Barbri, Agency & Partnership

Front 1

Test for Liability of Principal to 3P for Agent's tort

Back 1

1. Does a Principal Agent relationship exist?;
2. Was the tort within the scope of the relationship?

Front 2

Principal-Agent Relationship, definition

Back 2

assent (of both), benefit (to P), control (of P)

Front 3

Does a Principal have vicarious liability for sub-agents and borrowed agents? Do P and sub-agent owe each other duties?

Back 3

Subagent and principal owe each other duties, and principal is liable for acts of subagent only if appointed with proper authority. But only the agent has a duty to pay the subagent unless otherwise agreed.

In any case, duty and liability flow between subagent and agent.

Front 4

What are Independent Contractors and do P's have Vicarious Liability (VL)?

Back 4

They are not agents because principal has no control over them. That means no vicarious liability.

Exceptions:
1. Ultra-Hazardous Activity with a non-delegable duty
2. Estoppel (holding out IC as A)

Front 5

Are Principals liable for Intentional Torts of their employees?

Back 5

Usually not.

EXCEPTIONS, (EG, bouncer) where conduct was:
1. authorized;
2. natural (to job);
3. motivated by desire to serve P.

Front 6

When might an agent be liable to 3P for contracts entered into on Principal's behalf?

Back 6

If A had no authority:
P is not liable except possibly in quasi-contact.
A is liable on contract if P is partially disclosed or undisclosed. He is also liable for breaching warranty if the Principal is fully or partially disclosed and 3P relied on A's representation of A's authority and P's competence.

If A had authority:
Disclosed P: A could only be liable if his signature was ambiguous (exception to Parol Evidence Rule) and suggests he was intended to be bound.

Partially/Undisclosed P: 3P can sue P, whenever discovered, or A, and A would have to seek indemnification. Use extrinsic evidence to see if agent was intended to be bound.

Front 7

Kinds of Authority (4)

Back 7

- Actual Express;
- Actual Implied;
- Apparent;
- Estoppel; (P misleads 3P who detrimentally relies, even though there isn't enough to establish Apparent Authority. P can't enforce it, but 3P is compensated for loss).
- Ratification

Front 8

What is Apparent Authority? What is Apparent Ownership?

Back 8

Apparent Authority
1. P cloaked A in appearance of authority through prior act, position, or lingering actual authority; and
2. 3P relied on that appearance of authority.

Apparent Ownership
Without necessarily making any representations, P gave A indicia of ownership, like a deed. This gives A power to deal with property as if it were his on, and P cannot set it aside. Under UCC, giving possession to a merchant who deals in goods of that kind is sufficient.

Front 9

General Partnership, definition and evidence of formation

Back 9

It is an association of 2+ persons who are carrying-on as co-owners of a biz for profit. Sharing of profits creates rebuttable presumption of partnership, which can be rebutted by showing that profits are taken to satisfy a debt, rent, or other purpose.

Evidence: Jointly held property, parties' own designation, sharing of gross returns.

Front 10

Do General Partners have liability for the partnership's debts?

Back 10

Partners are agents of the partnership for carrying on usual partnership business; thus each individual general partner is jointly and severally liable for all obligations of the partnership.

Front 11

Do Incoming Gen Partners have liability for all partnership debts?

Back 11

NOT liable for prior debt,
BUT any money paid into the partnership by the new partners can be used to satisfy those prior debts.

Front 12

Do Outgoing Gen Partners have liability for all partnership debts?

Back 12

YES, retain liability on future debts until death,
UNLESS, notice of their withdrawal has been given to all known and even potential creditors.

Front 13

What if a person is falsely held out as a General Partner?

What if one holds himself out falsely as a general partner?

Back 13

Held by other: victim is only liable if he consents. He is not bound if he merely fails to deny. The one who misrepresented will be bound by victim's acts through apparent authority.

Self-holding: He will be liable to anyone who deals with the partnership in reliance on his acts.

Front 14

How are profits shared in a Limited Partnership?

Back 14

Proportionately to contributions.

Front 15

Limited Liability Company, Liability

Back 15

Members who are owners are not liable for debts and obligations of the company;
Limited Liability, Taxed as partnership, An entity like a corporation, management can be centralized or by members

Front 16

Who can enforce contract against third party, Agent or Principal?

Back 16

Principal can always enforce if agent's authority existed.

Agent can enforce if Principal was partially or fully undisclosed, but only for benefit of Principal.

Front 17

What factors distinguish Independent Contractor from Employee?

Back 17

Parties' own understanding
Customs
Skill level
Whose tools
Period of employment
Basis of compensation
Distinct business

*Remember that an employee relationship can be created by estoppel if 3P is induced to rely on representations.

Front 18

When is a Principal liable for misrepresentations of Agent?

Back 18

Whenever agent had actual or apparent authority to make statements concerning that subject matter.

Front 19

What fiduciary duties are owed in a Limited Partnership?

Back 19

General partner owes limited fiduciary duties not violated by conduct that furthers his own interest. Limited Partner owes no fiduciary duty at all and is free to compete and be adverse.

Front 20

Can a partner in a Limited Partnership transfer interest?

Back 20

Yes, this doesn't give the transferee any rights as a partner, though. Transfer of an entire interest is ground for explusion.

Front 21

Are Limited Partners in a Limited Partnership ever called upon to vote?

Back 21

Only for
Amending the partnership agreement
Converting to LLLP
Disposing of substantially all property
Admitting a new partner
Compromising a partner's obligation to make a contribution

Front 22

When a partner dissociates, does he get bought out immediately? Can he still bind the partnership, and is he still liable to other parties?

Back 22

If partnership was fixed-term, he must wait unless there is no hardship to partnership.

He can bind partnership and be liable for transactions for up to 2 years if other party reasonably believed dissociated partner was still active / did not have notice.

All parties have notice 90 days after filing of notice of dissociation.

Front 23

What is needed for principal to be liable to 3rd party through agent?

Back 23

Consent: Agent and principal must both consent that agent is under principal's control.

Capacity: Principal must have contractual capacity / agent needs minimal capacity.

Writing: Usually not. Statute of Frauds might require it for the contract itself. In that case, Equal Dignities doctrine might require the agent to have authority in writing.

Front 24

What is the rule for implied consent?

Back 24

Principal's conduct leads agent to believe that agent has authority. May arise from incidents of express authority, custom, prior acquiescence, emergency, necessary/customary/ministerial delegation.

Front 25

What are the ways that actual agency relationship can terminate?

Back 25

1. death/incapacity/bankruptcy. Even if unfair to an agent who does not know of the death. EXCEPTION: Irrevocable if power is coupled with interest, durable, or a bank paying checks up to 10 days after an unknown death.

2. after specified time/event, but only if A has knowledge that event occurred.

3. by change of circumstances., such as destruction of subject matter, insolvency, change in law, but probably not if P is aware of this and hasn't spoken.

4. breach of fiduciary duty

5. At will

6. If not specified, after a reasonable time period.

Front 26

What is the diff. between ratification and adoption?

Back 26

A Principal who adopts an agreement is only liable from the adoption on.

Ratification relates back to date of original agreement unless it would prejudice innocent third parties who have acquired intervening rights.

Front 27

What duties are owed from agent to the principal?

Back 27

1. Loyalty = must disclose all, not compete

2. Care =

3. Obedience = must follow principal reasonable instruction.

4. Fiduciary = even if agent not getting paid.

Front 28

Who is liable for torts of loaned employee?

Back 28

The original employer is normally liable, but it depends on which principal has the primary right to control his actions.

Front 29

Can a tort claimant recover from someone who has been made a partner by estoppel?

Back 29

No, partnership by estoppel only applies to contract not tort.

Front 30

What determines whether property belongs to a partnership?

Back 30

FOR TITLED PROPERTY Under RUPA, it belongs to partnership if titled in partnership name or under partner's name with instrument noting his capacity as partner.

It is rebuttably presumed to belong to partnership if purchased with partnership funds

With none of those factors, it is presumed to be partner's separate property.

FOR UNTITLED PROPERTY
Look to funds, use, entry on books, relatedness to business, maintenance and improvement of property with partnership funds

Front 31

In a general partnership, what are the rights to profits, losses, management, remuneration?

Back 31

Profits: equal, absent other agreement
Losses: Same as profits
Management: equal, absent other agreement
Remuneration: None. In fact, if partner promised to devote time and doesn't, she is liable for damages.

Front 32

Are partners liable for contracts and torts of other partners? Can they be personally bound by a judgment?

Back 32

Yes, for the entire amount if in scope of partnership or with its authority. They can seek contribution from one another.

They are only personally bound by a judgment if served and partnership assets are exhausted/bankrupt.

Front 33

What happens if a partner gives away partnership property without authority?

Back 33

They can get it back from the initial transferee, but not from subsequent BFP. If partnership interest wasn't indicated, even initial transferee is safe.

At death, partnership property passes to other partners.

Front 34

What are the triggers for dissolution under RUPA?

Back 34

Notification, if partnership is at will
Completion, illegality, judicial decree
In a fixed-term partnership: Expiration, consent of all, or agreement of at least half within 90 days after one partner's death, bankruptcy, or wrongful dissociation.

Front 35

Can a partner continue to have apparent authority after the dissolution even if he is not winding up?

--how can the partnership avoid liability?

Back 35

Yes. Partners can avoid liability by providing notice of dissolution to creditors who were unaware of the dissolution (actual notice to creditors, newspaper notice to others). Filing a statement gives all persons notice 90 days after that.

Front 36

Who has the right to wind up the partnership?

Back 36

All who did not wrongfully dissolve.

Front 37

How is partnership money distributed at dissolution?

Back 37

Creditors
Partner/creditors
Partner accounts
Profits or losses split

Front 38

What is needed for partnership to continue after dissolution?

Back 38

Remaining partners who have not wrongfully dissolved must unanimously agree. This will not affect rights of those who relied on dissolution previously.

Front 39

What is the liability for partners in an LLP?

Back 39

No personal liability for contract or torts of others, only her own wrongful acts.

Front 40

Can a limited partner become liable for more than her investment?

Back 40

Formerly, yes, if she participated in management or control or put name in title. But ULPA no longer says this.

Front 41

What is required to show Ratification?

Back 41

Purporting of Agent to act on behalf of Principal (not undisclosed)

Knowledge of all material facts by Principal (otherwise P can later rescind unless 3P detrimentally relied or P assumed risk f own ignorance)

Capacity of principal at time of ratification

Entire transaction must be accepted

Third-party's rights not interfered with (including offeror's if he has withdrawn, changed position, or died)

Capacity/existence of principal at time of transaction as well, otherwise it is merely an adoption.

Act must have been authorizable/proper to begin with.

Front 42

What kind of authority does a general partner have to bind the partnership?

Back 42

All have apparent authority to bind in the ordinary course of business of the kind carried out, unless the 3P knew or had notice that the partner lacked authority.

Actual authority can be given by majority vote for ordinary business and unanimous vote for extraordinary acts.

Front 43

When is notice effective for a principal, when is it no, and how long does it last? For a partnership?

Back 43

An agent must have any kind of authority, and the 3P must not know that agent is adverse to P. It lasts forever.

For parnerships, When it is delivered to a place of business of a partner.

Notice to a partner is imputed to the partnership unless the partner is participating in a fraud against the partnership.

Front 44

How is apparent authority terminated?

Back 44

Notice must be given personally to third parties known to have been dealt with.

Publication must be given if authority had been advertised.

If given by writing, must be terminated in writing.

Death terminates automatically without notice.

Front 45

When is Agent's knowledge imputed to principal?

Back 45

Only if agent had actual authority in the matter.

Only if facts were in scope of relationship and discovered by agent during agency relationship or had it in mind when it became relevant.

Exceptions: Not if principal's subjective knowledge is required, and not after long time or when agent is adverse to principal.

Front 46

Can a third party rescind a contract upon discovery of principal's identity?

Back 46

Only if agent fraudulently represented he was contracting for himself BECAUSE he knew 3P wouldn't deal with him otherwise, or enforcement by P would imposed added burdens