Agency And Partnership Barbri 2013

Front 1

Principal's Liability for Agent's Tort Standard

Back 1

Principal will be liable for torts committed by its agent if 1) there is a principal/agent relationship; and 2) tort was committed by the agent within the scope of that relationship.

Front 2

Requirements for Principal/Agent Relationship

Back 2

1) Assent
2) Benefit
3) Control

Front 3

Assent

Back 3

Informal agreement b/w principal with capacity and agent.

Front 4

Benefit

Back 4

Agent's conduct must be for the principal's benefit

Front 5

Control

Back 5

P must have right to control A by having the power to supervise the manner of A's performance.

Front 6

Vicarious Tort liability for sub-agents

Back 6

Same standard. Typically, principal does not assent to the sub-agent's help and does not have the right to control the sub agent. Generally no liability.

Front 7

Vicarious Liability Borrowed Agents

Back 7

Typically no liability for borrowed agents because no right to supervise manner of A's manner of performance and therefore no control.

Front 8

Vicarious Liability for Independent Contractor

Back 8

Generally, no vicarious liability for independent Contractors because cannot supervise manner of performance.

Front 9

Exceptions to General Rule Governing Vicarious Liability for Independent Contractors

Back 9

- Ultra Hazardous or inherently dangerous activities (this standard could be lower for this case than it typically is in torts law)
- Estoppel- if you hold out your I.C. with the appearance of agency, you will be estopped from denying vicarious liability on I.C.'s torts.
Note: Look for instances of both exceptions (e.g. tire hypo)

Front 10

Factors to Consider for Torts Committed within the "Scope" of Principal-Agent relationship

Back 10

1) Conduct was "of the kind" agent was hired to perform.
2) Tort Occurred "On the Job"
3) Agent's Intent to Benefit the principal

Front 11

Frolic vs. Detour

Back 11

Frolic= A new and independent journey and not "on the job."

Detour= Mere departure from an assigned task

Front 12

Vicarious Liability for Intentional Torts

Back 12

Generally, intentional torts are outside the scope of agency.

Front 13

Exceptions for General Rule Governing Vicarious Liability for Intentional Torts

Back 13

1) Authorized by the principal
2) Nature from nature of employment
3) Conduct was motivated by a desire to serve the principal
Note: A Club Bouncer usually will meet all three.

Front 14

Liability of Principal for Contracts Entered by Agents

Back 14

Issue: Whether the principal is liable for contracts entered into by its agent.
General Rule Statement: A principal is liable on its authorized contracts.

Front 15

Four Types of Authority for Principal/Agent relationship

Back 15

1) Actual Express
2) Actual Implied
3) Apparent
4) Ratification

Front 16

Actual Express Authority

Back 16

Rule: Actual express authority can be oral and even private.
Exception: If contract itself must be in writing, so too must the express authority.
Note: Narrowly construed.

Front 17

Revocation of Actual Express Authority

Back 17

1) Unilateral Act of either the principal or the agent, or
2) Death or Incapacity of the principal

Front 18

Exception to General Rule of Revocation of Actual Express Authority

Back 18

If principal gives the agent a durable power of attorney, meaning:
1) A written expression
2) of authority to enter a transaction
3) Conspicuous survival language

Front 19

Actual Implied Authority

Back 19

Authority through conduct or circumstance:
1) Necessity
2) Custom
3) Prior acquiescence by Principal

Front 20

Actual Implied Authority Necessity

Back 20

To do all tasks necessary to accomplish an expressly authorized task.

Front 21

Actual Implied Authority Custom

Back 21

To do all tasks that are customarily performed by persons w/agent's title or position.

Front 22

Actual Implied Authority- Prior Acquiescence by Principal

Back 22

All tasks which agent believes to have been authorized to do from prior acquiescence by principal.

Front 23

Apparent Authority Two-Part Test

Back 23

i) Principal "cloaked" agent with the appearance of authority; and
ii) third party reasonably relies on appearance of authority
Note: Remember Clock hypo

Front 24

Ratification

Back 24

Authority can be granted AFTER contract has been entered, if:
a. principal has knowledge of all material facts regarding the contract, and
b. principal accepts its benefits
c. exception: Ratification cannot alter the terms of the contract

Front 25

Liability of Agents on Contracts

Back 25

As a General Rule, an authorized agent is not liable on its authorized contracts.

Front 26

Exception to General Rule Governing Liability of Agents on Contracts

Back 26

The undisclosed principal
- partial (only identity of principal concealed)
- undisclosed (fact of principal concealed)

Front 27

Duties Agent Owes to Principal

Back 27

1. Duty of Care
2. Duty to obey instructions that are reasonable
3. Duty of loyalty

Front 28

Agents' Duty of Loyalty

Back 28

Must never:
1. Self-deal. Cannot receive benefit to the detriment of the principal
2. Usurp principal's opportunity
3. Secret profits. Making profit at the principal's expense w/disclosure.

Front 29

Five Partnership Issue Areas

Back 29

1. General Partnership Formation
2. Liabilities of General Partners to Third Parties
3. Rights and Liabilities Between General Parties
4. General Partnership Dissolution
5. Alternative Unincorporated Business Organizations

Front 30

What are the Formalities General Partnership Formation

Back 30

No formalities

Front 31

Definition of General Partnership

Back 31

An association of two or more persons who are carrying on as co-owners of a business FOR PROFIT

Front 32

Presumption of a General Partnership

Back 32

exists when there is a contribution of money or services in return for a share of profits.

Front 33

Agency Principles of General Partner Liabilities to Third Parties

Back 33

1. Partners are agents of the partnership for apparently carrying on usual partnership business
2. Gen. Partnership is liable for each partner's torts in the scope of partnership business and for each partner's authorized contracts.

Front 34

General Partners' Liabilities for Debts of Partnerhsip

Back 34

Each general partner is liable for ALL debts of the Partnership and for each co-partner's torts.

Front 35

Incoming Partner's Liability for pre-existing debts

Back 35

Incoming partners not liable for prior debts, but any money paid into a partnership by an incoming partner can be used to satisfy prior debts.

Front 36

Dissociating partner's liability for subsequent debts

Back 36

A partner retains liability on future debts until notice of their dissociation is given to creditors or until 90 days after filing notice of dissociation with disdain.

Front 37

General Partnership Liability by Estoppel

Back 37

One who represents to a third partner that a general partnership exists will be liable as if a general partnership exists.

Boating school hypo.

Front 38

General Partners are Fiduciaries of Each Other and the Partnership

Back 38

Owe each other duty of loyalty

Front 39

Action by Partnership Against Partner- Accounting for Profits

Back 39

May recover losses that are caused by the breach and also may disgorge profits made by breaching partners

Front 40

3 Types of Partnership Property

Back 40

1. Specific Partnership Assets- NOT LIQUID
2. Share of Profits- Personal Property and LIQUID
3. Share in Management- NOT LIQUID

Front 41

Specific Partnership Assets

Back 41

Land or leases or equipment which are owned ONLY by the partnership itself and therefore no individual partner may transfer these assets to some third party.

Front 42

Share of Profits

Back 42

Personal property owned as such by individual partners and therefore may be transferred by individual partners or third parties.

Front 43

Share in Management

Back 43

Asset owned only by the partnership itself and therefore may not be transferred by an individual partner.

Front 44

Differentiating Between Personal and Partnership property

Back 44

Ask:
1) Whose $ was used to buy property?
if personal $ was used, it becomes personal property. If partnership $, it becomes partnership property.

Front 45

Management of Partnerships

Back 45

Without an Agreement, each partner is entitled to EQUAL control. (vote)

Front 46

Partner Salary

Back 46

Absent an agreement, partners get NO SALARY

Front 47

Exception to Partnership Salary Rule

Back 47

Partners do receive compensation for helping to wind up a partnership's business

Front 48

Partner's Share of Profits and Losses

Back 48

Without an agreement, profits are shared equally. Without an agreement, losses are shared just like profits.

Note: If profits are shared 60/30/10 and agreement is silent on losses, losses are shared 60/30/10. If reverse is true, profits are shared equally.

Front 49

Dissolution of General Partnership

Back 49

Without an agreement that sets forth events of dissolution, a general partnership dissolves upon notice of the express will of one general partner to dissociate.

Front 50

The Real End of the Partnership is Called

Back 50

Termination

Front 51

Winding Up

Back 51

The period b/w dissolution and termination in which the remaining partners liquidate the partnership's assets to satisfy the partnership's creditors.

Front 52

Partnership's Liability upon Dissolution

Back 52

Old Business- Partnership and partners are liable on all transactions entered into to wind-up old business by satisfying existing creditors.

New Business- Liable on brand new transactions during winding up until notice of dissolution is given to creditors OR until 90 days after filing a statement of dissolution w/the state.

Front 53

Priority of Distribution at the Dissolution of a General Partnership

Back 53

1) Creditors
2) Capital Contributions
3) Profits/Losses

Front 54

Distribution to Creditors Upon Dissolution of a General Partnership Includes

Back 54

Top Priority Includes:
Outside non-partner trade creditors and also all partners who have LOANED $$ to partnership and become creditors thereby.

Front 55

Repayment of Capital Contributions Upon Dissolution of a General Partnership

Back 55

2nd Priority
Partnership is liable to all of its own partners for their capital contributions.

Front 56

Distribution of Profits/Losses Upon Dissolution of Gen Partnership

Back 56

Last priority
Profits, if any, are shared equally absent an agreement. Losses are treated like Profits.

Front 57

Rule for Repayment of Partners Upon Dissolution of Gen. Partnership

Back 57

Each partner must be repaid his or her loans and capital contributions, plus that partner's share of any profits, or minus that partner's share of any losses.

Front 58

Alternative Unincorporated Business Organizations

Back 58

1) Limited Partnerships
2) Registered Limited Liability Partnerships
3) Limited Liability Companies

Front 59

Limited Partnership Definition

Back 59

A partnership w/at least one general partner and at least one limited partner. Limited partner has some measure of a limit of liability.

Front 60

Limited Partnership Formation

Back 60

Must file a limited partnership certificate that includes the names of all general partners

Front 61

Limited Partnership Liability and Control

Back 61

General Partners: Liable for all limited partnership obligations. Right to manage the business.
Limited Partners: Limited liability. Not liable for obligations of limited partnership. Under newly revised Uniform Limited Partnership Act, limited partners now may manage a business without forfeiting LL status.

Front 62

Registered Limited Liability Partnership (RLLP) Formation

Back 62

Register w/state by filing a statement of qualification and annual reports.

Front 63

Liabilities of RLLPs

Back 63

No partner is liable for the obligations of a registered limited liability partnership

Front 64

Limited Liability Company's Definition

Back 64

Hybrid b/w a corporation and a partnership in which the owners who are called members have the same limited liability in a corporation and also the benefits of partnership tax status.

Front 65

LLC formation

Back 65

Organizers must file articles of organization and they may adapt on operating agreement.

Front 66

Control of LLCs

Back 66

Owners may control the business, but also they may delegate their control to a team of managers.

Front 67

LLC Limited Liquidity

Back 67

A full membership interest may not be transferred without unanimous consent of all members.

Front 68

Limited Life of LLC

Back 68

LLC must also have limit on life. Articles of Organization or Operating Agreement must indicate events of dissolution.

Front 69

LLCs in a nutshell

Back 69

Limited Liability, Limited liquidity, limited life, limited tax.

Front 70

Agency Mini Review- Principal's Liability for Agent's Torts

Back 70

1. Assent, benefit Control AND Scope
2. No vicarious liability for independent contractor's torts
3. Intentional torts are generally outside scope.

Front 71

Agency Mini Review- Principal's Liability for Agent's Contracts

Back 71

Actual Express Authority--> oral, except for land, revocable, unless durable
Actual Implied Authority--> necessity, custom, prior acquiescence
Apparent Authority--> Principal cloaks, third party relies
Ratification--> knowledge+acceptance of benefits
Authorized agents not liable unless undisclosed principal

Front 72

Agency Mini Review- Duties Agent Owes Principal

Back 72

1) Care
2) Obedience
3) Loyalty

Front 73

Partnership Mini Review- Formation

Back 73

1) No general partnership formalities
2) Association, two or more persons, carrying on, co-owners, business, for profit

Front 74

Partnership Mini Review- Liabilities to Third Parties

Back 74

General Partners= liable for all partnership debts
Estoppel= False Representers are liable as if general partnerships "hold out"

Front 75

Partnership Mini Review- Relations between Partners

Back 75

Fiduciaries --> accounting for profits
Only share of profits is liquid personal property
W/o an agreement, equal control, no salary, equal profits and losses like profits

Front 76

Partnership Mini Review- Dissolution

Back 76

Priority:
All outside plus partner creditors, then all capital contributions, profits, if any, shared equally w/o agreement.
Distribution Rule
Each partner must be repaid loans and their capital plus share of profits, but also minus their share of losses

Front 77

Partnership Mini Review- Alternative Unincorporated Business Organizations

Back 77

Limited Partners, plus Registered Limited liability partners, plus LLC members all have limited liability.