Agency And Partnership

Front 1

Agency Defined

Back 1

Agent is authorized to represent the principal in dealings with 3Ps

Front 2

Requirements for Creation of Relationship

Back 2

- Capacity
- Consent
- Modes

Front 3

Capacity

Back 3

- P must have contractual capacity
- Agent needs only minimal capacity.
- A disqualified if represents both parties or does not have a required license

Front 4

Modes

Back 4

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

Front 5

Agents Duties

Back 5

- Express K duties
- Fiduciary duty of loyalty, reasonable care, obedience

Front 6

Principal's Remedies

Back 6

K actions, Tort Actions\
Equitable actions for an accounting, w/holding compensation for intentional torts & intentional breaches of FD

Front 7

SubAgent Duties

Back 7

- 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

Front 8

Principal's Duties

Back 8

K duties, compensation, reimbursement, and non-interference

Front 9

Real Estate Broker's Contracts

Back 9

- Nonexclusive K - entitles A to payment when A brings buyer
- Exclusive K - entitles A to payment when ANYONE brings buyer

Front 10

Types of Authority

Back 10

Actual
Apparent
Ratification

Front 11

Actual Authority

Back 11

Authority A reasonably believes he has based on dealings with P. Express or implied.

Front 12

Express Authority

Back 12

- Contained in agency agreement
- Effective even if granted mistakenly or because of misrepresentation

Front 13

Implied Authority

Back 13

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

Hint 13

Basically, anything where to complete the job, it's necessary to have authority

Front 14

Termination of Agency

Back 14

-Lapse of specified or r/able time
- Happening of specified event
- Change in circumstances
- A's breach of FD
- Unilateral termination
- Operation of law

Front 15

Irrevocable Agencies

Back 15

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.

Front 16

Apparent Authority

Back 16

Arises from 3P's reasonable beliefs when P holds another out as possessing authority that induces r/able reliance on that authority.

Front 17

Types of Apparent Authority

Back 17

- Where A has no authority yet P bound
- When A exceeds authority yet P bound
- Inherent authority

Hint 17

3 main types

Front 18

When A has no authority yet P bound

Back 18

-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

Front 19

How does death or incompetency of P affect A's authority?

Back 19

ENDS IT. No notice of death required. The only exception is for banks honoring transactions until they learn of death/incompetency.

Front 20

When A exceeds actual authority and P still bound

Back 20

- 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.

Front 21

Inherent Authority

Back 21

When A does not have actual authority, buy P still bound.
- Respondeat superior,
- Conduct similar to that authoirized even though exceeding authorization.

Front 22

Improper disposition of goods

Back 22

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.

Front 23

Ratification

Back 23

- Agency created by ratification when "A" purports to act on behalf of "P" w/o any authority but P subsequently validates act & is bound.

Front 24

Can Ratification be retroactive?

Back 24

YES. Unless P did not have capacity when A acted or if it would interfere w/rights of 3Ps.

Front 25

Prerequisites for Ratification

Back 25

P must know/have reason to know all material facts, accept the entire transaction, and have capacity.

Front 26

Methods of Ratification

Back 26

- Express or implied through conduct.
- Acceptance of transactions benefits, silence if there is any duty to disaffirm, suing on transaction.

Front 27

What may be ratified and by whom?

Back 27

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

Front 28

Liability - 3P v. P

Back 28

P liable to 3P on K A entered if A had authority

Front 29

Liability - 3P v. A

Back 29

- Disclosed P always liable, A generally not
- Partially disclosed and undisclosed liable, but 3P must choose A or P

Front 30

When is A liable to 3P?

Back 30

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.

Front 31

Liability - 3P to P & A

Back 31

- Disclosed P - only P can enforce K & hold 3P liable
- Paritally & Undisclosed - either P or A may hold 3P liable.

Front 32

Subtleties of 3P liability to partially and undisclosed P

Back 32

- 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

Front 33

Tort Liability - Respondeat superior

Back 33

-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

Front 34

Employer-employee Relationship

Back 34

- Required for liability

Front 35

Independent Contractors

Back 35

- P not liable for IC torts
- IC if P does not have the right to control how job is done.

Front 36

When P liable for IC acts

Back 36

1. Inherently dangerous activities.
2. Non-delegable duties.
3. P knowingly selected incompetent IC

Front 37

Liabilities for Sub-A's Acts

Back 37

- Also on P if sub acted w/authority.
- SubA's authority can be express or implied.

Front 38

Employer-Employee by Estoppel

Back 38

P liable for torts if creates appearance of agency & 3P relies

Front 39

Liability for Acts of Borrowed Employees

Back 39

- Original employer generally liable for loaned employee's torts unless borrower had primary right to control employee's acts.

Front 40

Scope of employment

Back 40

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

Front 41

Frolic & Detour

Back 41

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

Front 42

Was A's Conduct Motivated to Serve Employer

Back 42

- 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.

Front 43

Intentional torts not in scope UNLESS:

Back 43

- Natural incident of A's duties
- A promoting P's biz
- Nature of work gives rise to hostilities

Front 44

Ratificationv of torts

Back 44

May be possible if it meets requirement of reqs

Front 45

Nature of partnership

Back 45

- 2 or more personas as co-owners of business for profit.
- Natural persons or entities

Front 46

Governing law for partnerships

Back 46

RUPA & partnership K

Front 47

Formation of Partnership

Back 47

- 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

Front 48

Proving P'ship exists

Back 48

- 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.

Front 49

Evidence indicative of Pship

Back 49

- Title to property held in JT or TIC
- Venutre undertaken requires extensive activity
- Sharing gross returns

Front 50

Liability of Purported Pners held out as Pner

Back 50

- 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.

Front 51

Liability of purported Pners - one who holds the other out

Back 51

- Person makes the other his agent
- If is Pship, only Pners who know/consent the holding bound

Front 52

Classifications of Pship Property

Back 52

1. Pship Capital: Property & $$ contributed by each Pner for carrying on Pship biz.

2. Pship property: Everything Pship owns, including capital

Front 53

What is includable in Pship Property?

Back 53

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.

Front 54

Untitled property: Common Law criteria indicating pship prop

Back 54

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

Front 55

Rights of Pner in Pship Prop

Back 55

Pner NOT co-ownerl, so no transferable interest in pship property

Front 56

Pners interest in pship

Back 56

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.

Front 57

Pners right to participate in mgmt

Back 57

- EQUAL
- Decisions involving ordinary biz can be decided by majority vote.
- Matters outside ordinary course of biz require unanimous consent of pners.

Front 58

Fiduciary duties to pship

Back 58

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.

Front 59

Pner Accounts

Back 59

Amount contributed plus profits minus losses.

Front 60

Remuneration for Pners

Back 60

No right to remuneration for services rendered to Pship except in winding up or if agree otherwise.

Front 61

Indemnification & other repayment

Back 61

Pship must indemnify every Pner re: payments made and obligations r/aby incurred in carrying on pship biz

Front 62

Pship rights upon dissolution

Back 62

Each pner gets settlement of her account

Front 63

Books & info

Back 63

Must be kept at main office, each partner has right to inspect and copy

Front 64

Legal actions by and against pners

Back 64

- 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

Front 65

Application of Agency Law to Partnership

Back 65

Each Pner is agent of Pship according to RUPA

Front 66

Apparent authority under RUPA

Back 66

Pner can bind pship in Ks within scope of pship biz.

Front 67

- 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:

Back 67

- 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.

Front 68

Transfers of Pship Property when Pship interest indicated in deed

Back 68

- 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

Front 69

Transfers of pship prop when Pshi interest NOT indicated in deed

Back 69

- 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.

Front 70

Actual authority and Pship

Back 70

- Pship BOUND. Authority pner r/ably believe he has based on comm btw pship & pner.

Front 71

Epanding & Limiting Authority w/ Statement of Authority

Back 71

- 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

Front 72

Notice undre RUPA

Back 72

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

Front 73

Civil Liability of Pners

Back 73

- For Ks pner entered w/ actual or apparent authority.
- For torts by pner w/in ordinary course of pship biz or w/auth

Front 74

Nature of civil liability

Back 74

Joint and Several

Front 75

Extent of Civil Liability

Back 75

Each pner personally and individually liable for entire amount of pship obligations.

- If pay more than share, entiteld to contribution/indemnification.

Front 76

Is incoming pner liable for obligations incurred before joiniing?

Back 76

NO.

Front 77

Outgoing parnter liability

Back 77

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

Front 78

Criminal liability of pners

Back 78

Pners not liable for crimes of other pners unless they participated.

Front 79

Triggerring events for dissociation

Back 79

- 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

Front 80

Consequences of dissociation

Back 80

- 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

Front 81

Dissociated pner's liability to bind Pship

Back 81

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

Front 82

Dissociated pner's liability to other parties for pship obligations

Back 82

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.

Front 83

Triggering events for dissolution

Back 83

- 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.

Front 84

Pner's power to bind after dissolution

Back 84

- By any act of winding up
- By acts w/ 3P w/o notice of dissolution unless filed ntc w/ sec of state

Front 85

Pners may waive dissolution and continue biz at any time before wind up complete how?

Back 85

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

Front 86

Distro of assets

Back 86

- 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

Front 87

Formation of Limited Liability Partnership

Back 87

- 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

Front 88

How do you know it's an LLP?

Back 88

It's name HAS to end with LLP.

Front 89

Liability in an LLP

Back 89

- Pner not personally liable for obligations of LLP.
- Pner does remain liable for own acts

Front 90

Who is required for a limited partnership?

Back 90

General Partners and Limited Partners

Front 91

What is a GP liable for?

Back 91

Pship obligations.

Front 92

What do Lim. Pners have liability for?

Back 92

Nothing past agreed-upon contributions

Front 93

How is a LP formed?

Back 93

- 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

Front 94

How long does a limited partnership run?

Back 94

Perpetually unless otherwise agreed.

Front 95

How can you tell it's a Limited Partnership?

Back 95

It has to have LP or LLLP in it's name.

Front 96

How are GPs and Lim Pners admitted?

Back 96

As provided in the pship K, as a result of merger, or conversion, or on consent of pners

Front 97

What about contributions that are required of pners before distro?

Back 97

- 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

Front 98

Liabilities of GPs in an LP or LLLP?

Back 98

- 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.
-

Front 99

Limited Liability Limited Partnership

Back 99

Liability is for the LLLP's alone, GP not personally liable.

Front 100

Liability of a Lim. P

Back 100

Not personally liable for pship obligations

Front 101

Duties of pners

Back 101

- 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.

Front 102

Rights of Both General and Limited Partners

Back 102

- 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

Front 103

Rights to Distro in LP

Back 103

- On the basis of pner's contributions
- No distro if it woluld make LP unable to pay debts or make assets less than liabilities.

Front 104

Liability for Improper LP distros

Back 104

- 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.

Front 105

Right to assign pship interest

Back 105

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

Front 106

Derivative actions to enforce LP's rights

Back 106

If pner first demands GPs to bring action to enforce & GPs do no w/in r/able time or demand would be futile.

Front 107

Rights specific to GPs

Back 107

- Management
- Right to inspect and copy
- Indemnification

Front 108

Management of LP

Back 108

- 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

Front 109

Indemnification of GPs in LP

Back 109

LP must indemnify GP for liability incurred in ordinary course of biz

Front 110

Rights specific to Limited Partners

Back 110

Management - May participate, but if the do, do not invoke personal liability.
- RIght to inspect and copy.

Front 111

Dissociation of Limited Partnerships

Back 111

- Same triggering events as regular partnership
- Ltd pner has no right to dissociate before termination of LP

Front 112

Effect of Dissociation on Lim P

Back 112

Treated as transferee of Lim P's transferable interest.

Front 113

Effect on GP

Back 113

Effects of dissociation on pner if regular pship

Front 114

Dissolution of Lim Pships

Back 114

- 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)

Front 115

Triggering events of dissolution of Limited Pship

Back 115

- 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

Front 116

Winding up of Limited Pship

Back 116

Must discharge liabilities, settle and close partnership activities, and marshal and distribute its assets.

Front 117

Power to bind LP after disso

Back 117

- 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

Front 118

Order of Distro of Assets upon Winding Up

Back 118

- 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.

Front 119

What if person doesn't contribute full amount required?

Back 119

Others pick up the slack. The person paying additional $$$ can recover from non-contributor

Front 120

Conversion and Merger of a Limited Partnership

Back 120

LP can convert to or merge w/another entity upon all pners consent and filing certificate with sec of state.