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61 Cards in this Set
- Front
- Back
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AGENCY |
Agency is the fiduciary relationship that results when one person consents to act under the control and on behalf of another.
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CONSENT
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Consent does not have to be express but can be implied, sometimes even from a failure to object when action taken previously in an agency capacity is suggested again. A gratuitous agent is still an agent. |
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CONTROL
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Control requires some degree of subservience but the principal doesn’t have to exercise physical control over the action of his agent as long as the principal may direct the ultimate objective. Control is defined in the context of the nature of the liability being asserted against the principal. Liability for a physical tort might depend upon physical control, while liability for fraud might depend upon claimant’s expectations.
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PRINCIPAL
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The one for whom action is to be taken is the principal.
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UNDISCLOSED PRINCIPAL
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A principal is undisclosed when a party to a contract is unaware that the agent is acting for a principal and assumes the agent is contracting on his own behalf. Under these circumstances, the agent is a party to the contract.
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PARTIALLY DISCLOSED PRINCIPAL
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A principal is partially disclosed when a party to a contract has notice that the agent is acting on behalf of someone but does not know the identify of this party. In this case, it is inferred, subject to agreement otherwise, that the agent and principal are both parties to the contract.
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AGENT
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An agent is person or entity who acts on behalf of and subject to control another.
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GENERAL AGENT
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A general agent is an agent who is authorized to conduct a series of transactions involving a continuity of service.
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SPECIAL AGENT
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A special agent is one authorized to conduct a single transaction or a series of transactions not involving a continuity of service.
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ELEMENTS TO SHOW AN AGENCY RELATIONSHIP
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Elements to show existence of an agency relationship are:
1. manifestation by the principal that the agent will act for him 2. an acceptance by the agent of the undertaking Edit 3. and an understanding by the parties that the principal will control the enterprise. |
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AUTHORITY
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Authority is the agent’s power to produce a change in a given legal relationship.
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ACTUAL AUTHORITY
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Actual authority encompasses express or implied authority.
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IMPLIED AUTHORITY
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Implied authority is that authority that can be inferred or implied form the words used, the customs and the relations of the parties. An agent’s implied authority is defined by his or her reasonable interpretation, in light of the circumstances, of the express instructions given by the principal. An agent has a right to bind the principal when he acts with express or implied authority. |
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IMPLIED ACTUAL AUTHORITY
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The act of putting agent into such a position that leads the agent to reasonably believe that he has the authority.
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IMPLIED APPARENT AUTHORITY
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The act of putting agent in such a position that third parties would reasonably believe the agent has the authority.
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INCIDENTAL AUTHORITY
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Incidental authority is a subset of implied authority and it is the authority to do acts which are incidental to, but reasonably necessary, to carrying out the transaction involved. |
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APPARENT AUTHORITY
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Apparent authority is the power of the agent to bind the principal to unauthorized contracts. The principal must have manifested to the third party that the agent can act on his behalf. Apparent authority exists when it is reasonable for the third party to believe that the agent is authorized. |
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INHERENT AUTHORITY
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Inherent authority is the situation in which an agent can bind his principal to contracts where there is neither authority or apparent authority but the acts done are of the type that usually accompany or are incidental to the type of transactions the agent is authorized to handle. Inherent authority is the power of an agent that is derived solely from the agency relationship and exists for the protection for persons harmed by or dealing with a servant or other agent.
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ESTOPPEL
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Estoppel is a principle of torts developed to prevent loss by a person who acts in reliance upon a representation or promise of the estopped person. It differs from apparent authority because a person can be estopped from denying liability based on inaction but apparent authority requires a manifestation by the principal.
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RATIFICATION
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Ratification is the affirmance by a person of a prior act, which did not bind him but which was done or professedly done on his account. Ratification can create liability in tort or contract.
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ELEMENTS OF RATIFICATION
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Ratification is adoption and affirmance of an agent’s previously unauthorized acts through subsequent conduct and with knowledge of all the facts. Ratification will be denied legal effect if necessary to protect the rights of an innocent third party.
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AFFIRMANCE
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Affirmance is a manifestation of an election by the one whose account an unauthorized act has been done to treat the act as authorized.
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AQUIESCENCE
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If there were similar acts before, there might be acquiescence.
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SERVANT
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A servant is an agent performing services in the master’s affairs whose physical conduct is controlled or is subject to the right of control by the master.
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VICARIOUS LIABILITY
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Under the doctrine of respondeat superior, a master is subject to liability for the torts of his servants acting within the scope of their employment. |
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INDEPENDENT CONTRACTOR
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An independent contractor is a person who agrees to carry out some task but is not subject to the principal’s control in doing so. The test is whether the principal has control over the day-to-day operations of the business; control or influence over the results alone is insufficient. An independent contractor is not an agent.
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LIABILITY FOR INDEPENDENT CONTRACTOR
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A principal is not responsible for the acts of an independent contractor unless it is a non-delegable duty or inherently dangerous. Non-delegable duties are usually statutory.
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NON-SERVANT AGENT
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A non-servant agent is one, such as a real estate broker or lawyer, who acts on behalf of another but is not subject to control by the principal over the physical conduct of the work. A principal is not liable for the physical torts of a non-servant agent (independent contractor.)
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DUTY OF REASONABLE CARE
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An agent owes the principal a duty to exercise reasonable care, which means to act with the skills of persons performing similar work in the locality.
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DUTY TO OBEY REASONABLE INSTRUCTIONS
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An agent owes the principal a duty to obey reasonable instructions.
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DUTY OF LOYALTY
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An agent owes the principal a duty of loyalty, which means he must keep the principal’s interests foremost in his mind. This includes
1. duty not to engage in self-dealing, 2. no usurping of the principal’s opportunities 3. and no secret profits. |
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DUTY OF CANDOR
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An agent owes a duty to disclose to the principal all facts relevant to a transaction that the agent reasonably believe that the principal would want to know.
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SELF-DEALING
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Self-dealing is benefiting oneself at the expense of someone to whom you owe a duty of care.
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LIABILITY ON CONTRACT
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A principal is contractually liable for the agents of his agent only when the agent acts with actual or apparent authority or if the principal ratified the agent’s acts. |
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LIABILITY ON CONTRACT WITH UNDISCLOSED PRINCIPAL
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If the principal is partially disclosed or undisclosed, the agent is treated as though a party to the contract. The third party must elect who to sue.
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PARTNERSHIP
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A partnership is an association of two or more persons to carry on as co-owners a business for profit.
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FORMATION OF PARTNERSHIP
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A partnership can be formed without a written agreement but it can be shown through a writing, by testimony as to some conversation and by circumstantial evidence. The contribution of money or services in return for a share of the profits creates a presumption that a partnership exists. |
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ELEMENTS OF A PARTNERSHIP
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A totality of the circumstances is used to determine if there was a partnership. The elements the court might consider include: 1. the intention of the parties; the agreement itself;
2. the right to share in profits; 3. the obligation to share in losses; the ownership and control of the partnership property and business; 4. and the conduct of the parties toward third parties. |
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PROFIT-SHARING
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Sharing of profits is prima facie evidence of partnership but no such inference is drawn if the profits are paid as wages.
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PARTNERSHIP BY ESTOPPEL
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In order to establish a partnership by estoppel, four elements must be shown:
1. plaintiff must establish that there was either an express or implied holding out of a partnership 2. the representation was made by a person sought to be charged as a party or with his consent 3. a reasonable reliance in good faith by the third party t 4. a change of position, with consequent injury, by the third party in reliance on the relationship. |
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PARTNERSHIP LIABILITY
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Partners are jointly and severally liable for everything chargeable to the partnership. Persons who are not partners as to each other are not partners to third persons.
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DUTIES OF PARTNERS
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General partners are fiduciaries of each other and the partnership, They owe the same duty of loyalty that an agent owes.
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DUTY OF LOYALTY
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Partners have a duty to account for profits received, to refrain from dealing with the partnership as or on behalf of an adverse party, to refrain from competing.
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DUTY OF CARE
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A partner has a duty of care to the partnership and other partners in the conduct and winding up of the partnership and must refrain from
1. engaging in grossly negligent or reckless conduct, 2. intentional misconduct 3. and knowing violation of the law. |
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DUTY OF CANDOR
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A partner must render on demand, or without demand, true and full information of all things affecting the partnership or any partner.
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FORMER PARTNERS
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A partner is a fiduciary of his partners, not his former partners.
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LIABILITY FOR TORTS
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The partnership is bound by torts committed by partners in the scope of partnership business.
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LIABILITY FOR CONTRACTS
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The partnership is bound by contracts entered into by partners with partnership authority.
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LIABILITY FOR DEBTS
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General partners are personally liable for debts and obligations of the partnership. Incoming partners do not have personal liability for previous partnership debts. If one contributes capital to a partnership, it can be used to satisfy prior debts. A disassociating partner remains liable for debts of the partnership until actual notice of the disassociation is given to creditors or to 90 days after filing notice of disassociation with the state.
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LIMITED PARTNERSHIP
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A limited partnership is a partnership with at least one general and one limited partner.
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GENERAL PARTNERS
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General partners are liable for all debts and obligations. General partners have substantial managerial control.
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LIMITED PARTNER
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A limited partner has limited control and is not liable for debts and obligations. A limited partner must pay full consideration for their interest.
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FORMATION OF LIMITED PARTNERSHIP
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A certificate that lists the names of all general partners must be filed.
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LIMITED LIABILITY PARTNERSHIPS
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Limited liability partnerships must register with the state and must file annual reports but no partner is liable for the debts and obligations of the partnership
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ACTION FOR ACCOUNTING
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An action for accounting is the only form of action that a partnership can bring against a disloyal, breaching partner. The partnership may recover losses caused by the breach and may be able to force the breaching party to disgorge secret profits.
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PARTNERS’ RIGHTS
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Absent an agreement to the contrary, partners are entitled to:
1. Equal management control 2. Equal share of losses 3.. No salary 54 Compensation paid if involved in winding up |
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PARTNERSHIP PROPERTY/ASSETS
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Partnership property is that which was purchased by partnership funds. Partnership assets such as land, leases and equipment are owned by the partnership and may not be transferred by an individual partner without partnership.
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PARTNERSHIP PROPERTY/PROFITS
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A partner’s share of profits is personal property and may be transferred.
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MANAGEMENT SHARE
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A partner’s share in management may not be transferred.
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PARTNERSHIP DISSOLUTION
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In a partnership at will with no express agreement, the partnership will be dissolved upon the express will of any single partner to dissociate. In a partnership not at will with an express agreement, the partnership will be dissolved according to the terms of the agreement or if any single partner dissociates and the remaining partners, by majority vote, vote to dissolve within 90 days of that partner’s dissociation.
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WINDING UP
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Winding up is the period between dissolution and termination (the final end) in which the remaining partners liquidate the partnership’s assets to satisfy creditors.
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