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55 Cards in this Set
- Front
- Back
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A&P1. What is the definition of the agency relationship? |
Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control.
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A&P2. Is a writing needed to form agency relationship? |
No but the statute of frauds may require it.
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A&P3. Is consideration required for the creation for an agency relationship? |
No.
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A&P4. What types of authority does an agent have to bind a principal? |
Actual either express or implied and apparent authority.
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A&P5. How does termination of actual authority occur? |
Actual authority must exist when the agent enters into a contract. It will be terminated/revoked (1) after a specified time or event, or after a reasonable time (2) by change of circumstances (3) by a breach of the agent’s fiduciary duty (4) by a unilateral act of either the principal or the agent (5) by death or incapacity of the principal or agent.
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A&P6. What is apparent authority? |
Apparent authority exists when the principal holds out another as possessing authority and a third party is reasonably led to believe that authority exists.
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A&P7. What is the difference between actual and apparent authority? |
Actual authority is based on the principal’s manifestations and how they affect the reasonable agent. Apparent authority is based on the principal’s manifestations and how they affect the reasonable third party.
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A&P8. Can apparent authority linger after actual authority ends? |
yes.
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A&P9. What is ratification? |
Even if the agent has no authority at the time of entering into the contract, the principal will still be bound by the agent’s actions if the principal ratifies the contract.
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A&P10. What are the requirements for ratification? |
(1) the principal must havek knowledge of all material facts regarding the contract, (2) the principal must accept the entire transaction [cannot merely ratify a portion of the transaction] (3) ratification cannot be used to alter the rights of intervening parties.
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A&P11. What is the liability of the principal to be bound to a contract? |
If actual or apparent authority or ratification is present the principal is liable on the contract and the agent is not.
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A&P12. What is the exception for no agent liability on a contract? |
If the principal is undisclosed or partially disclosed the agent is also liable on the contract.
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A&P13. What are the agent’s fiduciary duties? |
(1) duty of care, (2) duty of loyalty, (3) duty of obedience
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A&P14. What is the test for respondent superior? |
A master is liable for torts committed by a servant within the scope of the servant’s employment, While a principal is generally not liable for torts committed by an independent contractor
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A&P15. When can an intentional tort be viewed as within the scope of employment? |
(1) natural from the nature of the job (2) motivated to serve the employer or (3) specifically authorized or ratified by the employer.
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A&P16. What is the definition of a partnership? |
A partnership is formed as soon as two or more persons associate to carry on as co-owners a business for profit, regardless of whether the parties subjectively intended to form a partnership. No state filing or other formalities are required.
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A&P17. What is a partnership by estoppel? |
If no partnership was formed in fact parties may still be liable as if they were partners to protect reasonable reliance by third parties.
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A&P18. What is the importance of a partnership agreement? |
No requirement for a writing but if a writing does it exist it can modify the statutory default rules.
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A&P19. What are the voting rights of the partnership? |
All partners have equal rights in the management of the business and equal votes unless otherwise agreed. Decisions regarding matters within ordinary course of the partnership business require a majority vote while matters outside of the ordinary course require the consent of all partners.
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A&P20. What are the default rules regarding right to salary or other compensation? |
No right to salary or compensation unless otherwise agreed.
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A&P21. What is the rule on sharing profits and losses? |
Unless otherwise agreed profits are shared equally among partner and losses are shared in the same manner as profits.
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A&P22. What is the liability of the partnership in tort? |
Partnership is liable for loss or injury caused to a person as a result of the tortious conduct of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.
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A&P23. What is the partnership liability in contract? |
partnership is liable for contracts entered into on its behalf by partners with actual or apparent authority.
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A&P24. What is the liability of partners? |
A defining characteristic of the general partnership is that each partner is jointly and severally liable for all the obligations of the partnership but the plaintiff must first exhaust the partnership resources before seeking to collect from an individual partner’s assets.
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A&P25. What is the fiduciary duty of a partnership? |
(1) duty of loyalty, (2) duty of care and a statutory (3) duty of disclosure.
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A&P26. What is the duty of disclosure? |
Each partner and the partnership shall furnish to a partner (1) without demand any information concerning the partnership’s business and affairs reasonably required for the proper exercise of the partner’s rights and duties and (2) on demand, any other information concerning the partnership’s business and affairs.
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A&P27. What is the requirement to establish partnership property? |
It is partnership property if it is acquired in the partnerships name or in a partners name where it is apparent from the document that she is acting for a partnership.
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A&P28. What is dissociation? |
the term dissociation simply refers to a withdraw. When a partner dissociates from a partnership, the partner withdraws or bows out of the partnership.
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A&P29. What is wrongful dissociation? |
A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express terms in the partnership agreement. Dissociation is also wrongful in a term partnership if the partner withdraws, is expelled, or becomes bankrupt before the end of the term.
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A&P30. What is the liability for a wrongful dissociation? |
A partners who wrongfully dissociates is liable to the partnership for any damages caused by the dissociation.
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A&P31. What are the consequences of dissociation? |
Two statutory paths are taken either Liquidation or buy out.
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A&P32. What is liquidation? |
An avenue that provides that the partnership is dissolved and that its business must be wound up.
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A&P33. What is buy out? |
An avenue that provides that the partnership continues in existence with the dissociated partner becoming entitled to a buy out of his partnership interest.
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A&P34. What is dissolution? |
Dissolution is the process of winding up the partnership.
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A&P35. When must a partnership be compelled to wind up and dissolve? |
In an at will partnership by the dissociated partner by express will.
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A&P36. When must a dissolution and winding up occur when a wrongful dissociation occurs? |
If within 90 days after the dissociation and one-half of the remaining partners agree to wind up the partnership.
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A&P37. What is the liability of dissociated partner? |
Generally a dissociated partner remains liable for pre-dissociation partnership obligations and may also be liable for post-dissociation partnership liabilities incurred within two years after the dissociation.
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A&P38. Are there ways to protect liability of the dissociated partner for post-dissociation? |
Yes, by notifying creditors directly of his dissociation or by filing a public state of dissociation. The partnership can make the filing as well.
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A&P39. How long does a dissociated partner have apparent authority to bind the partnership? |
2 years
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A&P40. What occurs at winding up of the partnership assets? |
Assets must be applied to the discharge of partnership liabilities. If the assets are insufficient, individual partners are required to contribute in accordance with their loss shares. If there is excess assets, they are distributable to the partners in cash in accordance with their profit shares.
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A&P41. What is the propriety of distribution after winding up the business? |
(1) creditors, (2) partnership must repay all capital contributions paid into the partnership by partners (3) profits or losses if any.
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A&P42. What is the limited partnership? |
A partnership with at least one general partner and at least one limited partner. Because it is a partnership, general partnership principles typically apply unless displaced by limited partnership provisions.
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A&P43. How is a limited partnership formed? |
Must file a certificate of limited partnership with the secretary of state.
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A&P44. What is required on the certificate of limited partnership? |
(1) the name of the LP (2) the name and address of the agent for service of process and (3) the name and address of each general partner.
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A&P45. What is the liability of general partners? |
General partners are liable for the obligations of the LP.
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A&P46. What is the liability of limited partners? |
A limited partner is not personally liable for an obligation of the LP solely by reason of being a limited partner.
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A&P47. What is a limited liability partnership? |
An LLP is typically a general partnership where all of the partners have limited liability.
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A&P48. What must be filed for formation of the LLP? |
Statement of qualification with the secretary of state.
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A&P49. What is required in the statement of qualification? |
(1) the name and address of the partnership (2) a statement that he partnership elects to be an LLP (3) a deferred effective date.
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A&P50. What is the liability of the partner in an LLP? |
A partner in an LLP is not personally liable for the obligation of the LLP, whether arising in tort, contract, or otherwise.
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A&P51. What is the limited liability company? |
A hybrid between a corporation and a partnership in which the owners have limited liability as well as the benefits of partnership tax treatment. This is not a corporation, nor is it a partnership. It is its own business form.
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A&P52. How is an LLC formed? |
Must file articles of organization with the secretary of state.
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A&P53. What is included in the articles of organization? |
(1) name of the LLC (2) the address of the LLC’s registered office (3) the name of its registered agent.
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A&P54. How is a LLC managed? |
An LLC is managed by one or more managers who may be members. LLC is managed by mangers unless: (1) unless otherwise provided in the articles of organization or operating agreement, decisions of the managers shall be made by majority vote of the managers on a per capital basis and (2) each manger is an agent of the LLC.
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A&P55. What is the liability of the members in an LLC? |
Members generally are not personally liable for the LLC’s obligations. They have limited liability and can only lose the amount of their investments. As always, members are liable for their own torts. |
