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37 Cards in this Set

  • Front
  • Back
What are the hallmarks/keys of an agency relationship?
consent & control
In an agency relationship, what must exist?
* Principal (P) must have capacity (not A)
* Writing not req'd unless SoF
* Authority --- actual/implied/apparent/ratified later/adoption
What makes agency irrevocable?
coupled w/interest (like being a secured creditor)
What is the key to apparent authority?
viewed from THIRD PARTY's pt of view. Reas belief must be created by P, not just A.
what is ratification?
P ratifies previously non-existing authority by accepting benefit of contract or suing on the contract.
What are reqts of ratifying something later?
P has knowl of all material facts; must accept ENTIRE transaxn; must have had capacity at time of orig contract too
What happens if corporation adopts a lease that promoter entered on its behalf? (what happens to liability)
corp is liable too, but promoter still is also
What is a third party's liability?
To P (i.e. P can sue the third party), unless A has special skills *and* P is undisclosed.
When is "master" liable for what servant did? what is the test?
Was tort committed by a servant acting w/n scope of employment? Then master & servant are joint & severally liable.

(test for servant is same as employee vs indep contractor for tax purposes... skill req'd, employer's ctrl of eqipment/hours/tools, long-term, etc.)
Is principle liable to a third party on a contract that an agent entered? What are the relevant questions?
Did the agent have axl/apparent authority @ time of K, or did principal ratify/adopt later?
Is an employer liable for a tort committed by an employee?
Was a tort committed by a servant in scope of employment?
What is a partnership?
Assoc of 2+ co-owners. Only need to be in writing if SoF requires it.
How do you determine who is a partner?
Factors (not reqts): capital contrib'd, control, sharing profits (but NOT if gross receipts or in lieu of wages)
What is a joint venture?
Partnership w/an express agreement re: sharing of losses.
Estoppel --- def
When 3rd party reasonably relies, parties may be liable as if they are partners.
A buys truck in her name w/her money. AB uses the truck for deliveries. Does truck belong to A or to AB partnership?
A... "as long as no indic acting for a partnership"
Rights in partnership property
* the partnership itself has unrestricted rights in the property.

* but the partner only has rights for partnership purps
Can a partner transfer his share of a partnership's profits?
YES, can assign or devise. "Partner may transfer econ int in partnership just as any other econ asset." But transferee does NOT become partner.
partnership statutes
default BUT partnership agreement supersedes if different
How are profits split in a partnership? (default rule)
equally, NOT per capital contrib
How are biz matters decided in a partnership?
by majority interest
What is required to admit a new partner?
If a new partner is admitted, is he liable for debts incurred in partnership B4 his admission?
YES, but is cut some slack. No personal liability on preexisting debts.
How does an LLP work?
No liability on contracts or others' torts unless directly involved, supervising tortfeasor, or aware.
How form an LLP?
File certif of formation w/Sec State & pay annual fee

Name must include limited liability partnership

Buy @ least 100k in liabil ins or segregate 100k of funds.
What is a withdrawn partner's liability?
To existing creditors unless released. To subseq creditors unaware of w/drawal (but can notify them & not have liability). To other partners if withdrawal's wrongful.
If partnership is formed to buy land and sell of lots, and 1 partner w/draws before last lot sold, what happens?
That partner is liable for breach of K, because partnership was to "accomp an undertaking/built in ending."
When can partner w/draw if partnership is formed to run a bar or something similar w/o an ending time?
It's an at will partnership. can leave anytime w/o penalty.
distributing partnership assets when winding up the partnership... How do you do thsi?
1st pay off creditors and all partners' loans to the partnership. Then each partner gets: their capital contribution + their equal share of the profits - equal share of losses.

If assets insuiffic to cover liablities, the creditors split the assets avail pro rata (by % of what they loaned of the total loans).
Limited Partnership (LP)... What is it and how is it formed & what is the liability?
General partners (generally liable) + limited partners (liabil limited to their investment)

Formed by filing certif of formation w/Sec State + fee with written agreement; name included Limited Partnership/Limited/LP.

Limited partners can only lose their cap contrib. They lose this protexn if they take part in control, but this does NOT include being employed, advising, or guaranteeing a note.
In an LP, what is the test to see if a limited partner is exerting control req'd to increase liability?
Reliance Test. "Creditor reasonably believed she was a general partner based on her conduct."
How are general partners in an LP laible?
jointly & severally.
What is an LLLP?
Shields general & limited partners. Limited Liabil LImited Partnership.
What is an LLC and how is it formed?
Formed by filing certif of formation wiht Sec; name includes LLC/LC;if profesl LLC, must be licensed; profits/losses split in proportion to cap contrib.

No vicarious liability for what other members of LLC do.
What are the best types of partnerships to form?
LLP and LLC. Both have no liability, and LLP only if dir involved/supervising tortfeasor/aware.
Which partnerships have joint & several liability?
LP (for gen partners) and GP
What is tax benefit of partnership?
Income passed thru to owners, not taxed twice like it is in a corporation.