New York - Agency And Partnership

Front 1

When is a principal liable for torts committed by the agent?

Back 1

1) Principal-agent relationship exists
2) Tort w/in scope of agency

Front 2

When is a principal-agent relationship said to exist?

Back 2

1) assent
2) benefit to principal
3) control over agent

Front 3

What is the difference between a frolic and a detour? What are the consequences for a principal's liability?

Back 3

Frolic = new and independent journey → outside scope of agency

Detour = mere departure from an assigned task → w/in scope of agency

Front 4

When is a principal liable for intentional torts committed by their agent?

Back 4

Intentional torts are generally outside scope of agency

Exceptions
1) Authorized by principal
2) Natural from the nature of employment
3) Motivated by a desire to serve the principal

Front 5

When is a principal liable for torts committed by independent contractors?

Back 5

A principal is generally not liable for torts committed by an independent contractor.

Exceptions
1) Ultrahazardous activity
2) Estoppel: Independent contractor held out as agent

Front 6

When is a principal liable for contracts entered into by their agents (general rule)?

Back 6

Principal is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract

Front 7

When is an agent liable for contracts authorized by a principal?

Back 7

An agent is liable for contracts authorized by a principal when the principal is undisclosed or partially disclosed.

Front 8

What are the four types of authority that an agent can have?

Back 8

1) Actual express authority
2) Actual implied authority
3) Apparent authority
4) Ratification

Front 9

What is actual implied authority?

Back 9

Actual implied authority is authority which the agent reasonably believes the principal has given

Front 10

What are the three ways in which actual implied authority can be conferred?

Back 10

1) Necessity
2) Custom
3) Prior dealings

Front 11

When does an agent have apparent authority?

Back 11

1) Principal cloaked the agent w appearance of authority, and
2) Third party reasonably relies on appearance of authority

Front 12

When must actual express authority be granted to an agent in writing?

Back 12

Actual express authority must be granted to an agent in writing when the contract involves an interest in land lasting more than one year

Front 13

When has a principal ratified a contract made by an agent?

Back 13

Authority can be granted after the contract has been entered if

1) Principal has knowledge of all material facts regarding the contract, and

2) Principal accepts its benefits

Front 14

What three duties are owed to a principal by an agent?

Back 14

1) Reasonable care
2) Obey reasonable instructions
3) Loyalty

Front 15

What are the remedies of a principal against an agent who violates the duty of loyalty?

Back 15

1) lost profits
2) disgorgement

Front 16

What three things must an agent avoid doing in order to satisfy the duty of loyalty?

Back 16

1) Self dealing: agent cannot receive a benefit to the detriment of the principal
2) Usurp the principal’s opportunity
3) Secret profits

Front 17

What formalities are required in the formation of a general partnership?

Back 17

None

Front 18

What is a general partnership?

Back 18

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

Front 19

What is the effect of profit sharing in determining whether a partnership exists?

Back 19

Contribution of $ or services in return for a share of profits is prima facie evidence of a general partnership

Front 20

What special relationship exists between a partnership and its partners?

Back 20

A partner is an agent of the partnership. Therefore, agency rules apply

Front 21

What is the liability of a general partner for the debts of the partnership?

Back 21

General partners are personally liable for debts of the partnership

Front 22

What is an incoming partner’s liability for pre-existing debts?

Back 22

Incoming partners are not liable for prior debts. But: $ paid into partnership by the incoming partner can be used to satisfy prior debts

Front 23

What is an outgoing partner’s liability for subsequent debts of the partnership?

Back 23

An outgoing partner retains liability on future debts until they die, unless notice of their withdrawal has been given to all known and future creditors

Front 24

What is the effect if a person represents to a third party that a partnership exists, when in reality there is no partnership?

Back 24

Partnership by estoppel. One who represents to a third party that a partnership exists will be liable as if a partnership exists

Front 25

What to know about exotoxins released by Clostridium tetani

Back 25

Mnemonic "Blocking Renshaw gives you lock jaw"
Blocks the release of inhibitory neurotransmitter glycine from Renshaw cells in the spinal cord. Causes "lockjaw"

Front 26

What formalities are required to form a limited partnership?

Back 26

In order to form a limited partnership, need to file a limited partnership certificate that includes the name of all general partners

Front 27

What liability/control does a general partner have over a limited partnership?

Back 27

Liable for all LP obligations

Right to manage business

Front 28

What liability/control does a limited partner have over a limited partnership?

Back 28

Limited liability
1) Not liable for LP’s obligations
2) Liable only for their contributions

May not manage the business w/o forfeiting limited liability

Front 29

What formalities are required to form a registered limited liability partnership?

Back 29

Must register w state as RLLP and indicate which profession you will be practicing

Front 30

What are the liabilities of a partner in a RLLP?

Back 30

No partner is liable for RLLP’s debts and obligations

Front 31

What are the formalities required to form a limited liability corporation?

Back 31

1) File articles of organization w state

2) Publish a summary of articles once a week for 6 weeks in a row, in 2 newspapers

Front 32

What are the liabilities of members (i.e. partners) of a LLC?

Back 32

Members are not liable for debts and obligations of company

Front 33

What duty do partners owe to each other and to do the partnership?

Back 33

Duty of loyalty

Front 34

What is required prior to transfer of assets owned by the partnership?

Back 34

Authorization of the partnership

Front 35

Are a partner's share of profits owned by the individual partners or the partnership as a whole?

Back 35

A partner's share of profits is personal property owned by individual → individual partners may transfer w/o partnership consent

Front 36

Is a partner's share in the management of a partnership owned individually or by the partnership?

Back 36

A partner's share in the management of the partnership is owned by partnership → no individual may transfer share in mgmt to a third party

Front 37

How do you distinguish between specific partnership assets and personal property?

Back 37

To distinguish, ask: whose $ was used to buy the property

Front 38

What is the default rule regarding relative control of a partnership by its partners?

Back 38

Absent agreement, each partner gets equal control

Front 39

What is the general default rule regarding the salary of partners?

Back 39

Absent agreement → no salary

Front 40

What is the only time during which the partners receive a salary from the partnership by default?

Back 40

Partners receive compensation for helping to wind up partnership

Front 41

What is the default rule regarding the sharing of partnership profits between the partners?

Back 41

Absent agreement → profits shared equally

Front 42

What is the default rule regarding the sharing of partnership losses between the partners?

Back 42

Absent agreement → losses shared like profits

Front 43

What is a dissolution of a partnership?

Back 43

Any material change in a partnership caused by the death or withdrawal of any single general partner creates an automatic dissolution of the partnership

Front 44

What is the termination of a partnership?

Back 44

Termination is the real end of the partnership (as opposed to dissolution)

Front 45

What is the winding up of a partnership?

Back 45

The winding up is the period between dissolution and termination in which the remaining partners liquidate the partnership assets to satisfy the partnership’s creditors

Front 46

What is a partnerships liability for transactions entered into to wind up old business w existing creditors?

Back 46

Partnership (and independent general partners) retain liability on all transactions entered into to wind up old business w existing creditors

Front 47

What is a partnerships liability for new business transactions entered into during the winding up period?

Back 47

Partnership (and independent general partners) retain liability on all new business transactions until notice of dissolution is given to all existing and potential creditors

Front 48

What is the priority of distribution of a partnership's assets?

Back 48

1) Outside non-partner creditors
2) Partner creditors
3) Capital contributions by partners must be paid
4) Profits and surplus (if any)