Agency Law & Business Organizations

Front 1

Basic business organizational structures

Back 1

1) sole proprietorship
2) partnerships
3) corporations

hybrids
1) limited liability partnerships
2) "s" corporations
3) limited liability companies
4. limited partnerships

Front 2

Agency is based on _________ and is therefore called __________

Back 2

Agency is based on the consent of the parties and is therefore called a consensual relationship

Front 3

Agency law involves
1)
2)
3)

Back 3

1) principal
2) agent
3) third party

Front 4

Agent

Back 4

person or firm who is authorized by the principal or by operation of law to make contracts with third persons on behalf of the principal

Front 5

Principal

Back 5

person or firm who employs an agent

Front 6

Agency can be based on either ________ or _______ agreement

Back 6

Agency can be based on either an express or implied agreement

Front 7

Respondeat superior

Back 7

anytime an employee is liable for a tortious act in the scope of his employment, the employer is also liable

Front 8

Duties
To avoid personal liability, an agent must comply with
1)
2)
3)
4)

Back 8

1) duty of loyalty
2) duty to keep principal informed
3) duty to obey instructions
4) duty to account for all monies handled

Front 9

Employees

Back 9

generally not hired to represent employer in making contracts with third parties
possible
however it is possible for an employee to be an agent as well

Front 10

Independent contractor

Back 10

bound by a contract to produce a certain result

Front 11

agent or employee differs from an independent contract in that ______

Back 11

agent or employee differs from an independent contract in that the contractor controls the performance of the work
an employer or principal can control the employee or agent, however they cannot control an independent contractor

Front 12

By law, an independent contractor is liable for _________ not _________

Back 12

By law, an independent contractor is liable for their work and their employees, not the person who hires the independent contractor

Front 13

Special agent

Back 13

an agent authorized to transact a specific act

Front 14

General agent

Back 14

an agent authorized to conduct all affairs of a principal in a certain category of business

Front 15

Universal agent

Back 15

authorized to do all acts permissible by law on behalf of the principal

Front 16

Levels of authority

Back 16

actual authority
expressed authority
implied authority
apparent authority

Front 17

Apparent authority

Back 17

actions that may cause a person to believe that a party is acting as an agent for a principal.
if this is the case, the principal will be esstoped from denying an agency relationship

Front 18

The burden of proof that an agency exists rests on _______

Back 18

The burden of proof that an agency exists rests on the party that will benefit from the proof

Front 19

An agent is under duty to obey and carry out all lawful instructions of the principal

Back 19

and may be held liable for any harm or loss suffered by the principal if he does not follow his instructions

Front 20

If an agent makes a contract on behalf of a disclosed principal, with proper authority to do so and the contract is executed correctly

Back 20

the agent has not personal liability

Front 21

Agent
Unauthorized action

Back 21

if a person makes a contract as agent for another but lacks authority to do so, the contract will not bind the principal
may be personal liability

Front 22

If the person purports to act as agent for a principal, an _____ arises that this person has authority to do so
If the agent lacks authority there is a ______ and the agent may be liable to the third party for any damages or losses incurred

Back 22

If the person purports to act as agent for a principal, an implied warranty arises that this person has authority to do so
If the agent lacks authority there is a breach of warranty and the agent may be liable to the third party for any damages or losses incurred

Front 23

Disclosed principal

Back 23

when an agent makes known the identity of the principal and the fact that the agent is acting on behalf of the principal

Front 24

Agent
Contract
Disclosed principal

Back 24

agent is not a party to nor bound by any contract that is executed

Front 25

Partially disclosed principal

Back 25

when an agent makes known the existence of a principal but not his or her identity

Front 26

Agent
Contract
Partially disclosed principal

Back 26

agent is a party to the contract and is bound

Front 27

Undisclosed principal

Back 27

when the third party is not told or does not know the existence of a principal

Front 28

Agent
Contract
Undisclosed principal

Back 28

agent is a party to the contract and is bound

Front 29

Sole proprietorship

Back 29

most common business organization in the country
easiest to form
continuity is tied directly to the proprietor
liability is solely with the proprietor
taxed as an individual

Front 30

Partnership

Back 30

easy to form (partnership agreement)
dissolved upon death or exit of a partner
control defined in partnership agreement
all partners are jointly liable for the partnership's obligations

Front 31

Corporations

Back 31

artificial intangible entity created under state law
more complicated to form (requires filing articles of incorporation)
continues until dissolved (deaths of shareholders does not affect)
managed by officers and directors as elected by shareholders
public vs. closely held

Front 32

Limited partnerships

Back 32

same attributes of a partnership except one or more of the partners can be designated as limited
limited partners have limited liability (may not be held liable for other partners' actions)

Front 33

"S" corporations

Back 33

require filing articles of incorporation (start as "C" corporations)
continuity until dissolved
controlled by officers and directors, elected by shareholders

Front 34

Limited liability company

Back 34

require filing articles of organization continuity until dissolved
control is vested in its members and managers
members not personally liable

Front 35

Types of stock

Back 35

common
preferred
cumulative preferred
participating preferred
convertible preferred
redeemable preferred