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49 Cards in this Set

  • Front
  • Back
When is principle liable for agent's torts?
1. Assent, Benefit, Control + Scope
2. No vicarious liability for independent contractor's torts
3. Intentional torts are generally outside scope
When is principle liable for agent's contracts?
When agent had express, implied or apparent authority, or ratification by principle.
Are authorized agents liable for contracts?
No, unless there is an undisclosed principle
What is ratification?
1. Knowledge
2. Acceptance of Benefits
What duties does an agent owe a principle?
1. Duty of care
2. Duty of obedience
3. Duty of loyalty
What is the remedy for a breach of an agent's duty?
Actual damages.

If agent violated the duty of loyalty then must disgorge profits.
Two-part test for principle liability
1. Agent-principle relationship
2. Tort committed by agent within the scope of that relationship
When is there a principle-agent relationship?
Assent, Benefit, and Control
What does control mean when determining an agency relationship?
Principle has the power to supervise the manor of agent's performance
Is a principle vicariously liable for the actions of a sub-agent?
No, unless assent, benefit, and control
Is a principle vicariously liable for actions of a borrowed agent?
No, unless assent, benefit, and control
What is the key distinction between agents and independent contractors?
Principle has no right to control independent contractor, because there is no power to supervise the manor of his performance.
When is the principle liable for torts committed by an independent contractor?
No vicarious liability unless:

1. Ultra hazardous activity, or
2. Estoppel (hold out appearance of agency)
Scope of principle-agent relationship factors
1. Conduct of the kind the agent was hired to perform
2. Conduct occurred on the job
3. Agent intended to benefit the principle
Frolic and Detour
Frolic: new and independent journey
- not within scope
Detour: mere departure from assigned task
- within scope
Is a principle liable for agent's intentional torts?
Generally no (outside scope)
When will the principle be liable for agent's intentional torts?
1. Authorized by principle
2. Natural from nature of employment
3. Motivated by a desire to serve principle
When will the principle be liable for the agent's contracts?
Principle authorizes the agent to enter into the contract
Four types of authority to bind principle
Actual Express
Actual Implied
Apparent
Ratification
Actual express authority
Express authority can be oral and private, but it is narrowly construed
How may express authority be revoked?
1. Unilateral act of either the principle or agent
2. Death or incapacity of principle
Durable power of attorney
Express authority is revoked on death except with durable power of attorney.

Must have conspicuous big bold letters of survival.
Actual implied authority
Authority that the agent reasonable believes principle has given him because of:

1. necessity (all tasks which are necessary to accomplish the expressly authorized task)

2. custom (all tasks which are customarily performed by persons with agent's title or position)

3. prior dealings (all tasks agent believes to be authorized to do from prior acquiescence by the principle)
Apparent authority
1. Principle "cloaked" agent with the appearance of authority, and
2. 3rd party reasonable relies on appearance of authority
When an A has lingering authority...
...the principle can be liable for agent's contracts
What is the exception to ratification?
Principle cannot alter the terms of the contract
Are authorized agents liable for contracts of the principle?
No, unless undisclosed
Agency principals of partnerships
1. Partners are agents of the partnership for carrying on usual business

2. Partnership is bound by torts and contracts of its partners
What is a partnership?
Association of two or more persons carrying on a business for profit.

No formalities required.
Are general partners personally liable for debts of partnership?
Yes
Are incoming partners liable for pre-existing debts?
Generally no, but any money paid into partnership can be used to satisfy the debt
Are dissociating partners liable for subsequent debts?
Generally yes:
1. until actual notice to creditors, or
2. 90 days after filing notice of dissolution with state
General partnership liability by estoppel
One who represents to 3rd party that general partnership exists is liable as if it does exist.
Limited partnership
Must:
1. Have at least 1 general partner and 1 limited partner.

2. File a limited partnership certificate including names of all general partners
Liability of limited partnership's general partner
General partners are liable for all limited partnership obligations but also have right to manage/control the partnership
Liability of limited partners
Not liable for limited partnership's obligations and may not control business without forfeiting status
Registered Limited Liability Partnership
Must register with the state a statement of qualification plus annual reports.

No partners are liable
Duties of general partners
1. Not to engage in self dealing
2. Not to usurp partnership opportunities, or
3. Not to make secret undisclosed profits
Remedies for breach of general partners duties
1. Recover losses caused by breach, and
2. Disgorge profits made by disloyal partner
Rights of partners to partnership property
Only liquid property is a share of profits
Default rule of management
Absent an agreement, partners are equally entitled to control the partnership
Default rule of salary
No salary for partners
Default rule for partner's share of profits
Profits shared equally, and losses shared like profits
When does dissolution occur?
Absent an agreement, upon notice of express will of one general partner to dissociate
Winding up
Period between dissolution and termination (real end)
Compensation and liability for winding up rule
Exception to no salary rule: A partner gets compensated for winding up.
Partnership's liability for winding up
Old business- all transactions with existing creditors;

New business- retain liability until actual notice or 90 after file statement of dissolution with the state
Priority rules of distribution
1. Creditors (inside/outside)
2. Partner's capital contributions
3. Profits/surplus equally to partners
Do partners share in losses?
Yes. Each partner must be repaid on his loans and capital contributions and get their share of profits minus losses.