Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
119 Cards in this Set
- Front
- Back
|
What is "agency?"
|
The feduciary relation which results from the manifestation of CONSENT by one person to the other that the other shall act ON HIS BEHALF and subject to his CONTROL, and CONSENT by the other so to act.
|
|
|
What consent is required to form a feduciary/agency relationship
|
1) Consent by BOTH principal AND agent.
2) Either express (written or oral) or implied consent (From conduct) acceptable |
|
|
What does it mean for an agent to act "on behalf of" the principal?
|
Agents actions are PRIMARILYfor th ebenefit of the principal, rather then for the agent or some other party.
|
|
|
What level of control is necessary to find a feduciary relationship?
|
Minimal; sufficient that principal established the task to be performed, and no other details.
|
|
|
Who is required to have contractual capacity in an agency relationship?
|
Principal, but not the agent, because principal is the one being bound.
|
|
|
Qhat is the equal dignigities rule?
|
Agency agreements must be in writing when the agent is to eneter into certain contracts subject to the statute of frauds
|
|
|
Must agency relationships be in writing?
|
Only if some other body of law governs the transaction; agency law itself does not require writing.
|
|
|
Note to self: learn statute of frauds stuff
|
More than $500, sale of property, cannot be fulfilled within a year
|
|
|
IS consideration required for the creation of a valid agency relationship?
|
NO
|
|
|
When is a prinicpal liable for contracts entered into by an agent?
|
When the agent acts within the scope of authority given by the principal, either expressly or impliedly
|
|
|
What is "actaul authority" ?
|
Authority that the AGENT reasonably thinks she possesses based on the principal's dealing's with her. (eg. principal's words or conduct give reasonable person impression that they have authority to bind)
|
|
|
What is express actual authority?
|
Authority conveyed by the principal in words.
|
|
|
What is implied actual authority?
|
Aurhority that the agent reasonably believes she ahs as a result of the principal's actions. (eg. implied by necessity, implied by custom, implied by acquiescence etc.)
|
|
|
At what time must the agent have actual authority to bind the principal?
|
Moment when the agent enters into the contract
|
|
|
When is actaul authority terminated?
|
1) after specified time or event OR
2) after reasonable time, if time not specified OR 3) by change in circustances OR 3) by breach of agent's fiduciary duty OR 5) by unilateral act of eithe rthe principal or the agent OR 6) by death or incapacity of either the principal or the agent. |
|
|
When does an agent have "apparent authority" to bind the principal?
|
WHen the principal holds out the agent as possessing authority; AKA when the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent has authority to act on the prinicpal's behalf
|
|
|
Can agency/authoirty be established by title/position? IF so, what kind?
|
Yes, An agent's title can create apparent authority or actaul authoirty.
|
|
|
Can apparent authority be established through the agent's actions alone?
|
Nope. Only principal's actions can establish apparent authoirty
|
|
|
Can apparent authority exist when actaul authority does not?
|
Yes,
|
|
|
How is apparent authoirty terminated?
|
P tells third party directly that A is no longer authorized to bind P
|
|
|
Can an agent bind a principal to a contract if he has no authority at the moment at the contract's creation?
|
Yes, if P later ratifies teh contract.
|
|
|
What are the requirements for ratification?
|
1) P must have knowledge of all material facts regarding the contract AND
2) Principal must accept the enire transaction AND 3) Ratification cannot be used if it would negatively affect the rights of an intervening thrid party |
|
|
What are the methods for after the fact ratification of a contract?
|
1) Express (oral or written affirmation of a contract)
2) Implied (eg. principal accepts benefit of the contract) |
|
|
Is an agent bound by a contract entered into on the principal's behalf?
|
NO so long as:
1) actual authority, apparent authority or ratification is present AND 2) P was fully disclosed at the time of the contract. If not 1), Agent alone is liable. If not 2) both agent and principal are liable. |
|
|
What duties does the agent owe to the principal?
|
FIDUCIARY DUTIES (AKA solely on principal's behalf):
1) Duty of care 2) Duty of loyalty 3) Duty of obedience |
|
|
WHat is the duty of care?
|
Duty to carry out his or her agency with reasonbale care
|
|
|
What is a duty of loalty?
|
1) account to the princiapl for any profits made while carryign out the principal's instructions
2) act solely for the benefit of the principal 3) refrain from dealing with his principal as an adverse party 4) no competition in subject matter of agency 5) may not use Princiapl's property for his won purpose |
|
|
What i the duty of obedience?
|
Agent must obey all reasonable direcions of his principal.
|
|
|
What remedy for a violation of duty of obedience/lloyalty/care?
|
Damages for costs incurred (eg. indemnification) + disgorgement of profits made by agent in violation of prinicpal's instruction
|
|
|
What duties does a prinicipal owe to the agent?
|
NON-FEDUCIARY DUTIES
1) Indemnify for costs incurred in principal's behalf. 2) Compensation etc. |
|
|
When can agent incur tort liability on behalf of the principal?
|
Tort occurred within the scope of employment. ie.
1) Was the conduct of the kind that the agent was hired to perform? 2) Did the tort occur "on the job"? 3_ Was the conduct actuated to benefit the principal? |
|
|
What is an "independent contractor?"
|
A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct int h eperformance of the undertaking
|
|
|
For torts committed in the scope of employment....
|
principal and agent are jointly and severally liable.
|
|
|
What factors do you consider to determine whether an agent is subject to the principal's right to control (aka is an independent contractor or an employee?)
|
1)Skill required
2) who supplies tools and facilities 3) period of employment 4) basis of compensation 5) task in furtherance of business purpose 6) distinct business. |
|
|
Factors to determine whether tort was committed in the scope of agent's employment
|
1) Was the conuct "of the kind" that agent was hired to perform?
2) Did the tort occur within the time and space limits of the employment? 3) Was the conduct actuated at least in part to benefit the principal? |
|
|
What is a detour?
|
Minor deviation from employer's direction; typically inside the scope of employment
|
|
|
What is a frolick?
|
A substantial deviation from employer's direction; typically outside the scope of employment
|
|
|
Is a principal liable for intentional torts committed by an agent on the job?
|
NO, unless conduct is:
1) natural from the nature of the job OR 2) motivated to serve teh employer OR 3) specifically authorized or ratified by the employer. |
|
|
NOTE:
|
If agent loaned to another principal, liabiltiy determined by who had primary right of control at the time. Typically, it's the loaning principal.
|
|
|
Direct liability
|
Every individual liable for own torts; thus, even without vicarious liability, employers may be liable for negligent hiring, etc.
|
|
|
What is a general business partnership?
|
Two or more perssons associatining to carry on as co-owners of a business for profits, regardless of wehther the parties subjectively intend to form a partnership. No fillings required
|
|
|
Factors to determine whether an association rises to level of partnership
|
A: SHARING OF PROFITS. A person who shares profits is presumed a partner unless:
1) as payment for debt 2) as wages or compensation 3) as rent 4) as interest on a loan. B: Right to control the business |
|
|
Does the sharing of gross returns create a partnership?
|
Not by iteslf, no.
|
|
|
Is a written document required to establish a partnership?
|
NO, although may be required pursuant to the statute of frauds
|
|
|
What is "partnership by estoppel?"
|
No partnership formed in fact, but parties liable as if they were partners to protect reasonable reliance by third parties. (eg. held out as partner)
|
|
|
Can statutory requirements for partnerships be altered by agreement?
|
Almost always yes. EXCEPTIONS
|
|
|
Is a partnership an independent legal entity?
|
Yes
|
|
|
By default, how are voting rights divided among partners?
|
Equally.
|
|
|
What percentage of partners must consent to make a decision within ordinary course of partnership business/
|
Majority
|
|
|
What percentage of partners must consent to make a decision outside the ordinary course of business?
|
UNANIMITY
|
|
|
By default, are partners entitled to compensation or salary?
|
NO except with a right to compensation for services rendered in winding up the partership busiins
|
|
|
What is the default rule for how profits will be shared in a partnership?
|
Equally among the partners by number
|
|
|
What is the default rule for how losses will be shared in a partnership?
|
However the profits are being shared
|
|
|
Can the default rule for profit sharing or loss sharing be changed?
|
Yes, explicitly by contract.
|
|
|
When is the partnership liable in tort?
|
If the tortfeasor was a partner or employee acting in the ordinary course of business of the partnership or with authority of the partnership
|
|
|
When is the partnership liable in contract?
|
If contract was executed on behalf of the partnership by a partner with apparent or actual authority
|
|
|
How is actual authority created in a partnership?
|
1) Partnership agreement
2) Requisite vote of the partners (majority) 3) statement of partnership authority filed with the secretary of state. |
|
|
When are "statements of partnership authority" binding on third parties?
|
Real property transactions when there is a statement of partnership authority filed with BOTH secretary of state AND county where the real property is located.
|
|
|
How is apparent authority created in a partnership?
|
By statute! Each partner has apparent authority to enter into contracts on behalf of the partnership within the ordinary course of the partnerships's business (unless the third party is aware that the partner lacks actual authority). MANDATORY RULE, CANNOT BE CONTRACTED AROUND.
|
|
|
Are partner's individual assets subject to seizure to settle partnership obligations/debts? If so, how and when?
|
Yes.
Each partner is individually jointly and severally liable for all of the obligations of the partnership (whether arising in tort or contract), BUT P must first exhaust partnership resources. Each partner is also entitled to indemnification from other partners. EXCEPTION: Newly, not yet admitted partners |
|
|
When can you contract around the rights of third parties in a partnership?
|
NEVER EVER EVER EVER EVER EVER EVER.
|
|
|
What duties does a partner owe to the partnership?
|
1) care
2) loyalty 3) disclosure |
|
|
What duties does a partner owe to the other partners?
|
1) care
2) loyalty 3) disclosure |
|
|
What is the duty of loyalty for partnership purposes?
|
1) Discose any benefit derived by partner in conducting partnership business, using the partnership's property, or appropriating a partnership opportunity
2) refrain from dealing with partnership as an adverse party 3) refrain from competing with the partnership in the conduct of its business. |
|
|
What is the duty of care ofr partnership purposes?
|
Each partner must refrain from engaging in
1) grossly negligent conduct 2) reckless conduct 3) intentional misconduct 4) knowing violations of law. |
|
|
What is the duty of disclosure for partnership purposes?
|
Each partner and the partnership must furnish to a partner:
1) any informaiton concerning the partnership's business and affairs reqasonably required for the proper exercise ofthe partners's rights and duties WITHOUT DEMAND 2) ON DEMAND, any other info concerning partnership's business and affairs. MAY BE ELIMINATED BY AGREEMENT. |
|
|
When does property belong to the partnership?
|
1) acquired in partnership's name OR
2) in a partner's name but where the document mentions partnership or says that purchaser is a partner in the partnership. OR 3) Presumed if purchased with partnership funds |
|
|
When does propety belong to an individual partner rather than the partnership?
|
Presumed if purchased
1) in partner's name AND 2) without partnership funds AND 3) no sign she was acting for partnership |
|
|
When can partnership use partnership property?
|
WHENEVER THE HELL IT WANTS FOR WHATEVER PURPOSE IT WANTS
|
|
|
When can a partner use partnership property?
|
Only for partnership purposes, unless partnership consents.
|
|
|
Is a partner a co-owner of partnership property?
|
NO
|
|
|
What is a "partnership interest"
|
THe partner's ownership interst in a partnership (like stock for a shareholder in a corporation). Consists of:
1) management rights AND 2) financial rights It is the personal asset of the partner |
|
|
What are the management rights in a partnership interest?
|
1) participate in management AND
2) obtain info about partnership AND 3) be recognized as partner |
|
|
What is the "pick your parnter" rule?
|
Default rule that admission of a new partner requires unanimous consent of other partners
|
|
|
Can a new partner be admitted through the transfer of an existing partner's management rights?
|
NO unless there is an agreement otherwiswe.
|
|
|
Can a partner unilaterally transfer his financial rights in a partnership interest?
|
Yes
|
|
|
What are the events of disassociation?
|
1) Disassociation by express will: partner gives partnership notice of intent to withdraw
2) Partner's expulsion 3) Partner's death 4) Partner's bankruptcy 5) arrival of an agreed upon event 6) Appointment of a receiver for a partners |
|
|
What does it mean for a partner to disassociate from a partnership?
|
Withdraw or bow out
|
|
|
What is a wrongful dissassocation?
|
1) DIsassociation in breach of an express term in partnership agreement
2) partner withdraws, is expelled or becomes bankrupt before the end of a term partnership. |
|
|
Who is liable for damages to the partnership caused by wrongful disassocaition?
|
The partner who wrongfully disassociates
|
|
|
What is an "at will" partnership?
|
Partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking; default rule!
|
|
|
What is a "term" partnership
|
Partners have explicitly or implicitly agreed to remain partners for a definite term or until the completion of a particular undertaiking
|
|
|
What are the consequences of disassociation
|
DEPENDS ON EVENT TRIGGERING DISASSOCIATION. EITHER:
1) Partnership is dissolved and business must be liquidated/wound up OR 2) Partnership continues and disassociated partner is entitled to a buy out of his partnership interest |
|
|
What events require the dissolution and winding up of a partnership?
|
1) Event in agreement requiring winding up
2) Business becomes illegal 3) Issuance of a judicial decree 4) Unanimous consent of the partners in a term partnership 5) Expiration of a term partnership 6) Express will disassociation of any partner in an at will partnership 7) One partner disassociates wrongfully or dies or goes bankrupt in a term partnership AND one half of remaining partners agree to wind up partnership. |
|
|
When is a disassociated partner liable for partnership obligations/liabilities?
|
1) pre-disassociation partnrship obligations (by default) 2) post-disassociation liabilities incurred within two years after disassociation IF PARTNER OR PARTNERSHIP HAS NOT
a) notified creditors directly of disassociation b) filed public statement of disassociation (effective 90 days after fling). |
|
|
When does disassociated partner have apparent authority to bind partnership?
|
Two years after disassociation UNLESS PARTNERSHIP HAS:
1) Notified creditors directly OR 2) FIled public statement (effective 90 days after filing) |
|
|
Priority of distribution of assets in dissolution of partnership
|
1) Pay ALL creditors (inside and out) THEN
2) repay all cpital contributions paid into the partnership by partners THEN 3) Profits or losses if any. |
|
|
Who has a right to participate in the winding up of a partnership?
|
All partners who have not wrongfully disassociatede
|
|
|
Do partners retain any apparent authority to bind the partnership to new obligations after dissolution?
|
YES. By default, for two years, unless partnership has:
1) notified creditors directly of dissolution OR 2) any non wrongfully dissociated partners file a public statement of dissolution (effective 90 days later) |
|
|
What is a limited partnership?
|
Partnership with at least one general partner and at least one limited partners. General partnership provisions generlaly apply unless displaced by LP specific provisions
|
|
|
How does one form a limited partnership?
|
File a certificate of limited partnership with the secretary of state that includes:
1) Name of LP, 2) Name and address of agents for service of process 3) name and address of each general partner. IF NOT FILED, general partnership. |
|
|
Requirements for name of limited partnership?
|
Must contain either:
1) limited partnership OR 2) LP OR 3) L.P. |
|
|
Can you accidentally form a limited partnership?
|
NO
|
|
|
Who mamages a limited partnership?
|
GENERAL PARTNERS
|
|
|
Do limited partners have management rights?
|
No
|
|
|
What percentage of partners must approve extraordinary activities in limited partnerships/
|
Majority of ALL partners
|
|
|
How are profits distributed in a limited partnership (default rule)?
|
By contribution
|
|
|
How does liability work in a limited partnership?
|
General partners: liable for obligations of LP, just as they are in general partnership
Limited partners: only able to lose investment |
|
|
Does a limited partner owe a fiduciary duty to the limited partnership or other partners?
|
Nope.
|
|
|
What is a limited liability partnership?
|
General partnership where all of the partners have limited liability
|
|
|
What rules apply to limited liability partnerships?
|
ALL the rules of general partnerships EXCEPT liability
|
|
|
How is a limited liability partnership formed?
|
File a statement of qualification with the secretary of state, whcih includes:
1) name and address of the partnership 2) statement that the partnership elects to be an LLP 3) defrerred effective date. |
|
|
Can you "accidentally" form a limited liability partnership?
|
Nope. Gotta file a thing.
|
|
|
Is a partner in an LLP personally liable for the obligation of the LLP?
|
Nope.
|
|
|
What is an LLC?
|
Limited liability company. Hybrid form of a business between a corporation and a partnership in which the owners have limited liability as well as the benefits of partnership tax treatment.
|
|
|
What are owners of an LLC called?
|
Members
|
|
|
How is a limited liability cmpany formed?
|
Must file the "articles of organization" with the secretary of state that includes:
1) name of LLC 2) address of the registered office 3) Name of LLC's registered agent |
|
|
Can you accidentally form a limited liability compnay?
|
Nope. Gotta file a thing.
|
|
|
What document contains the detailed description of the operation and governance of an LLC?
|
Operating agreement
|
|
|
What is "pass through taxation"
|
Business profits are accounted for on a pro-rata basis on the tax returns of each owners individual tax returns, even if the businesss does nto distribute those profits to the individuals
|
|
|
What forms of business use pass-through taxation?
|
All but corporations
|
|
|
Who manages an LLC?
|
Members
|
|
|
IF an LLC is managed by members, what vote is required to approve most decisions?
|
Majority
|
|
|
How are financial profits and losses distributed in aN LLC?
|
By contribution
|
|
|
What duties does a member owe to the LLC?
|
Duty and loyalty
|
|
|
What duties does a member owe to other members of an LLC?
|
Duty and loyalty
|
|
|
How are new members admitted to an LLC?
|
ONLY by unanimous vote of existing members
|
|
|
Are financial rights in an LLC transferrable?
|
YES
|
|
|
Are members peronally liable for the obligations of an LLC?
|
Nope. Can only lose investment
|
