Ny Bar 2007 Agency And Partnerships

Front 1

Vicarious Liability or Respondeat Superior

Back 1

A principal will be liable for torts committed by an agent if a principal-agent relationship exists and the tort was committed within the scope of that relationship.

Front 2

Principal-Agent Relationship

Back 2

Assent: there must be an informal agreement between the principal, who has capacity, and the agent.
Benefit: the agent's conduct must be for the principal's benefit.
Control: the principal must have the right to control the agent by having the power to supervise the management of the agent's performance.

Front 3

Principal's Liability for the Torts of Sub-agents

Back 3

There can be no vicarious liability against the principal for a sub-agent's torts unless there is assent, benefit and the right to control the sub-agent tortfeasor.

Front 4

Principal's Liability for the Torts of Borrowed Agents

Back 4

There can be no vicarious liability against the principal for a borrowed agent's torts unless there is assent, benefit and the right to control the borrowed agent tortfeasor.

Front 5

Independent Contractor v. Agent

Back 5

Control: there is no right to control an independent contractor because there is no power to supervise the manner of the independent contractor's performance.

Front 6

Vicarious Liability for the Torts of Independent Contractors

Back 6

Generally, there can be no vicarious liability against the principal for an independent contractor's torts unless:
1. Ultra-hazardous Activity Exception: if the independent contractor commits a tort while engaged in ultra-hazardous activity(an activity which done wrong leads to death) or
Estoppel: if the independent contractor is held-out with the appearance of agency, the principal will be estopped from denying vicarious liability.

Front 7

Scope of the Principal-Agent Relationship

Back 7

1. The agent's conduct is of the type the agent was hired to perform.
2. The tort occurs on the job.
3. The agent intends to benefit (in NY even partially benefit) the principal by his actions.
Note: a frolic is a new and independent journey not within the scope whereas a detour is a mere departure from an assigned task and falls within the scope.

Front 8

Intentional Torts of Agents

Back 8

Intentional torts such as assault or battery are outsided the scope of agency unless they were i) specifically authorized by the principal, ii) natural from the nature of the employment or iii) motivated by a desire to serve the principal.

Front 9

Liability of a Principal for Contracts Entered Into By Agents

Back 9

A principal is liable for contracts entered into by agents if the principal has authorized the agent to enter into the contract.

Front 10

Actual Express Authority

Back 10

Principal uses words, oral, private and narrow, to express authority to the agent.
Contracts involving the conveyance of land require the express authority to be in writing.

Front 11

Revocation of Express Authority from Agent

Back 11

Express authority will be revoked by i) a unilateral act of either party or death or incapacity of the principal.

Front 12

Durable Power of Attorney

Back 12

A written expression of authority to enter into a contract which contains conspicuous survival language.
Express authority can not be revoked if the principal gave the agent durable power of attorney.

Front 13

Actual Implied Authority

Back 13

Authority which the agent reasonably believes the principal has given because of necessity, custom or prior dealings.

Front 14

Implied Authority Due to Necessity

Back 14

There is an implied authority to do all the tasks which are necessary to accomplish an expressly authorized task.

Front 15

Implied Authority Due to Custom

Back 15

There is an implied authority to do all tasks customarily performed by persons with the agent's title or position.

Front 16

Implied Authority Due to Prior Dealings

Back 16

There is an implied authority to do all the tasks which the agent believes to have been authorized based on prior acquiescence of the principal.

Front 17

Apparent Authority

Back 17

Apparent authority arises if the principal cloaks the agent with the appearance of auhtority and a 3rd-party reasonably relies on the appearance of authority.

Front 18

Principal's Secret Limiting Instruction

Back 18

If the agent has actual authority, but the principal has secretly limited that authority, and the agent acts beyond the scope of the limitation, the principal may still be bound under apparent authority.

Front 19

Agent's Lingering Authority

Back 19

If the principal has terminated the agent's authority but the agent continues to act on the principal's behalf, the principal may be held liable under apparent authority.

Front 20

Ratification of Authority

Back 20

Authority can be granted after the contract has been entered ino if the principal has knowledge of all the material facts regarding the contract and accepts its benefits as is without alteration to the terms of the contract.

Front 21

Liability on Contracts Rests on Authority

Back 21

If agent was authorized, principal is liable under the contract.

Front 22

Duties Agent Owes Principal

Back 22

Duty to exercise reasonable care.
Duty to obey instructions.
Duty of loyalty: an agent can not receive a benefit in detriment to the principal (self-dealing, usurping and secret profits).

Front 23

Formation of A Partnership

Back 23

No formalities are required, a partnership may be inferred from conduct alone.

Front 24

General Partnership

Back 24

An association of 2 or more persons who are carrying on as co-owners of a business for profit.
The contribution of capital or services in return for a share of the profits, if any, is prima facie evidence of the existence of a general partnership.

Front 25

Partners as Agents of the Partnership

Back 25

Agency principles apply: partners are agents of the partnership for carrying on the usual partnership business.
The partnership is bound by torts committed by partners within the scope of the partnership business.
The partnership is bound by contracts entered into by partners with authority.

Front 26

General Partner Liability for Partnership Debt

Back 26

General partners are personally liable for partnership debts.
Incoming partners are NOT liable for pre-existing debts, but any money paid into the partnership may be used by the general partnership to satisfy such debts.
Outgoing partners retain liability, even on future debts until they die, unless notice of their withdrawal has been given to all known and potential creditors.

Front 27

Partnership by Estoppel

Back 27

One who represents to a 3rd-party that a partnership exits will be liable as if the partnership existed.

Front 28

Limited Partnership Formation

Back 28

A partnership with at least 1 general partner and 1 limited partner.
Requires filing a certificate of limited partnership with the Department of State which contains the names of all the general partners.

Front 29

Limited Partnership Liability and Control

Back 29

The general partner is personally liable for all partnership debts and obligations and has the right to exercise managerial control.
The limited partners have limited liability and are not responsible for the debts and obligations of the limited partnership and may not exercise managerial control.

Front 30

Registered Limited Liability Partnership Formation

Back 30

A professional services partnership made up of licensed professionals which is created by filing a certificate of registration with the department of state.

Front 31

Registered Limited Liability Partnership Partner Liabilities

Back 31

No partner will be liable for the debts and obligations of the partnership (true limited liability).
Each partner is liable for his own wrongdoing and for the wrongdoing of those under his control.

Front 32

Limited Liability Company Formation

Back 32

A limited liability company is designed to give its owners (members) the same limited liability we give owners in stock corporations with the benefits of partnership tax status.
It is formed by filing articles of organization with the Department of State and publishing a summary of the articles in 2 publications for 6 consecutive weeks.

Front 33

Limited Liability Company Liabilities and Control

Back 33

The members are not liable for the debts and obligations of the LLC.
Members control but may delegate to managers.
Limited liquidity - member interests are not freely transferable.
Limited life - there are events of dissolution

Front 34

Partners as Fiduciaries to Each Other and the Partnership

Back 34

Partners have a duty of loyalty and may never i) engage in self-dealing, ii) usurp partnership opportunities or iii) make secret profits at the expense of the partnership.
The remedy is an actio for accounting.

Front 35

Actions for Accounting

Back 35

The remedy for a breach of partners' fiduciary duties.
The only form of action that may be brought by the partnership against one of its own breaching partners.
Partnership may revover losses caused by the breach and partnership may disgorge profits made by the breaching party.

Front 36

Partners Rights in Partnership Property: Specific Partnership Assets

Back 36

Specific partnership assets belong to the partnership. No individual partner may transfer these asets to 3rd parties.

Front 37

Partners Rights in a Share of Profits and Surplus

Back 37

Profits and surplus are the personal property of the individual partners and they may individually transfer them to 3rd-parties.

Front 38

Partners Rights to Share in Management of the Partnership

Back 38

Share in management is an asset owned by the partnership, not the partners, so no individual partner may transfer their share in management to a 3rd party.

Front 39

Conflicts Between Specific Partnership Assets and Personal Property

Back 39

If partnership money is used to purchase property, the property is a partnership asset.
Property acquired with a partner's personal money is that partner's property.

Front 40

Management of a Partnership

Back 40

Absent an agreement on control, each party gets equal control.

Front 41

Partner's Salary

Back 41

Absent an agreement on salary, partners get NO salary.

Front 42

Partner's Share of Profit and Loss

Back 42

Absent an agreement on profits, profits are shared equally.
Avsent an agreement on losses, losses are shared like profits.

Front 43

Dissolution Defined

Back 43

Any material change in a partnership caused by the death or withdrawal of any general partner.

Front 44

Termination Defined

Back 44

The true end of the partnership after which it does not exist.

Front 45

Winding Up Defined

Back 45

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

Front 46

Compensation and Liabilities for Winding Up

Back 46

Partners receive compensation for performing winding up services.
The partnership and therefore the individual general partners retain liability on all transactions entered into to wind up old business with existing creditors.
The winding up partners will be individually liable for any new business entered into until a notice of dissolution is given to all known or potential creditors.

Front 47

Priority of Distribution

Back 47

1. Creditors: the partnership MUST pay -
1st all outside non-partner trade and other creditors.
2nd all inside partners who have loaned money to the partnership.
2. Capital Contributions
The partnership MUST repay fully all capital contributions.
3. Profits and Surplus
In the absence of agreement, profits are shared equally among partners.
Any shortfall of MUST payments, absent an agreement, must be shared like profits among the partners.