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120 Cards in this Set

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Agency Defined
Agent is authorized to represent the principal in dealings with 3Ps
Requirements for Creation of Relationship
- Capacity
- Consent
- Modes
Capacity
- P must have contractual capacity
- Agent needs only minimal capacity.
- A disqualified if represents both parties or does not have a required license
Modes
By act of party
- Agreement - actual authority
- Holding out - apparent authority
- Ratification
By operation of law
- Estoppel (holding out causes 3P to rely)
- Statutes for limited purposes
Agents Duties
- Express K duties
- Fiduciary duty of loyalty, reasonable care, obedience
Principal's Remedies
K actions, Tort Actions\
Equitable actions for an accounting, w/holding compensation for intentional torts & intentional breaches of FD
SubAgent Duties
- Liability of A is absolute to P for sub-agent breach
- Duties are the same as an A if sub is authorized
- If sub UNauthorized, no duties to P but duties to A
Principal's Duties
K duties, compensation, reimbursement, and non-interference
Real Estate Broker's Contracts
- Nonexclusive K - entitles A to payment when A brings buyer
- Exclusive K - entitles A to payment when ANYONE brings buyer
Types of Authority
Actual
Apparent
Ratification
Actual Authority
Authority A reasonably believes he has based on dealings with P. Express or implied.
Express Authority
- Contained in agency agreement
- Effective even if granted mistakenly or because of misrepresentation
Implied Authority
What A r/ably believes as a result of P's action, including:
- Incidental to express authority
- Arising out of custom known to A
- Resulting from prior acquiescence by P
- To take emergency measures
- Where delegation customary
- Where impossible to act without delegation
- To manage investments
Basically, anything where to complete the job, it's necessary to have authority
Termination of Agency
-Lapse of specified or r/able time
- Happening of specified event
- Change in circumstances
- A's breach of FD
- Unilateral termination
- Operation of law
Irrevocable Agencies
Neither an agency coupled w/an interest nor poer given as security may be terminated unilaterally by P or by op of law if agency was given to protect A's or 3P's rights & is supported by consideration.
Apparent Authority
Arises from 3P's reasonable beliefs when P holds another out as possessing authority that induces r/able reliance on that authority.
Types of Apparent Authority
- Where A has no authority yet P bound
- When A exceeds authority yet P bound
- Inherent authority
3 main types
When A has no authority yet P bound
-Imposters - P negligently allows imposter to appear to have authority.
- Lingering apparent authority- A can still bind 3P w/whom P knows A dealt unless P notifies them of termination
- If 3Ps rely on A's writing after actual authority is terminated
How does death or incompetency of P affect A's authority?
ENDS IT. No notice of death required. The only exception is for banks honoring transactions until they learn of death/incompetency.
When A exceeds actual authority and P still bound
- P let A exceed authority before and knows 3P aware of this.
- P liable for acts w/in responsibilities commony carried by A's position.
Inherent Authority
When A does not have actual authority, buy P still bound.
- Respondeat superior,
- Conduct similar to that authoirized even though exceeding authorization.
Improper disposition of goods
P liable for disposition of her goods by A possessing them if A was given some indicia of ownership, or if goods disposed of were sold by A who is dealer in the particular goods.
Ratification
- Agency created by ratification when "A" purports to act on behalf of "P" w/o any authority but P subsequently validates act & is bound.
Can Ratification be retroactive?
YES. Unless P did not have capacity when A acted or if it would interfere w/rights of 3Ps.
Prerequisites for Ratification
P must know/have reason to know all material facts, accept the entire transaction, and have capacity.
Methods of Ratification
- Express or implied through conduct.
- Acceptance of transactions benefits, silence if there is any duty to disaffirm, suing on transaction.
What may be ratified and by whom?
A disclosed/partially disclosed P may ratify anything she could legally do, unless
- performance was illegal at the time of ratification
- 3P has w/drawn
- Material change in circumstances
Liability - 3P v. P
P liable to 3P on K A entered if A had authority
Liability - 3P v. A
- Disclosed P always liable, A generally not
- Partially disclosed and undisclosed liable, but 3P must choose A or P
When is A liable to 3P?
When the parties to K intended A to be liable, and when under A's implied warranty that P w/capacity exists & that A has authority to K for P.
Liability - 3P to P & A
- Disclosed P - only P can enforce K & hold 3P liable
- Paritally & Undisclosed - either P or A may hold 3P liable.
Subtleties of 3P liability to partially and undisclosed P
- If A enforces, P entitled to all rights & benefits thereunder.
- P may not enforce if: affirmative fraudulent misrep of P's ID or unforeseen burden to 3P if performance is due to P & not A
Tort Liability - Respondeat superior
-P liable for A's torts that are w/in the scope of employment.
- if no A liability, no P liability
- P can also be liable for own negligence in hiring/supervision
Employer-employee Relationship
- Required for liability
Independent Contractors
- P not liable for IC torts
- IC if P does not have the right to control how job is done.
When P liable for IC acts
1. Inherently dangerous activities.
2. Non-delegable duties.
3. P knowingly selected incompetent IC
Liabilities for Sub-A's Acts
- Also on P if sub acted w/authority.
- SubA's authority can be express or implied.
Employer-Employee by Estoppel
P liable for torts if creates appearance of agency & 3P relies
Liability for Acts of Borrowed Employees
- Original employer generally liable for loaned employee's torts unless borrower had primary right to control employee's acts.
Scope of employment
Same general nature as or incident to authorized acts.
- Act need not be authorized
- Serious criminal acts not in scope
- Frolic v. Detour
- Conduct motivated to serve ER
- Sometimes intentional torts
- Ratification
Frolic & Detour
Detour - small deviation & w/in

Frolic - major deviation and not w/in

Once show ee left scope of employment, must prove return before er liable for ee's tort
Was A's Conduct Motivated to Serve Employer
- No liability to invited passengers unless expressly authorized.
- P NOT liable for A's use of unauthorized instrumentalities.
- Trips w/2 purposes w/in scope if any substantial purpose of P being served.
Intentional torts not in scope UNLESS:
- Natural incident of A's duties
- A promoting P's biz
- Nature of work gives rise to hostilities
Ratificationv of torts
May be possible if it meets requirement of reqs
Nature of partnership
- 2 or more personas as co-owners of business for profit.
- Natural persons or entities
Governing law for partnerships
RUPA & partnership K
Formation of Partnership
- Agreement can be implied from conduct; need only intent.
- Writing not generally required; if want K for parntership for more than one year, need to satisfy SOF
- Capacity to K required; but if pner incapacitated, Pship lasts until dissolved
- Legality of purpose required
- Consent; and consent needed by all to add a Pner
Proving P'ship exists
- Intent is the most important. If parties intended to carry on biz as co-owners, there is a P'ship even if they did not subjectively intend it.
- Sharing profits = presumption of pship.Unless - received debt payment, for services rendered, as rent, as annuity/retirment, as interest on loan, or for sale of goodwill of biz.
Evidence indicative of Pship
- Title to property held in JT or TIC
- Venutre undertaken requires extensive activity
- Sharing gross returns
Liability of Purported Pners held out as Pner
- If person holds self out or consents to being held out as partner, liable to 3P who relies on representaition.
- Failure to deny is not enough, must actually consent.
Liability of purported Pners - one who holds the other out
- Person makes the other his agent
- If is Pship, only Pners who know/consent the holding bound
Classifications of Pship Property
1. Pship Capital: Property & $$ contributed by each Pner for carrying on Pship biz.

2. Pship property: Everything Pship owns, including capital
What is includable in Pship Property?
1. Titled Property - RUPA provisions.
- Titled property deemed pship property if titled in pship name or titled in name of pner(s) and deed notes titleholder's capacity as pner or existence of pship.

2. Property presumed pship prop if purchased w/ pship funds

** If pship not referred to in deed, presumed separate property. Even if used for Pship purposes.
Untitled property: Common Law criteria indicating pship prop
1. acquisition by pship funds
2. use by pship in conducting biz
3. entry of property in pship books as an asset
4. close relationship btw property & biz operations of pship
5. improvementof property w/pship funds
6. maintenance of prop w/ pship funds
Rights of Pner in Pship Prop
Pner NOT co-ownerl, so no transferable interest in pship property
Pners interest in pship
1. Each pner has transferable interest in pship, which consists of his share of pship profits, losses, y distros.
- Can only assign interest in receiving profits. Does NOT make assignee a partner unless others consent.
2. Unless otherwise agreed, each interest is equal share
3. Interst is treated as personal property, assignable w/o dissolving pship, and attachable.
Pners right to participate in mgmt
- EQUAL
- Decisions involving ordinary biz can be decided by majority vote.
- Matters outside ordinary course of biz require unanimous consent of pners.
Fiduciary duties to pship
1. Loyalty:
a. account for all profits/benefits derived by pner in connection w/ biz.
b. Do not deal w/ pship as one w/an adverse interest, and
c. Do not compete w/ Pship

Care: Pner must refrain from engaging in negligent, reckless, or unlawful conduct or intentional misconduct.
Pner Accounts
Amount contributed plus profits minus losses.
Remuneration for Pners
No right to remuneration for services rendered to Pship except in winding up or if agree otherwise.
Indemnification & other repayment
Pship must indemnify every Pner re: payments made and obligations r/aby incurred in carrying on pship biz
Pship rights upon dissolution
Each pner gets settlement of her account
Books & info
Must be kept at main office, each partner has right to inspect and copy
Legal actions by and against pners
- Must sue individual pner to reach his personal assets.
- Pship v. Pner for breach of FD or pship K
- Pner v. Pship or other pners to enforce rights
Application of Agency Law to Partnership
Each Pner is agent of Pship according to RUPA
Apparent authority under RUPA
Pner can bind pship in Ks within scope of pship biz.
- Act of any partner for apparently carrying on in the ordinary course of pship biz or biz of kind carried out by pship binds pship unless:
- Pner had no authority to act for pship in particular matter and 3P knew or had received notification Pner lacked authority.
- Knowledge = subjective - what 3P actually knew.
- Notification - comes to 3Ps attention or duly delivered.
Transfers of Pship Property when Pship interest indicated in deed
- Any partner may transfer prop held in name of pship.
- If prop held in name of pner(s) id'd as such & pship not named, transfer by titleholders in their own names is effective.
- If transferring pner lacked authorirty, pship may recover prop from initial transferee, but not subsequent BFP
Transfers of pship prop when Pshi interest NOT indicated in deed
- Person whose name is on property can transfer.
- If transferee pays value & does not have notice of Pner's lack of authority, takes free of pship interest.
Actual authority and Pship
- Pship BOUND. Authority pner r/ably believe he has based on comm btw pship & pner.
Epanding & Limiting Authority w/ Statement of Authority
- Grants or limits pner's authority to enter transactions on pships behalf
- Statement filed with Sec. of State & w/ recorder for real prop transfers
- Grant of authority in filed statement conclusive in favor of BFP for value
- Filed limitation to transfer real property = purchaser's constructive knowledge of lack of authority
Notice undre RUPA
when pner
- has actual knowledge
- Is notifies (comes to attention or delivered)
- Has reason to know based on surrounding circs
- Pner's notice of fact re: pship imputed to pship immediately unless pner w/notice participating in fraud against pship
Civil Liability of Pners
- For Ks pner entered w/ actual or apparent authority.
- For torts by pner w/in ordinary course of pship biz or w/auth
Nature of civil liability
Joint and Several
Extent of Civil Liability
Each pner personally and individually liable for entire amount of pship obligations.

- If pay more than share, entiteld to contribution/indemnification.
Is incoming pner liable for obligations incurred before joiniing?
NO.
Outgoing parnter liability
Remains liable for obligations arising while he was pner unless there has been payment, release, or novation.

** can also be liable for acts after dissolution
Criminal liability of pners
Pners not liable for crimes of other pners unless they participated.
Triggerring events for dissociation
- Notice of pner's express will to withdraw
- Happening of agreed event
- Expulsion pursuant to K, by unanimous vote if unlawful to continue biz w/pner or by judicial decree
- Pner's bankruptcy
- Pner's death or incapacity
- Appointment of receiver
- Termination of biz entity that is a pner
Consequences of dissociation
- Pner's right to participate over
- Pship buys out pner's interest & indemnifies him
- Liable to Pship if wrongful dissociation & not entitled to payment of buyout price until term expires or undertaking complete if leave before
Dissociated pner's liability to bind Pship
W/in two years
-If act would have bound pship pre-dissociation AND
- 3P r/ably believed dissociated pner was still a pner & was w/o notice
Dissociated pner's liability to other parties for pship obligations
W/in 2 years if
- When entering transaction, 3P r/ably believed dissociated pner was still a pner & did not have notice of dissociation

Can cut the 2 year period by filing notice of dissociation w/ sec. of state.
Triggering events for dissolution
- In pship at will, notice by any pner of intent to withdraw
- Expiration of term or completion of undertaking
- Consent of all partners
- w/in 90 days of pner's death, bankruptcy, or wrongful dissociation and at least 1/2 of pners want to dissolve
- Issuance of court order on pner's application that the economic purpose is frustrated, or a partner's conduct makes it not reasonably practicable to carry on, or the business can't be carried on in conformity w/ pship k
- Court order upon app of transferee of pner's interest that it is equitable to wind up after terms exipred, or undertaking completed, or at any time in a pship at will.
Pner's power to bind after dissolution
- By any act of winding up
- By acts w/ 3P w/o notice of dissolution unless filed ntc w/ sec of state
Pners may waive dissolution and continue biz at any time before wind up complete how?
By unanimous vote of pners who have not wrongfully dissociated.
- Waiver does not affect rights of persons who relied on dissolution before receiving notice of waiver
Distro of assets
- All assets reduced to cash
- Pay creditors, then pay back pners' capital, then split profits.
- Pner who pays more than his fair share of debts entitled to contribution
Formation of Limited Liability Partnership
- Must pass LLP decision by vote req'd to amend pship agreement
- If agreement is silent, need unanimous vote
- Must file qualification statement w/ sec of state
- Become an LLP on date of filing or on date specified in statement
How do you know it's an LLP?
It's name HAS to end with LLP.
Liability in an LLP
- Pner not personally liable for obligations of LLP.
- Pner does remain liable for own acts
Who is required for a limited partnership?
General Partners and Limited Partners
What is a GP liable for?
Pship obligations.
What do Lim. Pners have liability for?
Nothing past agreed-upon contributions
How is a LP formed?
- By filing certificate signed by all GPs with state.
- Maintain office w/records in state of filing
- Agent for service of process maintained in state
How long does a limited partnership run?
Perpetually unless otherwise agreed.
How can you tell it's a Limited Partnership?
It has to have LP or LLLP in it's name.
How are GPs and Lim Pners admitted?
As provided in the pship K, as a result of merger, or conversion, or on consent of pners
What about contributions that are required of pners before distro?
- Contributions may be in for of any benefit to pship
- Contribution obligation not excused by death/disability and may be compromised only on consent of all pners
Liabilities of GPs in an LP or LLLP?
- Jointly and severally liable for all LP's obligations.
- GP may also be a Lim P & have rights of Lim P, but dual capacity does NOT relieve GP of duties as GP.
- Incoming GP not personally liable for obligations incurred before joining.
-
Limited Liability Limited Partnership
Liability is for the LLLP's alone, GP not personally liable.
Liability of a Lim. P
Not personally liable for pship obligations
Duties of pners
- GP owes duties of care and loyalty. NO automatic breach of FD just because act furthers GPs own interests.
- Lim P owes no FD to Pship unless otherwise agreed.
Rights of Both General and Limited Partners
- Rights to Distro
- Right to assign pship interest
- Right to transact biz w/ pship and lend $ to pship
- Right to dissolve when not r/ably practicable to carry biz on
- Direct action against LP or another partner for legal or equitable relief to enforce pner's rights or interests
- Derivative action to enforce LP's rights
Rights to Distro in LP
- On the basis of pner's contributions
- No distro if it woluld make LP unable to pay debts or make assets less than liabilities.
Liability for Improper LP distros
- A GP who consents to improper distro is personally liable to LP for the amount of that distro.
- If knowingly receive, must return improper amount.
- No personal liability for improper distro that appeared to be proper based on r/ably prepared financial statement.
Right to assign pship interest
Assignee gets only right to receive distributions & demand accounting.
- Transferring pner remains a pner & transfer does not constitute dissociation or cause dissolution.
- BUT, transfer of pner's entire interest is grounds for expulsion
Derivative actions to enforce LP's rights
If pner first demands GPs to bring action to enforce & GPs do no w/in r/able time or demand would be futile.
Rights specific to GPs
- Management
- Right to inspect and copy
- Indemnification
Management of LP
- Equal rights to manage/conduct LP's activities
- Almost all decisions can be made by just GPs except:
a. Amending pship K
b. Converting pship to LLLP
c. Disposing of all;/substantially all LP's property outside usual & regular course of business
d. Admitting new pner
e. Compromising pner's obligation to make contribution or return improper distro
Indemnification of GPs in LP
LP must indemnify GP for liability incurred in ordinary course of biz
Rights specific to Limited Partners
Management - May participate, but if the do, do not invoke personal liability.
- RIght to inspect and copy.
Dissociation of Limited Partnerships
- Same triggering events as regular partnership
- Ltd pner has no right to dissociate before termination of LP
Effect of Dissociation on Lim P
Treated as transferee of Lim P's transferable interest.
Effect on GP
Effects of dissociation on pner if regular pship
Dissolution of Lim Pships
- By judge on pner's application if not r/ably practicable to carry on biz.
- Admisistrative disso by sec. of state if LP does not pay fees or file annual report (can apply for reinstatement by curing defect w/in 2 years)
Triggering events of dissolution of Limited Pship
- Even specified in LP agreement
- After dissociation of GP, upon consent of pners owning majority interest if another GP remains.
- If no GP remains, afer 90 days unless admit new GP
- 90 days after dissociation of last Lim Pner unless new Lim Pner admitted
Winding up of Limited Pship
Must discharge liabilities, settle and close partnership activities, and marshal and distribute its assets.
Power to bind LP after disso
- Bound by any acts of GP appropriate for winding up
- Bound by acts of GP not appropriate for winding up if acts would have bound LP before disso & 3P w/whom GP dealt w/o ntc of disso
Order of Distro of Assets upon Winding Up
- Creditors
- Any surplus paid in cash as distro
- When assets insufficient to satisfy debts, each GP must contribute to satisfy in proportion to right to recieve distro.
What if person doesn't contribute full amount required?
Others pick up the slack. The person paying additional $$$ can recover from non-contributor
Conversion and Merger of a Limited Partnership
LP can convert to or merge w/another entity upon all pners consent and filing certificate with sec of state.