Untitled Deck Flashcards
(439 cards)
What is required to create an agency relationship?
- The parties voluntarily consent to enter into an agency relationship
- The agent is subject to the principal’s control
These conditions ensure that both parties are aware of and agree to the agency arrangement.
How can an agency relationship be terminated by the parties?
- Agent or principal manifests the desire to cease the relationship
- Express terms of the agency expire
- Purpose of the agency is fulfilled
These options provide flexibility for both parties to end the relationship when necessary.
What are the conditions under which an agency relationship may be terminated by operation of law?
- Agent or principal dies
- Agent or principal loses capacity
- Agent materially breaches a fiduciary duty
These conditions are typically beyond the control of the parties and result in automatic termination.
What is required for an agent to bind a principal to a contract?
The agent must be acting within his actual or apparent authority
This ensures that the principal is legally bound by the actions of the agent as long as the agent is authorized.
Define actual authority in the context of agency.
Actual authority exists when the agent reasonably believes the principal wishes the agent to act
This can be express (clearly stated) or implied (based on the principal’s conduct).
What constitutes express authority?
Express authority exists when the principal directs the agent to engage in a specific task
This is a clear and direct form of authority.
Define implied authority.
Implied authority exists when the agent believes, based on a reasonable interpretation of the principal’s words or conduct, that the principal wishes the agent to act on his behalf
This authority is derived from the context and nature of the agent’s role.
What is apparent authority?
An agent acts with apparent authority when:
1. The principal holds the agent out as having authority
2. The principal’s conduct causes a third party to rely on the agent’s appearance of authority
This protects third parties who deal with the agent under the assumption of authority.
Under what circumstances may an employer be liable for torts committed by an employee?
- An employer-employee relationship exists
- The tort occurs within the scope of employment
This legal principle is known as respondeat superior.
What is the general rule regarding a principal’s liability for independent contractors?
Generally, a principal is not liable for the unauthorized conduct of an independent contractor
The level of control over the agent is a significant factor in determining this liability.
What are the requirements for forming a General Partnership (GP)?
- Two or more persons
- Associate as co-owners
- Carry on a business for profit
This structure does not provide limited personal liability for partners.
What distinguishes a Limited Partnership (LP) from a General Partnership (GP)?
An LP consists of general partners and limited partners; general partners have unlimited liability while limited partners are liable only to the extent of their investment
This structure allows for both active management and limited liability.
How is a Limited Partnership (LP) formed?
By executing a written certificate of limited partnership in substantial compliance with state law and filing it with the secretary of state
This formal process is essential for legal recognition.
What is the primary purpose of a Limited Liability Partnership (LLP)?
To limit a partner’s potential liability for professional malpractice committed by another partner
This structure is commonly used by professionals to protect individual partners from collective liability.
What are the tort liability implications for general partners in a partnership?
General partners are jointly and severally liable for all obligations arising from wrongful acts or omissions of any partner acting within the ordinary course of business or with authority
This means each partner can be held responsible for the actions of others.
What is the duty of care that each partner owes to the partnership?
Each partner must refrain from:
1. Grossly negligent or reckless conduct
2. Intentional misconduct
3. Knowing violation of the law
This duty helps ensure responsible management of the partnership.
What does the duty of loyalty require from each partner?
- Act in good faith and fairly
- Account for any property, profit, or benefit derived from the partnership
- Refrain from competing with the partnership and usurping business opportunities
This duty is fundamental to maintaining trust and integrity within the partnership.
What occurs during the dissolution of a partnership?
The partnership enters a ‘winding up’ phase until the affairs are completed
This phase allows for the orderly settlement of the partnership’s business.
What are the three main causes of dissolution of a partnership?
- Actions taken by the partners
- Operation of law
- Court order
These causes can vary in nature and complexity.
What is the Uniform Partnership Act (UPA) regarding partner membership changes?
Any change in partner membership automatically triggers dissolution unless there is an agreement to the contrary
This provision ensures continuity and clarity in partnerships.
Under the Revised Uniform Partnership Act (RUPA), when does disassociation not trigger dissolution?
Unless the partnership is at-will or an event specified in the partnership agreement occurs
This allows for greater flexibility in managing partnerships.
What is required for a merger or consolidation to occur?
- Recommendation of an absolute majority of the board
- Agreement of each corporation by an absolute majority of shareholders
This ensures that significant corporate changes have adequate support.
What is a derivative claim?
A lawsuit brought by a shareholder on behalf of the corporation to enforce the corporation’s rights
This action is taken when the corporation fails to pursue a valid cause of action.
What is federal question jurisdiction?
A federal court has federal question jurisdiction if the complaint alleges a claim that arises under federal law
This jurisdiction allows federal courts to hear cases involving federal statutes or constitutional issues.