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48 Cards in this Set
- Front
- Back
When is a principal liable for torts committed by the agent?
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1) Principal-agent relationship exists
2) Tort w/in scope of agency |
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When is a principal-agent relationship said to exist?
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1) assent
2) benefit to principal 3) control over agent |
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What is the difference between a frolic and a detour? What are the consequences for a principal's liability?
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Frolic = new and independent journey → outside scope of agency
Detour = mere departure from an assigned task → w/in scope of agency |
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When is a principal liable for intentional torts committed by their agent?
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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 |
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When is a principal liable for torts committed by independent contractors?
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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 |
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When is a principal liable for contracts entered into by their agents (general rule)?
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Principal is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract
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When is an agent liable for contracts authorized by a principal?
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An agent is liable for contracts authorized by a principal when the principal is undisclosed or partially disclosed.
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What are the four types of authority that an agent can have?
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1) Actual express authority
2) Actual implied authority 3) Apparent authority 4) Ratification |
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What is actual implied authority?
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Actual implied authority is authority which the agent reasonably believes the principal has given
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What are the three ways in which actual implied authority can be conferred?
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1) Necessity
2) Custom 3) Prior dealings |
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When does an agent have apparent authority?
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1) Principal cloaked the agent w appearance of authority, and
2) Third party reasonably relies on appearance of authority |
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When must actual express authority be granted to an agent in writing?
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Actual express authority must be granted to an agent in writing when the contract involves an interest in land lasting more than one year
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When has a principal ratified a contract made by an agent?
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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 |
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What three duties are owed to a principal by an agent?
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1) Reasonable care
2) Obey reasonable instructions 3) Loyalty |
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What are the remedies of a principal against an agent who violates the duty of loyalty?
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1) lost profits
2) disgorgement |
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What three things must an agent avoid doing in order to satisfy the duty of loyalty?
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1) Self dealing: agent cannot receive a benefit to the detriment of the principal
2) Usurp the principal’s opportunity 3) Secret profits |
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What formalities are required in the formation of a general partnership?
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None
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What is a general partnership?
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A general partnership is an association of 2+ persons who are carrying on as co-owners of a business for profit.
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What is the effect of profit sharing in determining whether a partnership exists?
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Contribution of $ or services in return for a share of profits is prima facie evidence of a general partnership
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What special relationship exists between a partnership and its partners?
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A partner is an agent of the partnership. Therefore, agency rules apply
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What is the liability of a general partner for the debts of the partnership?
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General partners are personally liable for debts of the partnership
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What is an incoming partner’s liability for pre-existing debts?
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Incoming partners are not liable for prior debts. But: $ paid into partnership by the incoming partner can be used to satisfy prior debts
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What is an outgoing partner’s liability for subsequent debts of the partnership?
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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
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What is the effect if a person represents to a third party that a partnership exists, when in reality there is no partnership?
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Partnership by estoppel. One who represents to a third party that a partnership exists will be liable as if a partnership exists
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What to know about exotoxins released by Clostridium tetani
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Mnemonic "Blocking Renshaw gives you lock jaw"
Blocks the release of inhibitory neurotransmitter glycine from Renshaw cells in the spinal cord. Causes "lockjaw" |
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What formalities are required to form a limited partnership?
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In order to form a limited partnership, need to file a limited partnership certificate that includes the name of all general partners
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What liability/control does a general partner have over a limited partnership?
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Liable for all LP obligations
Right to manage business |
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What liability/control does a limited partner have over a limited partnership?
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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 |
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What formalities are required to form a registered limited liability partnership?
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Must register w state as RLLP and indicate which profession you will be practicing
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What are the liabilities of a partner in a RLLP?
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No partner is liable for RLLP’s debts and obligations
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What are the formalities required to form a limited liability corporation?
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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 |
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What are the liabilities of members (i.e. partners) of a LLC?
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Members are not liable for debts and obligations of company
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What duty do partners owe to each other and to do the partnership?
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Duty of loyalty
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What is required prior to transfer of assets owned by the partnership?
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Authorization of the partnership
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Are a partner's share of profits owned by the individual partners or the partnership as a whole?
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A partner's share of profits is personal property owned by individual → individual partners may transfer w/o partnership consent
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Is a partner's share in the management of a partnership owned individually or by the partnership?
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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
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How do you distinguish between specific partnership assets and personal property?
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To distinguish, ask: whose $ was used to buy the property
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What is the default rule regarding relative control of a partnership by its partners?
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Absent agreement, each partner gets equal control
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What is the general default rule regarding the salary of partners?
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Absent agreement → no salary
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What is the only time during which the partners receive a salary from the partnership by default?
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Partners receive compensation for helping to wind up partnership
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What is the default rule regarding the sharing of partnership profits between the partners?
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Absent agreement → profits shared equally
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What is the default rule regarding the sharing of partnership losses between the partners?
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Absent agreement → losses shared like profits
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What is a dissolution of a partnership?
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Any material change in a partnership caused by the death or withdrawal of any single general partner creates an automatic dissolution of the partnership
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What is the termination of a partnership?
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Termination is the real end of the partnership (as opposed to dissolution)
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What is the winding up of a partnership?
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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
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What is a partnerships liability for transactions entered into to wind up old business w existing creditors?
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Partnership (and independent general partners) retain liability on all transactions entered into to wind up old business w existing creditors
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What is a partnerships liability for new business transactions entered into during the winding up period?
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Partnership (and independent general partners) retain liability on all new business transactions until notice of dissolution is given to all existing and potential creditors
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What is the priority of distribution of a partnership's assets?
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1) Outside non-partner creditors
2) Partner creditors 3) Capital contributions by partners must be paid 4) Profits and surplus (if any) |