Duties to Agent
A
Compensation, expense reimbursement, indemnification.
9
Q
Duty of Care
A
Perform with reasonable care, act within actual authority, use competence, indemnify for wrongful acts.
10
Q
Agent’s Duty to Principal
A
No usurping, secret profits, or competition.
11
Q
Accounting Duty
A
Agents must account for money/property and keep assets separate.
12
Q
Duty of Candor
A
Fully disclose relevant facts to the principal.
13
Q
Third Party’s Rights
A
Can sue principal or agent upon discovering undisclosed principal.
14
Q
Estoppel
A
Principal can’t deny agency if no manifestation of no authority.
15
Q
Ratification
A
Retroactive approval of agent’s act if principal accepts terms with knowledge.
16
Q
Independent Contractor Factors
A
Independence, working for others, fixed fee, own tools.
17
Q
Frolic and Detour
A
Personal errand outside scope, slight deviation may be within.
18
Q
Negligent Hiring
A
Principal liable for harm due to negligence in agent selection, training, etc.
19
Q
Employer’s Liability for Torts
A
Generally not liable for employee’s intentional torts unless in time/space limits, motivated to benefit, or act within job description.
20
Q
Employer Tort Liability
A
Vicarious liability for servant (employee) in scope of employment, but not always for independent contractor.
21
Q
Apparent Authority & Tort Liability
A
Principal may be liable for independent contractor’s torts if apparent authority implied.
22
Q
Independent Contractor vs. Employee
A
Control degree distinguishes; more control suggests employee relationship.
23
Q
Principal Liability to Independent Contractors
A
Not liable except for inherently dangerous activities, nondelegable duties, or negligent hiring.
24
Q
Agency Termination
A
Either party can terminate; agent’s apparent authority continues until third party is notified of termination.
25
General Partnership
A business co-owned by two or more persons for profit.
26
Joint Venture
An association for a single transaction or related transactions.
27
Dissociation
A partner's withdrawal from the partnership.
28
Winding Up
Process of settling partnership affairs.
29
Termination
When all partnership affairs are concluded.
30
Mandatory Dissolution
Forced dissolution per statute.
31
Permissive Dissolution
Dissolution by unanimous consent, regardless of agreement.
32
Limited Liability Partnership
Partners are shielded from each other's negligence or misconduct.
33
Limited Partnership
Combines general and limited partners.
34
General Partner
Manages, unlimited liability.
35
Limited Partner
Contributes, no management, liability limited to contribution.
36
Liability in General Partnership
All partners liable for partnership debts.
37
Partnership Definition
Coownership for profit sharing.
38
Partnership Allocation
Profits shared equally after liabilities.
39
Dissociated Partner
Can bind partnership if third party lacks notice of dissociation.
40
Partnership Formation
Based on agreement, no formal requirement.
41
Partnership vs. Joint Venture
Partnership indefinite; joint venture for specific transactions.
42
Capacity to Enter Partnership
Legal contract capacity.
43
Test for Partnership
Intent, not formal label.
44
Sharing Profits
Prima facie evidence of partnership, except certain payments.
45
Sharing Gross Returns
Alone doesn't establish partnership.
46
Common Property
Doesn't create partnership.
47
Control of Business
Partners must have ultimate control.
48
Partnership by Estoppel
Liability if representation of partnership.
49
Power of Each Partner
All partners are agents; partner's act binds if authority exists.
50
Authority of Each Partner
Express or implied authority; acts in ordinary course bind.
51
Statement of Partnership Authority
May specify restrictions.
52
Notice to a Partner
Notice to one partner is notice to partnership.
53
Nature of Partnership Liability
Joint and several liability for all obligations.
54
Extent of Partnership Liability
Each partner liable for entire obligation but can seek contribution.
55
Property Originally Brought In
Initial property is considered partnership capital.
56
Property Subsequently Acquired
Partnership property unless contrary intention.
57
Property Purchased w/ Partnership Funds
Presumed partnership property.
58
Real Property Belonging
Can own real property.
59
Conveyance of Real Property
Partners may convey.
60
Dissociation
Partner's withdrawal.
61
Wrongful Dissociation
Willful withdrawal contrary to agreement.
62
Effect on Partner's Rights
Ends management rights; loyalty and care continue for past matters.
63
Buyout of Dissociated Partner
Partnership must buy dissociated partner's interest.
64
Continuing Obligations
Outgoing partner remains liable for past obligations.
65
Termination of Binding Authority
Limited for dissociated partner.
66
Mandatory Dissolution
Occurs per statute, agreement, or bankruptcy.
67
Continuance after Dissolution
Partnership continues for winding up.
68
Right to Wind Up
Generally, partners not wrongfully dissociated can participate.
69
Order of Distribution
Creditors first, then partners.
70
Settlement of Accounts
Partners entitled to settlement during winding up.
71
Contribution by Partners
Required if partnership assets insufficient.
72
Characteristics of Partnerships
Governed by RUPA, unlimited liability, co-management, fiduciary duties, profit sharing.
73
Duty of Business Opportunity
Partner can't exploit without disclosure and approval.
74
Limited Partner vs. General Partner
Limited has no management, limited liability.
75
Formation of Limited Partnership
Certificate of limited partnership.
76
Limited Partner's Contributions
Can contribute cash, property, services, or promissory note.
77
Limited Partner's Mistaken Status
Protected if erroneously believed to be limited partner.
78
Limited Partner's Authority
Can't bind partnership.
79
Limited Partner's Duty
No fiduciary duty to partnership.
80
General Partner's Rights
Same as regular partners.
81
Partnership Property
Owned by partnership; criteria for identification.
82
Estoppel Theory in Partnership
Appearance of employee-employer relationship, third-party reliance.
83
Forming a Corporation
PPA: People, Paper, Act
84
1. People
Incorporators are needed, can be individuals or entities. They execute and deliver articles of incorporation to the Secretary of State.
85
2. Paper (Articles of Incorporation)
It's a contract between the corporation and shareholders and between the corporation and the state. Must include corporate name, incorporators' info, directors' info, registered agent, and office address.
86
3. Act
Incorporators deliver notarized articles to the Secretary of State, pay fees, forming the corporation. Organizational meeting follows, where officers are selected and bylaws adopted. Internal affairs governed by state law.
87
Liability
Directors, officers, and shareholders generally have limited liability. Corporation is a separate legal entity. Failure to form properly can result in personal liability. De facto and corporation by estoppel doctrines may apply.
88
Bylaws
Internal rules, not filed with the state. Amended by shareholders or board. Articles prevail in case of conflict.
89
Pre-Incorporation Contracts
Promoters may enter contracts on behalf of the yet-to-be-formed corporation. Corporation not liable until adoption (expressly or impliedly).
90
Foreign Corporations
Must qualify in other states to transact intrastate business. Certificate of authority needed, registered agent required.
91
Subscriptions
Irrevocable for six months (pre-incorporation), revocable until accepted by the corporation (post-incorporation).
92
Corporate Purpose
Generally, the corporation must state its purpose, but in some states, a general purpose is presumed.
93
Duties of Directors
Duty of care (prudent person standard), duty of loyalty (act in the best interests of the corporation).
94
Indemnification
Corporation may indemnify directors/officers, mandatory or permissive, based on good faith and reasonableness.
95
Shareholder Voting
Record shareholders have voting rights, proxies are allowed. Cumulative voting may be used when electing directors.
96
Fundamental Changes
Require board action, shareholder approval, and often filing with the Secretary of State. Dissenting shareholders may have rights of appraisal.
97
Dissolution
Voluntary (board and shareholder approval) or involuntary (court ordered for certain reasons). Winding up and distribution follow.
98
Securities
Debt (creditor) vs. Equity (owner) securities. Securities laws, such as 10b5, aim to prevent deceit in securities transactions.
99
Piercing the Corporate Veil
Courts can hold shareholders personally liable for corporate debts if certain conditions are met, such as fraud or ignoring corporate formalities.
100
Shareholder Appraisal Rights
Dissenting shareholders can force the corporation to buy their shares at fair value in fundamental corporate changes.
101
Shareholder Approval
Required for significant corporate changes like amending articles, merging, or dissolving the corporation. Shareholders may also vote on other matters.
102
Secured Transaction
Transaction creating a security interest (lien, collateral) in personal property or fixtures to ensure repayment.
103
To spot a secured transaction
Look for 1) a credit transaction and 2) an agreement that creates a lien in favor of the creditor in the debtor's personal property to secure the debt.
104
Sale on Credit (Credit Sale)
Buyer doesn't pay full purchase price at the time of the sale.
105
Debtor
Person who owes payment or performance.
106
Creditor
Entity owed money.
107
Secured Creditor
Entity owed money with a security interest.
108
Security Interest
Interest in personal property or fixtures securing payment or performance.
109
Security Agreement
Requires language creating a security interest, debtor's signature, and description reasonably identifying collateral.
110
Owner in a secured transaction
The debtor, unless the contract states otherwise.
111
Consumer Goods
For personal, family, or household use.
112
Equipment
Used for business.
113
Farm Products
Grown by farmers.
114
Inventory
Goods for sale or materials used by a business.
115
Intangible Instruments
Papers representing the right to be paid money.
116
Documents
Right to receive goods.
117
Chattel Paper
Evidence of monetary obligation and security interest.
118
Investment Property
Stocks, bonds, mutual funds, brokerage accounts.
119
Accounts
Right to payment for property sold or services rendered.
120
Attachment
When a security interest is created and effective against the debtor.
121
Perfection
Creating a security interest that is effective against other creditors.
122
Methods of Perfection
Filing, Possession, Control, Automatic Perfection (PMSI in consumer goods), Temporary Perfection.
123
Priority Rules
First to File or Perfect.
124
PMSI Priority
PMSI in goods has priority if perfected before or within 20 days.
125
Real Estate Priority
Real estate interest prevails over a subsequent PMSI.
126
Fixture Filings
File where a mortgage on real estate would be filed.
127
Accessions
Goods physically united with others, identity not lost.
128
5 Methods of Perfection
1. Filing. 2. Possession. 3. Control. 4. Automatic Perfection. 5. Temporary Perfection
129
PMSI in Consumer Goods
Automatically perfected upon attachment.
130
PMSI in Motor Vehicle
Perfected by notation on the vehicle's title.
131
Common law marriages are valid when parties
1. Agree they are married. 2. Cohabit as married. 3. Hold themselves out in public as married.
132
Conflict of laws for marriage
Valid in another state unless against strong public policy.
133
Putative marriage
arises when an innocent party believes in good faith in a valid marriage but later discovers an impediment. Remedies include spousal support and property distribution.
134
No-fault divorce
Typical standard is irreconcilable differences.
135
Cruelty is a fault-based ground arising from physical or emotional abuse.
is a fault-based ground arising from physical or emotional abuse.
136
Separation
Some states require separation before divorce.
137
Mediator's code of conduct
Impartiality, explain process, control proceedings, no coercion.
138
Community property
Minority rule - 50/50 split.
139
Equitable distribution
Majority rule - fair distribution.
140
Spousal support factors
Resources, standard of living, time to find employment/education, marriage length, contributions, age/health, marital misconduct.
141
Permanent alimony
Lifelong support for dependent spouse.
142
Limited-duration alimony
Short marriage support.
143
Rehabilitative alimony
Support until education/employment.
144
Reimbursement alimony
Compensates for enhancing future standard of living.
145
Spousal support modifiable based on changed circumstances.
changed circumstances.
146
Court deviation from income share models
Best interest, child's age/needs, special needs, assets, prior standard of living.
147
Child support modifications
Permissible for substantial changes in circumstances.
148
Child support based on voluntary income reduction
Must be in good faith.
149
Timing of modification
Only future payments modified.
150
Child support obligations end
at majority or as ordered.
151
UCCJEA determines
custody jurisdiction and modification.
152
UCCJEA subject matter jurisdiction based on
child's home state, past 6 months, significant connection, substantial evidence.
153
UIFSA determines
personal jurisdiction for child support and paternity.
154
UIFSA personal jurisdiction based on
personal service, past residence, intercourse, and conception.
155
Custody determined by child's best interest; factors include
primary caretaker, child's preference, financial ability, relationships, and past conduct.
156
Third-parties get custody when legal parents are
unfit or detrimental.
157
Third-parties get visitation if
acting as loco parentis.
158
Custodial parent relocating must show
legitimate purpose, child's best interest, relationship, age, and quality of life.
159
Premarital agreements enforceable if
written, signed, full disclosure, fair, voluntary.
160
Property acquired during marriage is
marital property unless gifted or inherited.
161
Bigamy is
void; subsequent marriage valid if prior marriage terminated.
162
Requirements for an Express Trust (8)
1. settlor 2. delivery 3. property 4. trustee 5. beneficiary 6. intent 7. lawful purpose 8. document
163
1. Settlor
The person who creates the trust.
164
2. Delivery
Transfer of legal title to property.
165
3. Property
The assets placed in the trust.
166
4. Trustee
Holds legal title for the beneficiary.
167
5. Beneficiary
The person who benefits from the trust.
168
6. Intent
Clear and unambiguous intention to create a trust.
169
7. Lawful Purpose
The trust must have a legal purpose.
170
8. Validly Executed Document
The trust document must be properly executed.
171
Express Trust (defined)
A legal device allowing the owner to transfer property for management on behalf of someone else.
172
Two Kinds of Express Trust
1. Lifetime trust (inter vivos). 2. Testamentary trust (set up in the will).
173
Not Required for Creating a Trust
Consideration.
174
Eligible Settlor
Anyone 18 or older with the capacity to enter into contracts.
175
Effective Delivery
Assets must be out of Settlor's control unless the Settlor is also the trustee.
176
Property Requirements
1. Owned property, not a mere expectancy.v2. Identified property, not subject to future determination.
177
Trustee Eligibility
Anyone with the capacity to hold property.
178
Trust Beneficiaries (3 things)
1. Must be definite and ascertainable. 2. Ambiguity leads to a resulting trust. 3. Exception for unborn descendants of named individuals.
179
Intent Requirements (3 things)
1. Clear and enforceable obligation. 2. Trustee must have duties to perform. 3. Clear and unambiguous intent.
180
Lawful Purpose
1. Cannot involve a crime. 2. Cannot destroy property. 3. Cannot be against public policy.
181
Trusts of Land
Must be in writing and signed by the settlor.
182
Revocable Lifetime Trust
Main Requirement - At least one non-settlor beneficiary.
183
Reasons for Revocable Inter Vivos Trusts
1. Efficient asset management. 2. Planning for incapacity. 3. Avoiding probate.
184
Reasons NOT to have Revocable Inter Vivos Trusts (2)
1. Does not avoid taxes. 1a. If settlor retains income interest, full assets included in gross estate.
185
Pour-Over Gifts
Gifts made in a will to an existing revocable trust.
186
Life Insurance Proceeds (2 ways)
1. Name trustee as policy beneficiary. 2. Name "the trustee named in my will" as beneficiary.
187
Totten Trust
Bank account in the depositor's name "as trustee for" a named beneficiary.
188
Totten Trust (2 key things)
1. Depositor can manage funds during life. 2. Beneficiary has no interest during depositor's life, inherits upon death.
189
Ways to Revoke Totten Trust (4)
1. Withdraw all money. 2. Manifest revocation intent. 3. Revoke in a will. 4. Death of beneficiary returns funds to depositor.
190
Changing Beneficiary of Totten Trust
Done by depositor with a notarized statement to the bank.
191
Creditor Access to Totten Trust
Creditors can always access the account.
192
Joint Bank Accounts with Right of Survivorship
3rd parties can block survivorship with clear and convincing evidence.
193
Charitable Trusts (5 things)
1. Indefinite beneficiaries. 2. Charitable purpose. 3. May be perpetual. 4. Cy Pres. 5. Attorney General represents beneficiaries.
194
Honorary Trust
Assets fall into the residuary unless trustee administers them for a garden/car's benefit.
195
Constructive Trust
Imposed by court to disgorge unjust enrichment or protect from fraud.
196
Statutory Spendthrift Rule
Protects beneficiary's interest from creditors, with exceptions.
197
Self-Settled Rule
Spendthrift protection doesn't apply to any interest retained by the settlor.
198
Trust Modification by Beneficiaries
Requires unanimous consent and no defeat of trust objectives.
199
Claflin Doctrine
Prohibits trust modification if it contradicts settlor's clear intent.
200
Two-Level Modification Test
Material purpose and specific directions determine if trust can be changed.
201
Trust Termination by Settlor
Trusts are irrevocable unless expressly reserved in the trust.
202
Trustee's Powers (6)
1. Sell property. 2. Mortgage property. 3. Lease property. 4. Make ordinary repairs. 5. Contest or settle claims. 6. Manage trust corpus.
203
Trustee's Limits (3)
1. No self-dealing. 2. No borrowing from trust. 3. No continuing a business without court approval.
204
Self-Dealing (5 ways)
1. Buying/selling trust assets to oneself. 2. Borrowing trust funds. 3. Lending money to the trust. 4. Profiting from trustee services. 5. Corporate trustee buying its own stock.
205
Self-Dealing Remedies (2)
1. Removal of trustee. 2. Surcharge for losses incurred.
206
Indirect Self-Dealing
Applies to loans or sales to relatives or trustee-related businesses.
207
Exculpatory Clauses
Cannot shield trustees from all liability, except for specific defenses.
208
Personal Liability of Trustee in Contract
Trustee personally liable unless contract explicitly shields them.
209
Trustee Reimbursement in Contract
Trustee reimbursed if contract within powers and proper administration.
210
Personal Liability of Trustee in Tort
Trustee personally liable for torts but can be reimbursed if not personally at fault.
211
Trustee Investment Power (UPIA)
Trustee can pursue modern portfolio theory, focusing on total return.
212
Prudent Investor Rule (UPIA)
Trustee must consider role in portfolio and expected total return.
213
Discretionary Trust
Trustee has broad discretion over investments and income distribution.
214
Trust Income
Beneficiaries receive net income, and remaindermen get corpus upon trust termination.
215
Implied Trust
Created by court in specific circumstances, often to prevent fraud.
216
Secret Trust
Appears testamentary but relies on beneficiary's promise to hold property for another.
217
Support Trust
Instructs trustee to spend only as much as needed for the beneficiary's support.
218
Power of Appointment Trust
Grants a general power of appointment to a spouse for asset disposal.
219
Anti-Lapse Statute
Provides substitute beneficiaries to prevent a lapsed gift.
220
No heirs
Property goes to the state (escheats).
221
Community Property Rules
Surviving spouse gets 100% of community property.
222
Definition of Issue
Lineal descendants, including children, grandchildren, and great-grandchildren.
223
Adoption
Adopted children inherit like biological children, severing ties with natural parents.
224
Stepparent Adoption
Establishes parent-child relationship, but does not prevent inheritance from the other genetic parent.
225
Posthumously Born Children
Child conceived before, born after, mother's husband's death. Presumption of husband's child if born within 280 days; otherwise, must prove parentage.
226
Non-Marital Children
Out-of-wedlock child can inherit if father later marries mother, holds child out as his own, or paternity is proven.
227
Per Stirpes
Equal shares to lineal descendants, even if some generations have no survivors.
228
Per Capita
Equal distribution to all of equal kinship.
229
Per Capita with Representation
Unequal distribution, with shares moving to surviving issue.
230
Ancestors and Remote Collaterals
If no spouse or descendants, property may go to parents, grandparents, or more distant relatives.
231
UPC Intestacy Order
Parents, siblings, grandparents, closest relative, or escheat to the state.
232
Formal Will Requirements (Three)
1. Signed writing. 2. Witnesses. 3. Testamentary intent.
233
Writing Signed by Testator
Entire will must be written and signed, location of signature may vary.
234
Capacity
Testator must be at least 18 and of sound mind.
235
Witnesses
Most states require two witnesses, signing in presence of testator, who must also sign.
236
Interested Witness
May not be competent, except under the UPC, which abolished the doctrine.
237
Present Testamentary Intent
Testator must intend the document to be a will and understand its contents.
238
Substantial Compliance
Under UPC, if clear and convincing evidence shows intent and substantial compliance, a will may be valid.
239
Holographic Wills
Material provisions must be handwritten, signed, and show clear intent.
240
Codicils
Amendments to will, executed with same formalities.
241
Will Substitutes
Trusts, pour-over wills, deeds, payable-on-death contracts can substitute for wills.
242
Conflict of Laws
Personal property governed by domicile at death. Real property governed by situs (location).
243
Revocation of a Will (Three Ways)
1. Subsequent instrument. 2. Physical act. 3. Operation of law (divorce).
244
Subsequent Instrument
Later will or inconsistency with prior will may revoke.
245
Revocation by Physical Destruction
Requires defacement of language, or mere alteration under UPC. Third party may revoke with testator's consent.
246
Lost Wills
Presumption of revocation, proponent must prove existence by clear and convincing evidence.
247
Revocation by Operation of Law - Divorce
In most states, divorce revokes gifts to former spouse. Subsequent marriage does not revoke.
248
Alteration of a Will
Testator can decrease a gift but cannot increase it.
249
Revoking Codicils
Revoking a will revokes attached codicils, but revoking a codicil does not revive the original will.
250
Revival
Can occur through republication or dependent relative revocation.
251
Republication
Requires intent to revive and extrinsic evidence may be admissible.
252
Dependent Relative Revocation (DRR)
Revokes mistaken revocation and revives earlier will if based on a mistake.
253
Construction
Courts determine the terms and distribution of a will.
254
Integration
All pages intended to be part of the will are included.
255
Plain Meaning Doctrine
Words are given their plain meaning unless the will states otherwise.
256
Incorporation by Reference
Extraneous documents can be included if described sufficiently in the will.
257
Acts of Independent Significance
Future acts unrelated to the will can affect distribution.
258
Lapses and Anti-Lapse Statute
If beneficiary dies before testator, anti-lapse statutes apply, and issue of the predeceased beneficiary may take.
259
Class Gift Rule under Anti-Lapse Statutes
If anti-lapse statute applies, issue of predeceased class members may also take.
260
Classification, Abatement, and Ademption
Assets are classified as specific, general, demonstrative, or residuary gifts, and abatement may occur to satisfy debts.
261
Abatement Order
1. Intestate property (not mentioned in the will) 2. Residuary bequests 3. General bequests 4. Specific bequests
262
Ademption by Extinction
Property no longer in estate. Treat as laspe
263
Traditional Rule
Beneficiary gets nothing.
264
UPC
Intent of testator matters; replacement property possible.
265
Ademption by Satisfaction
Gift satisfied during life. Requires testator's intent and written support.
266
Special Cases
Stocks: Include additional shares, stock dividends. Life Insurance: Policy proceeds to named beneficiary.
267
Ambiguities in Will
Traditionally, patent (on the face) and latent (not apparent) ambiguities. Today, many states allow both to be resolved with extrinsic evidence.
268
Mistakes
Extrinsic evidence allowed for mistakes in execution, not reasons for making the will.
269
Omitted Spouse
Omitted spouse gets a share unless it was intentional or a valid contract waives it.
270
Omitted Children
Omitted children get a share if unintentionally omitted.
271
Rights of Surviving Spouse
Entitled to support, allowances, and social security benefits.
272
Elective Share
Surviving spouse can claim a forced share, often 50% of the augmented estate.
273
Waiver of Elective Share
Requires a written waiver with fair disclosure, represented by legal counsel.
274
Advancements
Lifetime gifts to children may count against their intestate share.
275
Homicide ("Slayer Statute")
Killer cannot inherit from the victim.
276
Elder Abuse
Convicted abusers cannot inherit from their victims.
277
Disclaimer
A beneficiary can refuse a gift but must do so within 9 months of the decedent's death.
278
Objections to Will
Only interested parties can challenge a will within 6 months of probate.
279
Will Contests
Grounds include lack of capacity, insane delusion, undue influence, fraud, and mistake.
