Micro Flashcards
(25 cards)
Agency & how it’s created
A principal-agent relationship exists if there is Assent (voluntary, consensual agreement bw principal and agent with legal capacity), a benefit (agent’s conduct benefits objectives of the principal) and control (principal must have the right to supervise themanner the job is performed).
Termination of agency
1) By agreement,
2) operation of law, (death/incapacity)
3) Bankruptcy,
4) Change in circumstances,
5) Breach of duty
Duties of principal to agent
1) Compensation
2) Cooperation
3) Indemnity/Contribution,
4) Express contractual duties
Duties of agent to principal
(1) Reasonable care,
(2) obey reasonable instructions,
(3) Duty of Loyalty, (no self-dealing, usurping opportunities or secret profits)
(4) Express contractual duties
Actual Authority
i. Express – explicitly told to act (oral or written)
ii. Implied – given through conduct or circumstance.
Apparent Authority
i. Principal holds out the Agent as possessing authority.
ii. 3P reasonably relies on the agent’s appearance of authority.
Ratification
Principal knew of the material facts at the time of the alleged acceptance AND accepted benefits. Cannot alter terms
Agent Liability to 3P
Generally, A not liable to 3P unless:
i. Non-disclosure or partial disclosure of principal to 3P (3P can sue A and/or principal)
iii. Agent lacked authority altogether (only Agent is liable)
Principal Liability to 3P
Principal is liable for Ks entered into by Agent if Agent was authorized to contract on Principal’s behalf of Principal.
Principal’s liability for agent torts
(Respondeat superior)
Principal is liable for torts committed by Employee if the tort is within the scope of the employment/relationship.
Principal’s liability for independent contractor torts
Principal is not vicariously liable for torts of an independent contractor UNLESS:
(1) non-delegable duty (public policy) or
(2) inherently dangerous.
Principal liability to 3P for intentional torts
Principal is not liable for the intentional torts of their employees/agents unless they are:
a. natural consequence from the nature of the job;
b. Motivated to serve the principal/employer; OR
c. Authorized by the employer/Principal.
Partnership
An association of 2+ persons carrying on as co-owners of a business for profit.
Partnership formation
No formalities required to create – Courts look at parties’ intent to determine existence.
Where intent is unexpressed, courts look at:
(1) title to property;
(2) designation of entity by parties;
(3) amount of activity involved;
(4) sharing of gross returns/profits
Partnership duties
Partners in a general partnership owe fiduciary duties of care & loyalty, and a statutory duty of disclosure.
Liability of Partnership to 3P
A partnership is liable for:
1) debts incurred in the furtherance of partnership and
2) torts committed within the scope of the partnership.
But, partnership is NOT liable for Ks entered into by partners who exceeded their authority.
Liability of Partners to 3P.
General Partners are jointly and severally liable for debts and obligations incurred by partnership.
Partner is personally liable for
1) all Ks entered into by a Partner within scope of partnership and
2) entire amount of Partnership obligations (entitled to contribution from other partners)
DISSOLUTION
A change in legal relationship.
Unless an agreement to the contrary, dissolution occurs by:
1) act of partners (per agreement, mutual assent, expulsion, any partner if partnership at will);
2) operation of law (death); OR
3) by court decree (breach of agreement, unprofitability, misconduct, any other circumstances).
Partner Dissociation
Change in partners relationship caused by a partner ceasing to be associated with business.
Ways to dissociate:
(1) Notice of Partner’s express will to withdraw;
(2) Happening of an agreed upon event;
(3) Expulsion pursuant to partnership agreement;
(4) Bankruptcy of partner;
(5) Death/incapacity;
(6) Appt of receiver; or
(7) Termination of a business entity
Limited Liability Partnerships (LLPs)
A registered limited liability partnership is a business designation exclusively for professionals. Name of the business must include “LLP/RLLP.” Can have both GP and LPs.
LLP Formation
To form an LLP, a statement of qualification must be filed with the secretary of state. Must file annual reports.
LP
A limited partnership with both limited and general partners can be created to limit the liability of some partners.
LP Formation
To form an LP, a certificate of limited partnership must be executed and filed with secretary of state with of General Partners (GP) and Limited Partners (LPs). Business name must include “Limited Partnership”
Corporation
A legal entity (a separate person) created by filing certain docs with the state. Only corporation is liable for corporate obligations. Right to manage the corporation is in BOD, who delegate day-to-day duties to Officers.
