Agency - Bar - Ca - Essay

Front 1

3 Main issues in agency problems

Back 1

1) Liability of principa to 3rd for torts of an agent
2) Liability of Prin to 3rd for Ks entered by an agent
3) Duties which agents owe to prin

Front 2

Whether the prin will be vic/ liab/ for torts committed by A

Back 2

Two part test:
Prin will be lia/ for torts committed by A if:
1) a principal-A relationship exists, and

2) the tort was committed by the A w/in scope of that relationship

Front 3

How do you est Prin-A relationship?

Back 3

Requires:
1) Assent - informal agreement between Prin and the A
2) Benefit - Agent's conduct must be for the prin benefit
3) Control - the prin must have the right to control the A by having the power to supervise the manner of the agent's performance

Front 4

what are the types of control

Back 4

1) Sub-A tortfeasor - there can be NO vicarious liability for a sub-A's tort UNLESS: Assent/Ben/Rgt to Con the sub-A tortfeasor; exam: There is no assent or rgt to con, thus no vicarious liability

2) Borrowed-A - (Er 1 borrow Em 2's agent); Exam: there can be NO vicarious liability for a borrowed A's tort unless: A/B/C; there will be assent and benefit, but no rgt to control

*in the bar exam, there will be some assent and benefit, but there will be no right to control - THEN there will be INDEPENDENT CONTRACTOR

Front 5

When is a prin liable for Ks entered into by its A?

Back 5

Test: Principal is liable for Ks entered into by its A if the prin authorized the agent to enter the K

Front 6

What are the 4 types of authority

Back 6

1) Actual express
2) Actual implied
3) Apparent
4) Ratification

Front 7

How is actual express authority created?

Back 7

princ used words to express authority to agent

RULE: oral, private, narrow
Except

Front 8

Agent v. Independent Contractor

Back 8

No right to control b/c there is no POWER to supervise the manner of its performance.

Front 9

Independent Contractor - vicarious liability

Back 9

W/out the right of control - therefore, there is NO vicarious liability for independent contractor's torts

Exceptions:
1) Ultra hazardous activity - engaged in.

2) Estoppel - if you hold out independent contractor w/ the appearance of agency, prin/ will be estopped.

Front 10

How do you define/find SCOPE of Pr/ -A Relationship?

Back 10

3 part multi-factor cases by case wing test for scope:

1) Was conduct "of the kind" agent was hired to perform?
2) did the tort occur "on the job"?
3) did the agent intend to benefit the pr/?

Front 11

*"on the job" (Frolic v. Detour):

Back 11

frolic is a new and independent journey; detour is a mere departure from an assigned task

Front 12

*"intent to benefit":

Back 12

if the agent even in part intended to benefit the pr/ that's enough to be w/in scope of agency

Front 13

Intentional torts w/in scope of agency?

Back 13

As a rule - intentional torts are generally outside the scope.

Exception: (each one strong enough to overcome vicarious liability)
1) Conduct was specifically authorized by the pr/ - still w/in the scope
2) Conduct was natural from the nature of employment - still w/in the scope
3) Conduct was motivated by a desire to serve the pr/

*bouncer in a bar - batter/assault is the bar owner liable for the intentional tort? As a rule, generally no, outside the scope, except: authority/natural/motivated

Front 14

Actual Express Authority

Back 14

words used to express authority to agent. can be oral/private/it's narrowly construed to the actual words actually used.

Exception: But, if the K itself must be in writing, then the express authority MUST be in writing as well.

Front 15

What kind of Ks must be in writing?

Back 15

1) SOF
2) Land sale Ks - must be in writing.

Front 16

What if the agent stated he/she is an expert to negotiation?

Back 16

The pr/ even when whispered,

Front 17

Express authority will revoked by:

Back 17

1) unilateral act of either party, or
2) Death or incapacity of the pr/

Front 18

Exception to revocation of expressed authority

Back 18

if the pr/ gives the A a durable power of att.

poa - written expression of authority to enter a txn.

Durable: conspicuous survival language. e.g. survives death

Front 19

Actual Implied Authority

Back 19

Authority which agent reasonably believes the principal has given b/c:

1) Necessity - there is implied authority to do all tasks which are necessary to accomplish and expressly authorized task.
2) Custom - also implied auth/ by custom performed by persons with a title or position of agent.
3) Prior dealings - between the pr/ and A; also authority to do all tasks, which the A believes to be authorized from prior acquiescence. prior acceptance by the pr/

[NPC]

Front 20

Apparent authority

Back 20

two part test:
1) pr/ cloaked A w/ the appearance of authority and
2) 3rd party reasonably relies on appearance of authority

Front 21

Secret Limiting Instruction

Back 21

Agent has actual authority, but pr/ has secretly limited that authority. Agent acts beyond the scope of the limitation

Front 22

Lingering Authority

Back 22

Actual authority has been terminated. Afterwards, agent continues to act on pr/ behalf.

Front 23

Ratification

Back 23

Authority can be granted AFTER the K has been entered, IF
1) pr/ has knowledge of all material facts regarding the K, and
2) pr/ accepts its benefit
3) except: ratification cannot alter the terms of the K

Front 24

Rules of liability on K - generally:

Back 24

1) if no authority, pr/ is not liable on the K. if no authority, A is liable on the K

2) If authority, pr/ is liable on the K. If authority, A is NOT liable on the K

Exception: if pr/ is partially disclosed (only the id of pr/ concealed) or undisclosed (fact of pr/ concealed), authorized A may nonetheless be liable at the election of the 3rd party.

Front 25

Duties A owes to Pr:

Back 25

1) exercise reasonable care
2) obey reasonable instructions
3) Loyalty

Front 26

What constitutes a breach of duty to loyalty?

Back 26

1) Self-dealing - A cannot receive a benefit to the detriment of the pr/

2) Usurping the pr's opportunity, or

3) secret profits

Front 27

What are the remedies available by Pr/ when there is a breach

Back 27

a. Pr/ may recover losses caused by the breach, and also
b. Pr/ may disgorge the ill recv’d profits

Front 28

Four issue areas in Partnership:

Back 28

1) Partnership Formation
2) Liabilities of partners to 3rd parties
3) Rights and liabilities between partners
4) partnership dissolution

Front 29

Formation of a General partnership

Back 29

1) Formalities
2) Def.
3) Profits

Front 30

Def. of a general partnership

Back 30

Def. - a general partnership is an association of two or more persons who are carrying on as co-owners of a business for profit

Front 31

Are formalities necessary to form a general partnership?

Back 31

no formalities to becoming a general partnership - no filing/no writing

Front 32

How are profits shared w/in a partnership?

Back 32

contribution of capital or services in return for a share of profits - creates a presumption that a gen. partnership exists.

Front 33

What are the liabilities to 3rd parties by the gen. partners?

Back 33

1) Agency principles apply
2) Partners are agents of the partnership for carrying on usual partnership business.
3) partnership is bound by torts committed by partners in scope of partnership business
4) partnership is bound by Ks entered by partners w/ authority.

Front 34

Are individual partners liable personally for torts or breach of Ks?

Back 34

yes. general partners are liable personally for acts (torts/Ks) of other partners.

Front 35

Are incoming partners liable for pre-existing debts?

Back 35

No, generally. BUT, money paid into the partnership by an incoming partner can be used to satisfy those pre-existing debts.

Front 36

Are dissociating (withdrawing) partner's liable for subsequent debts?

Back 36

Dissociating partners retain liability on future debts, until - actual notice of their dissociation to creditors OR until 90 days after filing a notice of dissociation w/ the State.

Front 37

General Partnership liability by Estoppel

Back 37

A person who represents to a 3rd party that a general partnership exists will be liable as if a general partnership exists.

Front 38

Limited Partnerships

Back 38

Def - a partnership w/ at least one general partner AND at least one general limited partner

Front 39

How is a limited partnership formed?

Back 39

1) there must be a filing w/ the State - a LP certificate that includes the names of all the general partners.

Front 40

Liability and control the limited partnership has:

Back 40

General partners are liable for ALL limited partner's obligations.

But general partners have control the partnership

Front 41

What liabilities are associated w/ limited partners?

Back 41

They are not liable for the obligations on the partnership. BUT - limited partners may NOT manage the business w/out forfeiting their limited liability status.

Front 42

Registered Limited Liability Partnership

Back 42

1) Formed: by registering - filing a statement of qualification and annual reports

2) Liabilities: No partner is liable for the obligations of the partnership. Not even general partners are liable.

Front 43

Limited Liability Companies - purpose

Back 43

Purpose was to provide the owners who are called members the same limited liability of shareholders in a corporation, plus the benefits of the partnership i.e. tax status.

Front 44

How are LLC's formed?

Back 44

1) file the articles of organization
2) adopt an operating agreement

Front 45

Liabilities under the LLC?

Back 45

The owners/members are not liable for the obligations of the company itself.

Front 46

LLCs must take on what partnership characteristics (just at least 2)

Back 46

1) Members control, but articles may delegate control to managers
2) limited liability - member interests are not freely transferable
3) Limited life - events of dissolution
4) Therefore, LLC = limited liability, limited liquidity, limited life, limited tax (LLLT)

Front 47

General partners are owed:

Back 47

Fiduciary duties - duty of loyalty:

1) General partners cannot engage in self-dealing
2) may not usurp partnership opportunities
3) no secret profiting

Front 48

What can the partners recover?

Back 48

Action for accounting:

1) losses covered by the breach, and
2) Disgorge profits

Front 49

Partners' rights in partnership property:

Back 49

1) specific partnership assets - lands/ leases of equipment/ as partnership owned assets - therefore no individual partner may not transfer these assets w/out partnerSHIP authority.

2) share of profits and surplus -it is personal property, owned by individual partners, individual partners may transfer their share.

3) share in management - asset owned only by partnership - no individual MAY NOT transfer their share in management to some 3rd party. Cannot sell their right to vote.

Front 50

Conflicts between specific partnership assets and personal property

Back 50

whose money was used to obtain the property.

If the partnership funds were used it is part of the partnership - if personal funds used, becomes personal property.

Front 51

Management - who is entitled to control?

Back 51

W/out an agreement (default rule)
Each partner entitled to EQUAL control (vote).

Front 52

Salary - default rule

Back 52

Absent an agreement, partners get NO SALARY.

Exception: partners do receive compensation for helping to wind up the business.

Front 53

Partner's hare of profits and losses:

Back 53

separate:

1) absent an agreement, profits shared equally.

2) absent an agreement, losses shared like profits.

Front 54

Dissolution

Back 54

in the absence of an agreement that specifies events that will dissolve the partnership - dissolution occurs automatically, upon notice of express will of one general partner to disassociate. Just starts the process.

Front 55

Termination - the real END of the partnership

Back 55

END

Front 56

Winding up

Back 56

The period between dissolution and termination in which the remaining the partnership's assets to satisfy the partnership's creditors.

Front 57

Compensation for winding up

Back 57

provided to the partners who are involved in the wind up the business

Front 58

Partnership's liability for winding up - are partners still liable??

Back 58

distinguish:

1) Old business - the partnership and the individual partners RETAIN liability on ALL txns entered into w/ existing creditors.

2) New Business - the partnership and therefore individual general partners retain liability until actual notice of dissolution is given to creditors OR until 90 days after filing a statement of dissolution w/ the State.

Front 59

Priority of distribution

Back 59

each level must be satisfied
1) ALL creditors (includes outside non-partner trade creditors and also all partners inside who have loaned money to the partnership)

2) All capital contributions paid in, must be paid - partnership is liable/owes its own partners

3) IF after all payments are made - profits and surplus, if any. Shared equally w/out an agreement.