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74 Cards in this Set
- Front
- Back
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Three agency problems
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Liability of principal to 3d parties for torts of an agent; liability of principal to 3d parties for contracts entered by an agent; and duties which agents owe to principals
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How to determine whether the principal will be vicariously liable for TORTs committed by agent? (respondeat superior or vicarious liability) Two-part test:
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"Principal will be liable for torts committed by agent if: (1) a principal-agent relationship exists
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The principal-agent relationship requires (3 elements)
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"(1) Assent (an informal agreement btw the principal
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Sub-agent tortfeasor situations arise when …
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"principal will instruct an agent to do some task
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"There is no vicarious liability for a sub-agent’s tort unless _________. Usually
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will not find ____ nor ___
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Borrowed agent tortfeasor situations arise when …
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Employer 1 will borrow Employer 2’s agent
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"There is no vicarious liability for a borrowed agent’s tort unless _________. Usually
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will find ____ and ___
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Contrast Agent with Independent Contractor. Factors: there is no right to control an independent contractor because ________.
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there is no power to supervise the manner of its performance.
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Rule: ______ liability for an independent contractor’s torts.
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no vicarious
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Exception to general rule of no vicarious liability for independent contractor’s torts (two)
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"(1) Ultrahazardous activity exception (if an IC commits a tort whilst engaged in a ultrahazardous activity
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"When writing an essay
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if there is a general rule and an exception always ________."
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Use “in this case”
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to start the analysis section
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Scope of principal-agent relationship is determined by three factors:
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"Was tortious conduct ""of the kind"" agent was hired to perform (was the conduct within the job description); did the tort occur ""on the job"" (a frolic - new and independent journey - is outside scope of agency; a detour - mere departure from an assigned task - is inside scope of agency); did agent intend to benefit the principal (even partly suffices to be inside the scope)."
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Intentional torts - general rule re agency
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Intentional torts are outside scope of agency
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Intentional torts are within the scope of agency if the conduct was…
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specifically authorized by principal; natural from the nature of employment; motivated by desire to serve the principal
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Whether principal is liable for contracts entered into by its agents? One Test:
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"Principal is liable for contracts entered into by its agent if the principal authorized the agent to enter into the contract (on essay
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There are ________ types of authority given by principal to an agent to enter into a contract:
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"four … actual express
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Actual expressed authority to enter into a contract means that __________.
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"principal used words to express authority to an agent – Rule: can be oral or private (e.g.
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"Express authority will be revoked by ______
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or ______; it will not be revoked if ___________."
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A durable power of attorney is…
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"a written expression of authority to enter into a transaction (PoA)
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Actual implied authority is _______.
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authority which agent reasonably believes the principal has given because of (1) necessity (all tasks that are necessary to accomplish an expressly authorized task); (2) custom (all tasks that are customarily performed by persons with the agent’s title or position); (3) prior dealings between principal and agent (all tasks that an agent believes to be authorized to do from prior acquiescence by the principal)
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What is the two-part test for apparent authority?
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"(1) Principal ""cloaked"" agent with the appearance of authority
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Secret Limiting Instruction hypo
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"Agent has actual authority
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Lingering Authority hypo
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"Actual authority has been terminated. Afterwards
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Ratification
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"Authority can be granted after the contract has been entered if (1) P has knowledge of all material facts regarding the contract
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General rules of principal-agent liability on the contract
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"General Rule: (a) if no authority
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Exception to general rules of principal-agent liability on a contract
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"If principal is partially disclosed (only identity concealed) or undisclosed (fact of principal concealed)
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"Agents have a right to ______ from the principal
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and to be indemnified for ______. In return for compensation
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Duties agents owe to principal:
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"(1) duty to exercise reasonable care
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What are the remedies for a breach of the duty of loyalty?
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"P may recovery losses caused by the breach
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Partnership – four issue areas …
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"(1) Partnership formation
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Partnership - formalities required
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None - no formalities to becoming a general partnership
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What is the definition of a general partnership?
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An association of two or more persons who are carrying on as co-owners of a business for profit
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What creates a presumption of a general partnership and what does not?
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"sharing of profits - contribution of money or services in return for a share of profits creates a presumption that a general partnership exists
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"In determining liability of general partners to third parties
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what is the first step
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General partners are ___________ liable for _____________.
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personally … all debts and obligations of the partnership
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Incoming partners' liability for prior debts?
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Generally not liable for prior debts. But any money paid in to the partnership by an incoming partner may be used by the partnership to satisfy the prior debts.
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Dissociating partner's liability for subsequent debts?
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Dissociating partners retain liability on future debts until actual notice of their dissociation is given to creditors OR until 90 days after filing “notice of dissociation” with the state.
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General partnership liability by estoppel.
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One who represents to a third-party that a general partnership exists will be liable as if a general partnership exists.
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"On the essay for general partnerships
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always start with the ________
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A limited partnership is _________.
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a partnership with at least one general partner and at least one limited partner.
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A limited partnership is formed by __________.
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filing a limited partnership certificate that includes the names of all general partners with the state
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A general partner of an LP ______.
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"is liable for all limited partnership obligations
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A limited partner of an LP ___________.
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"has limited liability. They are not liable for the limited partnership’s obligations. In CA and most states
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A registered limited liability partnership is formed by …
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"Registering with the state
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"In a registered limited liability partnership (RLLP)
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what is the liability of partners?"
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What was the original purpose of a limited liability company?
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"to give to owners
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How is a limited liability company formed?
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"file articles of organization and adopt an operating agreement to become a company
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What are owners' liabilities in an LLC?
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Owners (who are called members) are not liable for debts and obligations of the company itself
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LLCs must take on two of these three characteristics of partnerships:
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"(1) Members control
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LLCS =
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limited liability + limited liquidity + limited life + limited tax
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General partners are _____________ of each other and of the ____________.
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fiduciaries … partnership
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Duty of loyalty for general partners means:
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"GPs may not engage in (1) self-dealing
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What remedy does a partnership have against a general partner who breaches duty of loyalty?
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"Action for accounting - partnership may recover losses caused by a breach
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Partners' rights in partnership property
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"Specific partnership assets (land
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"In a conflict between specific partnership assets and personal property
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the test is _________."
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"Default
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gap-filling rules cover ______
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"____________
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each partner is entitled to _____________ control."
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"____________
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partners get ________ salary - exception: ____________."
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"____________
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profits are shared __________."
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"____________
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losses are shared __________."
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Partnership dissolution - default rule:
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"without an agreement that specifies events that will dissolve the partnership
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___________ means the real end of a partnership
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Termination
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What is winding up of a partnership?
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The period between dissolution and termination in which the remaining partners liquidate the partnership's assets to satisfy the partnership's creditors.
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What is a Partnership's liability for winding up old business?
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Partnership and therefore its individual general partners retain liability on all transactions entered into to wind up old business with existing creditors
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What is a partnership's liability for winding up new business?
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"Partnership and therefore its individual general partners retain liability on new business transactions until notice of dissolution is given to creditors
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What is the priority of distribution on partnership dissolution?
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"Creditors
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Which creditors must be paid?
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"Outside
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What is a partnership's obligation to repay capital contributions?
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A partnership is liable to its own partners for the full repayment of their capital contributions
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"How should a partnership distribute profits and surplus
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if any
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What is the basic rule for partnership's obligations to partners on dissolution?
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"Each partner must be repaid his or her loans and capital contributions
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Principal is liable to third parties for agent's torts under the theory of…
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respondeat superior.
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Principal will be liable for torts committed by agent if…
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"assent
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Principal usually doesn't have enough control over ______ and ________ to be liable.
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sub-agents and borrowed agents
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