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49 Cards in this Set
- Front
- Back
When is principle liable for agent's torts?
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1. Assent, Benefit, Control + Scope
2. No vicarious liability for independent contractor's torts 3. Intentional torts are generally outside scope |
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When is principle liable for agent's contracts?
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When agent had express, implied or apparent authority, or ratification by principle.
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Are authorized agents liable for contracts?
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No, unless there is an undisclosed principle
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What is ratification?
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1. Knowledge
2. Acceptance of Benefits |
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What duties does an agent owe a principle?
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1. Duty of care
2. Duty of obedience 3. Duty of loyalty |
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What is the remedy for a breach of an agent's duty?
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Actual damages.
If agent violated the duty of loyalty then must disgorge profits. |
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Two-part test for principle liability
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1. Agent-principle relationship
2. Tort committed by agent within the scope of that relationship |
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When is there a principle-agent relationship?
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Assent, Benefit, and Control
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What does control mean when determining an agency relationship?
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Principle has the power to supervise the manor of agent's performance
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Is a principle vicariously liable for the actions of a sub-agent?
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No, unless assent, benefit, and control
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Is a principle vicariously liable for actions of a borrowed agent?
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No, unless assent, benefit, and control
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What is the key distinction between agents and independent contractors?
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Principle has no right to control independent contractor, because there is no power to supervise the manor of his performance.
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When is the principle liable for torts committed by an independent contractor?
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No vicarious liability unless:
1. Ultra hazardous activity, or 2. Estoppel (hold out appearance of agency) |
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Scope of principle-agent relationship factors
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1. Conduct of the kind the agent was hired to perform
2. Conduct occurred on the job 3. Agent intended to benefit the principle |
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Frolic and Detour
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Frolic: new and independent journey
- not within scope Detour: mere departure from assigned task - within scope |
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Is a principle liable for agent's intentional torts?
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Generally no (outside scope)
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When will the principle be liable for agent's intentional torts?
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1. Authorized by principle
2. Natural from nature of employment 3. Motivated by a desire to serve principle |
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When will the principle be liable for the agent's contracts?
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Principle authorizes the agent to enter into the contract
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Four types of authority to bind principle
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Actual Express
Actual Implied Apparent Ratification |
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Actual express authority
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Express authority can be oral and private, but it is narrowly construed
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How may express authority be revoked?
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1. Unilateral act of either the principle or agent
2. Death or incapacity of principle |
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Durable power of attorney
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Express authority is revoked on death except with durable power of attorney.
Must have conspicuous big bold letters of survival. |
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Actual implied authority
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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) |
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Apparent authority
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1. Principle "cloaked" agent with the appearance of authority, and
2. 3rd party reasonable relies on appearance of authority |
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When an A has lingering authority...
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...the principle can be liable for agent's contracts
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What is the exception to ratification?
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Principle cannot alter the terms of the contract
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Are authorized agents liable for contracts of the principle?
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No, unless undisclosed
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Agency principals of partnerships
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1. Partners are agents of the partnership for carrying on usual business
2. Partnership is bound by torts and contracts of its partners |
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What is a partnership?
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Association of two or more persons carrying on a business for profit.
No formalities required. |
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Are general partners personally liable for debts of partnership?
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Yes
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Are incoming partners liable for pre-existing debts?
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Generally no, but any money paid into partnership can be used to satisfy the debt
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Are dissociating partners liable for subsequent debts?
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Generally yes:
1. until actual notice to creditors, or 2. 90 days after filing notice of dissolution with state |
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General partnership liability by estoppel
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One who represents to 3rd party that general partnership exists is liable as if it does exist.
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Limited partnership
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Must:
1. Have at least 1 general partner and 1 limited partner. 2. File a limited partnership certificate including names of all general partners |
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Liability of limited partnership's general partner
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General partners are liable for all limited partnership obligations but also have right to manage/control the partnership
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Liability of limited partners
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Not liable for limited partnership's obligations and may not control business without forfeiting status
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Registered Limited Liability Partnership
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Must register with the state a statement of qualification plus annual reports.
No partners are liable |
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Duties of general partners
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1. Not to engage in self dealing
2. Not to usurp partnership opportunities, or 3. Not to make secret undisclosed profits |
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Remedies for breach of general partners duties
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1. Recover losses caused by breach, and
2. Disgorge profits made by disloyal partner |
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Rights of partners to partnership property
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Only liquid property is a share of profits
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Default rule of management
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Absent an agreement, partners are equally entitled to control the partnership
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Default rule of salary
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No salary for partners
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Default rule for partner's share of profits
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Profits shared equally, and losses shared like profits
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When does dissolution occur?
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Absent an agreement, upon notice of express will of one general partner to dissociate
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Winding up
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Period between dissolution and termination (real end)
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Compensation and liability for winding up rule
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Exception to no salary rule: A partner gets compensated for winding up.
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Partnership's liability for winding up
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Old business- all transactions with existing creditors;
New business- retain liability until actual notice or 90 after file statement of dissolution with the state |
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Priority rules of distribution
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1. Creditors (inside/outside)
2. Partner's capital contributions 3. Profits/surplus equally to partners |
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Do partners share in losses?
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Yes. Each partner must be repaid on his loans and capital contributions and get their share of profits minus losses.
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