Ca Agency And Partnership

Front 1

When will a principal be vicariously liable for torts committed by agent?

Back 1

TWO-PART TEST:
Principal will be liable for torts committed by agent if:
(1) a PRINCIPAL-AGENT RELATIONSHIP exists; AND
(2) the tort was committed by the agent within the SCOPE of that relationship.

Front 2

Principal-Agent Relationship Requirements

 

ABC

 

Back 2

ASSENT - an informal agreement b/w P who has capacity and A

BENEFIT - The A's conduct must be for the P's benefit

CONTROL - The P must have control over the A by having the power to supervise the manner of A's performance

Front 3

Vicarious Liability of Principal for torts of Sub-Agents and Borrowed Agents

Back 3

None unless there is A, B, and C (Assent, Benefit, and Control).

For subagent we don't usually have A or C, for borrowed agent we don't usually have C.

Front 4

Factors Distinguishing An Agent From An Independent Contractor

Back 4

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

Front 5

Scope of Principal-Agent Relationship

[Factors]

Back 5

(1)Was conduct 'of the kind' agent was hired to perform? (Was conduct in job description? If yes, likely within scope);

(2)Did tort occur 'on the job' (Frolic vs Detour)? Frolic is a new and independent Journey (outside scope) and Detour is a near departure from an assigned task (w/in scope).;

(3)Did A intend to benefit P? If so, even in part, that is enough and the conduct is w/in the scope.

Front 6

Principal's Liability for Agent's Intentional Torts

Back 6

RULE: Generally, intentional torts are outside the scope of liability.

EXCEPTIONS - Intentional Torts are w/in the scope if the conduct was:
(1) Specifically authorized by P
(2) Conduct was natural from Employment
(3) Motivated by a Desire to serve P

Front 7

Liability of Principal for contracts entered into by its agent

Back 7

P is liable for contracts entered into by A if P AUTHORIZED the agent to enter the contract

Front 8

Types of authority for agent to enter into a contract

Back 8

FOUR TYPES:

(1)Actual Express Authority;

(2)Actual Implied Authority;

(3)Apparent Authority;

(4) Ratification

Front 9

Actual Express Authority

Back 9

P used words to express authority to A.

Rule: Oral, Private, Narrow

Exception -- Equal Dignity Doctrine: If the contract itself must be in writing, then the express authority must also be in writing.

Front 10

Revocation of Express Authority

Back 10

RULE: Express Authority will be revoked by either
(1) Unilateral act of either party; or
(2) Death or incapacity of P.

EXCEPTION: Express Authority cannot be revoked if the principal gives the agent a DURABLE POWER OF ATTORNEY (Power of Attorney = written expression of authority)(Durable=Conspicuous survivor language)

Front 11

Actual Implied Authority:

Back 11

Authority which agent reasonably believes he has because of:

(1) Necessity: implied authority to do all tasks which are necessary to accomplish an expressly authorized task;

(2) Custom: implied authority to do all tasks which are customarily w/in the agent's title or position.

(3) Prior Dealings b/w P&A: implied authority to do all tasks which the agent believes to have been authorized to do by P's prior acquiescence.

Front 12

Apparent Authority

Back 12

TWO-PART TEST:
(1) P cloaked A w/ the appearance of authority; AND
(2) 3rd party reasonably relies on appearance of authority.

Front 13

Secret Limiting Instructions, as applied to apparent authority.

Back 13

Apparent Authority situation in which Agent has actual authority, but principal has secretly limited that authority. In common fact pattern, Agent acts beyond the scope of the limitation. (e.g. store clerk, contrary to owner's instructions, sells antique grandfather clock). P will still be bound b/c clerk was cloaked in appearance of authority and 3rd party reasonably relied.

Front 14

Lingering Authority in context of apparent authority

Back 14

Situation in which actual authority has been terminated. Afterwards, agent continues to act on principal's behalf. P will still be bound. (e.g. P fires long time A, but A continues to enter deals on P's behalf and runs away w/ 3rd Party's money -- P will still be bound b/c P has cloaked A with the lingering appearance of authority and also, customers may continue to rely reasonably upon A's appearance of authority, until they receive notice of her termination).

Front 15

Ratification

Back 15

RULE: Authority can be granted after the K has been entered, if:
(a) P has knowledge of all material facts regarding the K; AND
(b)P accepted its benefits.

EXCEPTION: Ratification cannot alter the terms of the K (otherwise authority is void)

Front 16

Rules of liability on the K (with regard to Agent/Principal)

Back 16

GENERAL RULES:
(1) If no authority, A is liable on the K but not P;
(2)If authority, P is liable on the K but not A.

EXCEPTION: if P is partially disclosed or undisclosed, the authorized A may nonetheless be liable at the ELECTION of the 3rd party

Front 17

Duties Agent Owes to Principal

Back 17

1. Duty to exercise reasonable Care;

2. Duty to obey reasonable instructions

3. Duty of Loyalty

Front 18

Duty of Loyalty

Back 18

(a) No self dealing - A cannot receive a benefit to the detriment of P;

(b) No usurpation of opportunity of principal;

(c) No secret profits

Front 19

Remedies Available to P against A for violation of duty

Back 19

Principal may recover
(1)LOSSES caused by an Agents breach; AND
(2) Principal may DISGORGE PROFITS made by the Agent

Front 20

GENERAL Partnership Formation

Back 20

FORMALITIES: none 

DEFINITION: A general partnership is an association of 2 or more persons who are carrying on as co-owners of a business for profit.

SHARING OF THE PROFITS: Contribution of money, capital, or services, in return for a share of profits creates a presumption that a general partnership exists.

Front 21

Liabilities of General Partners to 3rd Parties

Back 21

1. Agency Principles Apply:
(a) Partners are agents of the Partnership for carrying on usual Partnership business;
(b) Partnership is bound by torts committed by Partners in scope of Partnership business;
(c) Partnership is bound by Ks entered by Partners w/ authority.

2. General Partners are Personally Liable for Debts of the Partnership

Front 22

Incoming Partner's Liability For Pre-existing Debts

Back 22

Generally, incoming Partners are not liable for pre-existing debts but any contributions can be used to satisfy those pre-existing debts;

Front 23

Dissociating Partner's liability for Subsequent Debts

Back 23

Dissociating Partners retain liability on future debts until:
actual notice of dissociation is given to creditors; OR
until 90 days after filing of Notice of Dissociation with the State.

Front 24

General Partnership By Estoppel

Back 24

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

Front 25

Limited Partnerships (Definition)

Back 25

DEFINITION: Partnership in which there is at least one general partner and at least one limited partner, and therefore, has a two-tiered structure.

Front 26

Limited Partnerships (Formation)

Back 26

To form, you must file a Limited Partnership Certificate that includes the names of all general partners.

Front 27

Limited Partnerships (Liability and Control)

Back 27

GENERAL PARTNERS are liable personally for all limited partnership obligations (same as general partnerships) but they also have the right to control the limited partnership.

LIMITED PARTNERS have limited liability (no personal liability for debts & obligations) and limited control (no mgmt  w/out forfeiting the limited liability)

Front 28

Registered Limited Liability Partnerships (RLLP)

[FORMATION]

Back 28

Must file

 

(1) a Statement of Qualification (incl. Name and Address + Stmt Entity is LLP)

 

AND (2) Annual Reports

Front 29

Registered Limited Liability Partnerships (RLLP)

[LIABILITIES]

Back 29

1. NO Partner is Liable for the obligations of the partnership itself.

2. The individuals may be sued individually for their own torts.

Front 30

Limited Liability Companies

(Original Purpose)

Back 30

ORIGINAL PURPOSE: Give owners, a.k.a. Members, same limited liability of Shareholders of a corporation, as well as the tax Benefits of Partnerships

 

aka = Limited Liability Corporation + favorable partnership tax benefits

Front 31

Limited Liability Companies

(Formation)

Back 31

Must file:
(1) Articles of Organization; = LLC name, Agent and office (name and address), name of all members

 

AND
(2) Operating Agreement.

Front 32

Limited Liability Companies

(Liabilities)

Back 32

Members are NOT liable for Debts and Obligations of the LLC itself

Front 33

Limited Liability Company

(Characteristics or Attributes)

Back 33

(1) Members control, but Articles may delegate control to managers.
(2) Limited Liquidity -- Member interests are not freely transferable.
(3) Limited Life -- Events of dissolution.

THEREFORE LLC = Limited Liability, Plus Limited Liquidity, Plus Limited Life, and Limited Tax

Front 34

Relationship between General Partners

Back 34

General Partners are FIDUCIARIES of Each other and the Partnership

They owe a duty of loyalty + a duty of care (no negl, or unlawful conduct)

Front 35

Duty of Loyalty (For Partners)

Back 35

Partners, as w/ agents, may NOT:
(1) Engage in Self-Dealing;
(2) Usurp Partnership Opportunities; OR
(3) Make Secret Profits

Front 36

Action for Accounting

Back 36

Cause of Action in which Partnership may recover losses caused by the breach and may also disgorge profits made by the breaching partner.

Front 37

Specific Partnership Assets

Back 37

Land, leases, or equipment, owned only by the partnership.

 

Therefore, no individual partner may transfer these assets w/out partnership authority

Front 38

Partner's Rights in Partnership Property: Share of Profits and Surplus(Transferability)

Back 38

Personal property owned as such by individual partners.

Therefore, individual partners may transfer their interests in the share of profits and surplus to others.

Front 39

Partner's Rights in Partnership Property: Share in Management

Back 39

Owned only by the partnership itself.

Therefore, no individual Partner may transfer their share in management to some 3rd party.

Front 40

Partner's Rights in Partnership Property: Conflict b/w Specific Partnership Assets and Personal Property

Back 40

TEST: Whose $ was used to buy the property?

If partnership $ was used, then property is partnership property. If personal $ was used, then property is personal property.

Front 41

Rights and Liabilities b/w Partners
 

Back 41

ABSENT AN AGREEMENT,

 

1. Partners have EQUAL control (vote)

 

2. NO SALARY

EXCEPTION: Partners do receive compensation for winding up partnership business

 

3. Profits and losses shared equally

 

** Don't be tricked by (a) facts that provide for disproportionate sharing of losses but silent on profits (default rule will apply); and (b) facts indicating partners made different contributions but silent on agreement of sharing profits or losses(default rules apply)

 

 

Front 42

Dissolution (Definition)

Back 42

1. In a 'partnership at will,' where there is no agreement, dissolution occurs automatically upon notice of express will by any General Partner to disassociate.

2. In a Partnership not at will, where there is an agreement, dissolution occurs upon the happening of an event specified in the agreement or upon the majority vote of the partners to dissolve w/in 90 days of disassociation.

Front 43

Termination and Winding Up

(Definitions)

Back 43

TERMINATION = The Real End

WINDING UP = Period b/w dissolution and Termination in which remaining partners must liquidate the partnership assets to satisfy the partnership creditors.

Front 44

Compensation for Winding Up

Back 44

Partners do receive compensation for winding up

Front 45

Liability for Winding Up
(Old Business)

Back 45

OLD BUSINESS: Partnership, and therefore, its individual general partners, retain liability to wind up on all transactions to wind up the business.

Front 46

Liability for Winding Up
(New Business)

Back 46

Partnership, and therefore, its individual general partners, still retain liability for New Business until:
(1) actual notice of dissolution is given to creditors; OR
(2) until 90 days after filing a Statement of Dissolution w/ the State.

Front 47

Priority of Distribution

Back 47

Each level of priority must be fully satisfied b/f beginning the next level in this order:
(1) All outside and inside creditors;
(2) Capital Contributions;
(3) Profits, if any, or losses are shared equally (unless agreements says otherwise)

Front 48

Rule for distribution to partners at termination of business

Back 48

RULE: Each Partner must be repaid his or her loans and capital contributions, plus that partner's share of the profits or minus that partner's share of the losses.