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74 Cards in this Set
- Front
- Back
- 3rd side (hint)
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AGENCY
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Law regarding Agent authroized to represent Principal in business dealings w/ 3rd parties
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Three Sort of Problems
1. Liability of P to 3rd parties for torts of Agent. 2. Liability of P to 3rd parties for Contracts entered into by agent 3. Duties which Agent owes to Principals |
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Principal liable for TORTS committed by agent if . . .
(2 Part Test) |
1. Principal Agent Relationship Exist (Assent, Benefit, Control) AND
2. Tort Committed by agent w/in scope of relationship |
SUBAGENTS - usually no right to CONTROL
BORROWED AGENTS - usually no because no right to control INDEPENDENT CONTRACTOR - usually NO bc no right to control (supervise manner of performance) |
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Principal Agent relationship exists when there is. . .
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Assent - informal agreement between P and A
Benefit - A's conduct must be for P's benefit Control - P has right to control A by having power to supervise manner of A's performance |
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Tort committed within scope or relationship when . . .
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Three part weighing test
1. Conduct of the kind agent was hired to perform. 2, Tort occurred on the job - Frolic v Detour 3. Agent intended to benefit Principal |
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Intentional Torts generally outside of agency EXCEPT IF
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1. Specifically authorized by P
2. Natural from nature of employment 3. Motivated by desire to serve P |
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Agency
FROLIC |
New and independent deviation (outside scope)
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agency
DETOUR |
mere departure from assigned task
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Liability of Princicipals ro 3rd parties for CONTRACTS entered in to by an Agent
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RULE: P is liable for contracts entered into by agent if p AUTHORIZED A to enter into the K ( Actual Express, Actual Implied, Apparent, Ratification)
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Types of Authority to bind P to contract entered into by A
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1. Actual Express Authority
2. Actual Implied Authority 3. Apparent Authority 4. Ratification |
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Actual Express Authority
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P used words to express authority to A.
- Can be oral, private and narrow (Except Equal Dignity Doctrine) - Revoked by unilateral act of either party or death/incapacity of P (non revocable w/ durable power or attorney) |
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ACTUAL IMPLIED AUTHORITY
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Authority which A reasonably believes P has given because of
1. Necessity 2, Custom 3. Prior Dealings |
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Actual Implied Authority
NECESSITY |
Necessary to accomplish an expressly authorized tasks
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Actual Implied Authority
CUSTOM |
usually performed by persons with Agent's title/possession
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Actual Implied Authority
PRIOR DEALINGS |
Prior Dealings between Principal and Agent - authority to do all tasks which A believes have been authorized by P
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APPARENT AUTHORITY
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P "cloaked" A with appearance of authority AND 3rd party REASONABLY RELIES on appearance of authority
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(apparent authority)
LINGERING AUTHORITY |
Authority has been terminated but agent continues to act on P's behalf
(P can be held liable) |
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(apparent authority)
Exceeding Authority |
If A exceeds authority, P still can be bound if A had actual authority and P secretly limited and 3rd party doesn't know
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RATIFICATION
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Authority can be granted AFTER k ENTERED in to if:
a. P has KNOWLEDGE of all material facts regarding the K AND b. P accepts its benefits |
Ratification can alter terms of K
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general rules of liability of K
IF THERE IS no AUTHORITY . . . |
Principal is not liable on K AND A is liable on K
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general rules of liability of K
IF THERE IS AUTHORITY |
P IS liable on K AND A is not on K Unless:
- P is partially disclosed or undisclosed, authorized agent may nonethesless be liable at election of 3rd party |
3rd party choose who to go after
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DUTIES AGENT OWES TO PRINCIPAL
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Duty to:
1. Exercise reasonable CARE 2. OBEDIENCE - obey reasonable instructions 3. LOYALTY - no self dealing, usurping opportunities, or secret profits |
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BREACH OF DUTIES OWED TO PRINCIPAL
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1. RECOVER LOSSES caused by the breach AND
2. DISGORGE (get back) PROFITS made by A as well |
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PARTNERSHIP LAW COVERS
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1. General Partnership FORMATION
2. LIABILITIES to 3RD PARTIES of Partnership 3. PARTNERSHIP RIGHTS and LIABILITIES between Partners 4. DISSOLUTION of Partnership |
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General Partnership Formation
FORMALITIES |
NONE - Except to have a LEGAL PURPOSE
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General Partnership
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an Association of 2 or more persons who are carrying on as co-owners of a business for profit
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Sharing of profits creates REBUTTABLE PRESUMPTION that general partnership exists
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Agency Principles that apply to Partnership
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1. Partners are AGENTS of partnership for carrying on USUAL PARTNERSHIP BUSINESS
2. Partnership bound by TORTS commited by partners in scope of their business 3. Partnership is BOUND BY CONTRACTS entered by partners with authority |
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LIABILITIES OF PARTNERSHIP TO 3RD PARTIES
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1. Agency principles apply (Duties, Torts and Contracts)
2. General Partners are PERSONALLY LIABLE for debts/obligations of partnership 3. General Partnership Liability ESTOPPEL 4. Contract Formation and Liability w/in Unincorporated Business Organizations |
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General Partners are PERSONALLY LIABLE for debts/obligations of partnership EXCEPT when
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1, Incoming Liability for PRE-EXISTING DEBT
2. Partners liability for SUBSEQUENT debts after DISSOCIATION |
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General Partner Liability
PRE-EXISTING DEBT |
Rule: Partners are NOT liable for prior debts BUT an $ paid into partnership by incoming partners can be used by partnership to satisfy prior debts
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General Partner Liability
DISSOCIATING PARTNERS |
RULE: Outgoing partners retain liability for future debts until actual notice of dissolution given to creditors or 90 days after filing notice of dissolution with state
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General Partnership Liability by
ESTOPPEL |
RULE: One who represents to a 3rd party that a general partnership exists will be liable as if a general partnership exists
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CONTRACT FORMATION AND LIABILITY WITHIN UNINCORPORATED BUSINESS ORGANIZATIONS
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1. Limited Partnership
2. Registered Limited Liability Partnership |
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LIMITED PARTNERSHIP
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Partnership with at least 1 general partner and 1 limited partner
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Limited Partnership
FORMATION |
File with STATE a Limited Partnership Certificate that includes all of the general partners
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Limited Partnership
LIABILITY AND CONTROL |
General Partners - PERSONALLY LIABILE for all allocations/obligations of partnership (Have power to manage business)
Limited Partners - Not liable for obligations of Limited Partnership (Limited Liability) - (They MAY manage business) |
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REGISTERED LIMITED LIABILITY PARTNERSHIP
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Partnership in which some or all partners (depending on the jurisdiction) have limited liability.
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Registered Limited Liability Partnership
FORMATION |
Register and file with state a statement of qualification and annual reports
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Registered Limited Liability
LIABILITIES |
NO partner will be liable for obligations of the business
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RIGHTS AND LIABILITIES BETWEEN PARTNERS
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1. General Partners are FIDUCIARIES of EACH OTHER and BUSINESS
2. Rights in Partnership ASSETS (3 forms) 3. Management 4. Salary 5. Share of PROFITS AND LOSSES |
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General Partners
DUTIES OWED OF FIDUCIARIES |
1. Duty of LOYALTY
2. Duty of CARE |
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General Partnership
FIDUCIARY DUTY OF LOYALTY |
1. No SELF DEALING
2. Can't USURP PARTNERSHIP OPPORTUNITIES 3. Can't get SECRET UNDISCLOSED PROFITS at partnership's expense |
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Breach of
FIDUCIARY DUTY OF LOYALTY |
Remedy - Actions for ACCOUNTING
Partners may recover losses caused by breach and disgorge profits |
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General Partnership
FIDUCIARY DUTY OF CARE |
No negligent, reckless, or intentional misconduct
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PARTNERSHIP RIGHTS IN PARTNERSHIPS ASSETS
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THREE forms
1. Specific Partnership Assest 2. Share in Management 3. Share of Profits and Surplus |
Note: Think about whose money was used to buy property of individual partner and thus CAN transfer share to 3rd party
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Partnership Rights in Partnership's Assets
SPECIFIC PARTNERSHIP ASSETS |
Land, leases, or equipment are owned by partnership as assets and thus NO partners can transfer in management to 3rd party without partnership authority
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Partnership Rights In Partnership Assets
SHARE OF PROFITS AND SURPLUS |
Liquid personal property of individual partner and thus CAN transfer share to 3rd party
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Not: Think about whose money was used to buy property when deciding whether it is specific partnership assets or personal property asset
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Partnership Rights in Partnership's Assets
SHARE IN MANAGEMENT |
Asset owned by partnership and thus NO partners can transfer share in management to 3rd party without partnership authority
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Rights and Liabilities Between Partners
MANAGEMENT |
ABSENT AGREEMENT, each partner entitled to EQUAL control/vote
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This can be changed by agreement
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Rights and Liabilities Between Partners
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Absent and agreement, partners get NO SALARY
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Absent Agreement Partners get NO SALARY EXCEPT WHEN
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Winding up partnership
Compensation should be REASONABLE |
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Partner's Share of Profits
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Absent an agreement, Profits Shared EQUALLY
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Absent an agreement, Losses shared LIKE PROFITS
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Partner's Share of Losses
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Absent an agreement, Losses shared LIKE PROFITS
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Absent an agreement, Profits Shared EQUALLY
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Partnership Dissolution
DISSOLUTION |
Starts process of end of partnership: change in the relationship of partners caused by any partner ceasing to be associated in carrying on of business
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Occurs with express will or agreement to dissolve or majority vote within 90 days of dissociation of one party
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STAGES OF PARTNERSHIP DISSOLUTION
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Dissolution
Winding Up Termination |
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Partnership Dissolution
TERMINATION |
The real end of the partnership
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Partnership Dissolution
WINDING UP |
Time period between DISSOLUTION and TERMINATION in which remaining partners liquidate partnership's assets to satisfy the partnership's creditors
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Winding Up
COMPENSATION |
Partners receive compensation for helping WIND UP a business
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Winding Up
LIABILITY |
Partners are still liable for transactions entered into to wind up business
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Partnership Dissolution
PRIORITY OF DISTRIBUTION |
Order of Distributions
1. Creditors - outside and inside creditors (partners who loaned to partnership) 2. Capital Contribution by Partners 3. Profits and Surplus, if any (Shared Equally) |
RULE: Each partners must be repaid his or her loans and capital contributions, plus that partner's share of profits BUT minus that partner's share of the losses
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AGENCY
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Agency is a FIDUCIARY relationship arised from the MUTUAL "MANIFESTATION" OF CONSENT" that an AGENT shall act on behalf of and subject to the CONTROL of the PRINCIPAL.
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An OBJECTIVE STANDARD is used so that the relationship is dependant on what the agent believed the principal intended. An agency can arise even when absent the MUTUAL CONSENT
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TYPES OF PRINCIPALS
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1. Disclosed - Identity Known to 3rd party
2. Partially Disclosed - 3rd party knows agent is acting for another but not IDENTITY of Principal 3. UNDISCLOSED PRINCIPAL - 3rd party does not know that Agent is acting on behalf of another |
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DISCLOSED PRINCIPAL
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Identity if known to 3rd party
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PARTIALLY DISCLOSE PRINCIPAL
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3RD party known that agent is acting on behalf of another but does not know identity of Principal
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UNDISCLOSED PRINCIPAL
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3rd party does not know that agent is acting on behalf of another
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TYPES OF AGENTS
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1. General Agent
2. Special Agent |
General Agent has authority to conduct a series of transactions involving a CONTINUITY OF SERVICES
Special Agent - Has authority for only a SINGLE TRANSACTION for a series of transactions NOT involving a CONTINUITY OF SERVICE |
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GENERAL AGENT
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General Agent has the authority to conduct a SERIES OF TRANSACTIONS involving a CONTINUITY OF SERVICE.
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SPECIAL AGENT
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Special Agent has the authority for only a SINGLE TRANSACTION or a SERIES OF TRANSACTIONS not involving a CONTINUITY OF SERVICE
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FACTOR
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A FACTOR is a commercial agent employed to sell consigned merchandise in the agent's own name for the principal
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SUBAGENT
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One who, with authority, is appointed by the agent, to perform functions undertaken by the agent
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If agent has no such authority the appointee is an agent of the agent NOT A SUB AGENT
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Employer (Master) - Employee (Servant)
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Special type of agency relationship in which the Principal (Employer/Master) employs the agent (employee/servant) to perform service and RETAINS CONTROL over the manner of performance
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Note that there is no right of control over independent contractors - Does not retain control over the manner of perforamnce
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REQUIREMENTS FOR AGENCY RELATIONSHIP
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1. Consent - Agreement, ratification, or estoppel
2. Capacity 3. Proper Purpose |
No consideration is needed nor does it HAVE to be in writing though many states will enforce the STATUTE OF FRAUDS TO require a writing to execute land sales contracts
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EQUAL DIGNITY STATUTES
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Requires a written agency agreement whenever the contract the agent is entering into for the P is required to be in writing
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EFFECT ON NO WRITING
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IF A's authority was not in writing when it was required, any contract executed by the agent is UNENFORCEABLE AGAINST THE PRINCIPAL.
VOIDABLE at P's option |
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EXCEPTIONS TO STATUTE OF FRAUDS AND EQUAL DIGNITIES RULE
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EXECUTIVES acting on BEHALF OF A CORPORATION and agents acting MECHANICALLY
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