Barbri Agency And Partnership 2011

Front 1

Respondeat Superior

Back 1

Vicarious Liability

Principal is liable for the torts committed by its agent if:
1. There is a principal-agent relationship, AND
2. The tort was committed by the agent within the scope of that relationship

Front 2

Requirements for a Principal-Agent Relationship

Back 2

ABC
1. Assent; an informal agreement between the principal, who has capacity, and the agent
2. Benefit; agent's conduct is for the principal's benefit
3. Control; principal has the right to control the agent by having the power to supervise the manner of the agent's performance

Front 3

Principal's Liability for the Torts of Sub-Agents

Back 3

Principal is liable if there is assent, benefit, and the right to control between the sub-agent and the principal

There will NOT be assent or right to control on the exam

Front 4

Principal's Liability for the Torts of Borrowed Agents

Back 4

Principal is liable if there is assent, benefit, and the right to control between the borrowed agent and the principal

There will NOT be right to control on exam

Front 5

Agent v. Independent Contractor

Back 5

There is no right to control an independent contractor because there is no power to supervise the manner of performance

Therefore, no vicarious liability for independent contractor's torts

Front 6

Exceptions to No Vicarious Liability for Independent Contractors

Back 6

1. Ultrahazardous activities; if the tort is committed during a dangerous activity
2. Estoppel; if the principal holds out independent contractor with the appearance of agency, he will be estopped from denying vicarious liability on this ground

Front 7

Scope of Principal-Agent Relationship

Back 7

Factors:
1. Was the conduct of the kind the agent was hired to perform? If it is in the job description than it is within the scope
2. Did the tort occur on the job? Detour ("on the way back") = mere departure from an assigned task and is within the scope; Frolic = a new and independent journey and is outside the scope
3. Did the agent intend to benefit the principal? If so, even in part, it is in the scope

Front 8

Intentional Torts

Back 8

Are generally outside the scope of employment, UNLESS:
1. Authorized by the principal
2. natural from the nature of employment
3. Motivated by a desire to serve the principal

Front 9

Principal Liability for Contracts entered into by Agents

Back 9

Principal is liable if the principal authorized the agent to enter the contract

Front 10

Types of Authority

Back 10

1. Actual Express Authority
2. Actual Implied Authority
3. Apparent Authority
4. Ratification

Front 11

Actual Express Authority

Back 11

Principal used words to express authority to agent. Can be oral and private but will be narrowly construed.

Exception: If the contract itself must be in writing then the authority must also be in writing

Express authority will be revoked by:
1. Unilateral act of either the principal or the agent, or
2. Death or incapacity of the principal UNLESS the principal gave the agent a durable power of attorney.

Front 12

Actual Implied Authority

Back 12

Authority which the principal gives the agent through conduct or circumstance:
1. Necessity; There is implied authority to do all tasks necessary to accomplish an expressly authorized task
2. Custom: there is implied authority to do all tasks customarily performed by persons with the agent's title or position
3. Prior Dealings; There is implied authority to do all tasks which the agent believes to have been authorized to do from prior acquiescence by the principal

Front 13

Apparent Authority

Back 13

Test:
1. Principal claoked the agent with the appearance of authority, AND
2. The third party reasonably relied on the appearance of authority

Front 14

Ratification

Back 14

Authority can be granted after the contract has been entered, if:
1. The principal has knowledge of all material facts regarding the contract, AND
2. The principal accepts the benefits

Exception: Ratification cannot alter the terms of the contract

Front 15

Agent's Liability for Contracts entered into on Behalf of Principal

Back 15

An authorized agent isn't liable on its authorized contracts

Exception: If the principal is partially disclosed (identity concealed) or undisclosed (existence of principal concealed), an authorized agent may be held liable at the election of the 3rd party

Front 16

Duties Agent Owes to Principal

Back 16

1.Duty of Care
2. Duty to Obey Instructions that are Reasonable
3. Duty of Loyalty

Front 17

Duty of Loyalty

Back 17

An agent may never:
1. Self-deal; Agent can't receive a benefit to the detriment of the principal
2. Usurp the principal's opportunity, or
3. Make secret profits, profit at the expense of the principal without disclosure

Principal may recover the losses caused by breach and may disgorge profits made by the breaching agent

Front 18

Partnership

Back 18

No formal requirements

Partnership is an association of two or more persons who are carrying on as co-owners of a business for profit (shared profits is key)

The contribution of money or services in return for a share of profits creates a presumption that a general partnership exists

Front 19

Personal Liability of General Partner

Back 19

Each general partner is personally liable for all debts of the partnership and fro all debts and obligations of the partnership and for each co-partner's torts

Front 20

Incoming Partner's Liability for Pre-Existing Debts

Back 20

Generally not liable for prior debts but any money paid into partnership can be used by partnership to satisfy those prior debts

Front 21

Dissociating Partner's Liability for Subsequent Debts

Back 21

A dissociating partner retains liability for future debts until actual notice of the dissociation is given to creditor's or until 90 days after filing notice of dissociation with the state

Front 22

General Partnership Liability By Estoppel

Back 22

One who represents to a 3rd party that a general partnership exists will be liable as if a general partnership exists

Front 23

Liability between General Partners

Back 23

General partners are fiduciaries of each other and the partnership

They owe each other and the partnership the duty of loyalty

Front 24

Action for Accounting

Back 24

The partnership may recover losses that are caused by a general partner's breach of the duty of loyalty and also may disgorge profits made by the breaching partner

Front 25

Partners' Rights to Partnership Assets

Back 25

Assets such as, land, leases or equipment which are owned only by the partnership itself and therefore, may not be transferred by any individual partner without partnership authority

Front 26

Partners' Share of Profits and Surplus

Back 26

Each partners' share of profits and surplus is personal property owned as such by individual partners and therefore may be transferred to third parties by the individual partner

Front 27

Partners' Share in Management

Back 27

Partners' share in management is an asset owned by the partnership and therefore, individual partners may not transfer their share in management to 3rd parties

Front 28

Management by Partners

Back 28

Absent an agreement, each partner is entitled to equal control (equal vote)

Front 29

Partners' Salary

Back 29

Absent an agreement, partners get no salary

Exception: partners receive compensation for helping to wind up the partnership's business

Front 30

Partners' Share of Profits and Losses

Back 30

Absent an agreement, profits are shared equally

Absent an agreement, losses are shared the same as profits

Front 31

Partnership Dissolution

Back 31

In the absence of an agreement, a general partnership dissolves upon notice of the express will of one general partner to dissociate

Front 32

Termination

Back 32

The real end of the partnership

Front 33

Winding Up

Back 33

The period between dissolution and termination in which the remaining partners liquidate the partnership assets to satisfy the partnership's creditors

Front 34

Partnership's Liability upon Dissolution

Back 34

Old Business: Partnership and general partners retain liability on all transactions entered into to wind up old business by satisfying existing creditors

New Business: Partnership and general partners retain liability on brand new business transactions during winding up until actual notice of dissolution is given to creditors or until 90 days after filing a statement of dissolution with the state

Front 35

Priority of Distribution of Partnership Assets on Dissolution

Back 35

1. All creditors must be paid including all outsider non-partner trade creditors and also all partners who have loaned money to the partnership becoming creditors thereby
2. All capital contributions made by partners must be paid back in full
3. Profits and surplus, if any, is shared equally between the partners absent an agreement to the contrary. Losses are shared the same as profits and must be paid back into the partnership.

Front 36

Limited Partnerships

Back 36

A partnership with at least one general partner and one limited partner

Front 37

Limited Partnership Formation

Back 37

Formed by filing with the state a limited partnership certificate that includes the names of all general partners

Front 38

Liability and Control of General Partners in a Limited Partnership

Back 38

Liable for all limited partnership obligations but have the right to manage the business

Front 39

Liability and Control of Limited Partners in a Limited Partnership

Back 39

Not liable for the debts of the limited partnership itself

Under the Uniform Limited Partnership Act (adopted in IL), a limited partner may manage the business without forfeiting their limited liability status

Front 40

Registered Limited Liability Partnership Formation

Back 40

Register with the state by filing a statement of qualification and annual reports

Front 41

Registered Limited Liability Partnership Liabilities

Back 41

No partner is liable for the partnerships debts and liabilities (not even general partners)