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29 Cards in this Set

  • Front
  • Back

1. There is a principle agent relationship
2. The tort must occur within the scope of that relationship/agency.
a. Frolic: A frolic is a new and independent journey. If your agent is on a frolic will not be within the scope of the agency.
b. Detour: Is a mere departure from an assigned task. The agent is still within the scope of agency.
c. Intentional Torts: outside the scope of agency. Exceptions:
i. Intentional Conduct within scope of it was specifically authorized by the principles.
ii. Intentional conduct within the scope if it was natural from the nature of employment.
iii. Intentional Conduct is also within the scope of agency if it was motivated by a desire to serve the principle.
vicarious liability: principle will be liable for torts commited by agents if:

1. Assent: informal agreement between the principle who has capacity and the agent.
2. Benefit: Agent conduct must be for the principles benefit.
a. Partial Benefit: is enough to call conduct within scope of agency.
3. Control: The principle must have the right to control the agent by having the power to supervise the manner of the agent’s performance.
a. Employer and Employee Relationship: always have assent benefit and control.
4. Also has to be within scope of relationship.
vicarious liability: 3 part test for agency relationship

There can be no vicarious liability for a sub agent’s tort unless there is assent benefit and right to control that sub agent tort feasor.
sub agent tort feasor

borrow another principles agent): There can be no vicarious liability for a borrowed agents tort, unless there is assent; benefit, and right to control that borrowed agent tort feasor. There is no right to control a borrowed agent, so there can be no vicarious liability.
borrowed agent tort feasor

There is no right to control an independent contractor because there is no power to supervise the manner of its performance. Without the right to control there can be no vicarious liability for unrepentant contractor torts.
a. Exceptions:
i. Ultra hazardous activity – If your independent contractor commits a tort while it’s engaged in an ultra hazardous activity there will be vicarious liability for that tort.
ii. Estoppel – If you hold out your independent contractor with the appearance of agency you will be prevented from the vicarious liability even for independent contractor tort.
independant contractor

a. The principle will be liable on its authorized contracts if the agent has authority to do so.
liability of princples to third parties for contracts

The principle uses words to express authorization for agent to enter contract. Narrowly tailored to the actual words used to express it.
1. Equal Dignities Doctrine (Exception) – If the contract itself must be in writing then so too equally must be expressed authority to enter the contract also is in writing.
2. Actual express authority terminates upon the death of the principle there the estate will not be liable on this unauthorized contract.
3. Durable Power of Attorney: principal gives the agent a durable power of attorney. Power of attorney is a written expression of authority to enter into a transaction. Power of attorney is conspicuous, survival language.
actual express authority

(will never ask this question): Conduct and circumstances over time that gives rise to actual implied authority.
1. Necessity: implied authority to do all tasks which are necessary to accomplish an expressly authorized task.
2. Custom: Also implied authority to do all tasks customarily performed by persons with the agent’s title or position.
3. Prior Dealings: implied authority to do all tasks which the agent believes to have been authorized to do from prior acquiescence by the principal.
actual implied authority

The principal will still be liable even if there is only the appearance of authorization if: (1) principal itself cloaks with the appearance of authority, and (2) third party reasonably relies on appearance of authority
apparent authority

Authority can be granted after the contract has been entered, if:
1. Principal has knowledge of all of the key facts of that deal, and
2. Principal accepted the benefits of that prior contract.
a. Principal must ratify the entire contract as is and my not try to alter that deal.

i. General Rules:
1. If no authority, principal is not liable on the contract. If no authority, agent is liable on the contract.
2. If authority, principal is liable on the contract. If authority, agent is not liable on the contract.
ii. Exception: If principal is partially disclosed (only ID of principal concealed) or undisclosed (fact of principal concealed), authorized agent may nonetheless be liable at the election of the third party.
what duties do agents owe princples

a. Duty to exercise reasonable care
b. Duty to obey reasonable instructions
c. Duty of Loyalty
i. Self Dealing: agent cannot receive a benefit at the detriment of principal.
ii. No usurping a business opportunity, or
iii. Secret Undisclosed Profit
d. Remedies: The principal may recover losses caused by the breach and also may disgorge profits made by the breaching agent as well.
what duties do agnets owe princpiles

a. A general partnership is an association of two or more persons who are carrying on co owners of a business for profit.
general partnership

There are no formalities to becoming a general partnership. The contribution of money or services in return for a share of profits creates a presumption that a general partnership exists
partnership formation

The law of agency applies. Partners are agents to the partnership. Scope of carrying usual partnership business. Therefore, the partnership is liable for torts in the scope of partnership business and the partnership is liable for contracts entered into by its partners with authority to do so.
i. Individual Partner: Each individual general partner is personally liable for all debts and obligations of the business form.
ii. Incoming Partners: are not liable for prior debts, but any money paid into the partnership by that incoming partner made be used by the partnership to satisfy prior debts.
iii. Dissociating Partner for Future Debts (leaving partner): Dissociating partner retains liability even on future debts until notice of dissociation is given to creditors or until 90 days after filing notice of dissociation with the state.
liability of partners to third parties

A person who represents to some third party that they are a partner in a partnership will be liable to that third party as if they were a partner in that partnership even if they are not.
general partneship liabilty by estoppel

i. General Partners - are fiduciaries of each other and the partnership. They owe a duty of loyalty: they may never usurp partnership opportunities, engage in self dealing, and may not make a secret undisclosed profit at the partnership expense.
1. Remedies: Action For Accounting: the partnership may recover losses caused by the breach and also may disgorge profits made by the breaching partner.
internal rights and liabilities

1. Specific Partnership Assets: Land, leases, or equipment owned only by the partnership. Therefore, no individual partner may transfer those assets without partnership authority. Partnership owned assets.
2. Personal Property Owned as Such as Individual Partners: Individual partners own there share of profits or surplus as personal property, so individual partners may transfer there share to some third party.
3. Share in Management (asset owned only by the partnership itself): Therefore, no individual partner may transfer there share in management to some third party.
internal rights and liabilities: three different kinds of partnership rights

1. Under Rupa: the test is whose money was used to buy the property. If partnership money was used then it is presumed to be partnership property. If individual money was used then it is presumed to be individual property.
internal rights nad liabilities: partnership or individual property

1. Management: without an agreement how do partners manage a business, equally. Equal control so, one partner one vote.
2. Salary: without an agreement partners get no salary.
a. Exception: partners receive compensation for helping to wind up the partnership business.
3. Partners Share Profits and Losses
a. Profits: Absence of an agreement they share equally.
b. Losses: They share just like profits.
internal rights and liabilities: no agreement so default rule

First, in a partnership at will where there is no agreement dissolution occurs automatically upon notice of the expressed will of any one partner to dissociate. Second, in a partnership not at will where there is an agreement dissolution occurs only upon the happening of an event specified in the agreement or upon the majority vote of the partners to dissolve within 90 days of the dissociation of one partner

period between dissolution and termination in which the remaining partners liquidate the partnerships assets to set a spy the partnerships creditors.
1. Compensation: partners do receive compensation for helping to wind up the partnership business.
dissolution - winding up

a. Old Business: the general partnership and individual general partners retain liability on all transactions entered into to wind up old business with existing creditors.
b. New Business: the partnership and therefore its individual general partners still retain liability even on brand new transactions until notice of dissolution is given to creditors or until 90 days after filing a statement of dissolution to the state.
winding up liability

each level of creditors in this level of priority must be satisfied before moving on to the next priority:
i. All outside non partner creditors must be paid and also all partners who have loaned money to the partnership and have become inside creditors must be paid.
ii. The partnership still owes to its individual partners the full repayment of there capital contributions.
iii. If there is any surplus in the absence of an agreement it is shared equally among partners otherwise look at agreement for split.
distribution of assets: priority schedule

Each partner has the right to be repaid there loans and capital plus give they there share of surplus but also take from them there share from any remaining loss.
distributino of assets: individual partner right and liability in distribution

real end of the partnership. Dissolution starts the process of termination.

a. A limited partnership is a partnership with at least one general partner and at least one limited partner.
b. Formation: must filed a limited partnership certificate that includes:
i. Names of All General Partners
c. Liability
i. General Partnership: have personal liability for all general partnership obligations. Also have the right to manage to control the business.
ii. Limited Partners: have limited liability. Are not liable for the partnerships obligations. They are like owners of stock and not liable for the partnership obligations but they generally may not control or manage the business.
limited partnership

a. A group of attorneys or accountants or architects (Professionals) can become a registered limited liability partnership by filing a certificate of registration.
b. No partner, general or limited, will be liable for the obligations of the business form. They are liable for there own wrong doing but they are not liable for the business obligations.
registered limited liability partnership

a. Original purpose was to give the owners of this company the same limited liability of shareholders in a corporation and also the benefits of partnership tax status.
b. Taxation: Corporation tax is bad, partnership tax is good.
c. Formation:
i. File the articles of organization plus an operating agreement.
d. Benefits: Owners who are called “Members” are not liable for the debts and obligations of the business form.
e. Members have the power to manage and can also delegate that power to manage.
f. Must have some limit on its life: There must be some share transfer restriction. This is some event that will dissolve this business.
g. Limited liability, limited liquidity, limited life, and limited tax.