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Agency and Partnerships

Terms in this set (33)

Agency Issues
Tort liability of principals

Contract liability of principals

Duties of agent to principals
Partnership Issues
...
Tort liability of Principal
Principal Agent Relationship

Tort committed by Agent within the Scope of Relationship
Forming a Principal-Agent Relationship
Assent - informal agreement between principal and agent

Benefit - of the principal

Control - right to control the agent (power to supervise the manner of performance)
When principals have control over subagents
Same test as for agents.

If the Principal has not assented to sub-agent's help, there is no assent or right to control.

With borrowed agents there is generally assent but no right to control.
Exception to the Rule that excludes liability for Independent Contractors
Inherently (not extremely) dangerous activities

Estoppel - if you hold out the contractor as an agent.
Scope of the Agency
Conduct is of the kind agent was hired to perform

Tort occurred on the job (no frolic and detour)

Agent intended benefit to the principal
Principal Liability for Agent's Intentional Torts
Generally Outside the Scope unless:

Authorized by Principal

In the Nature of the Employment (security guard)

Motivated by a desire to serve principal
Principal Liability for Agent Contracts
Liable for contracts entered into by the agent if the principal authorized the agent to enter into the contract
Types of Agent Authority
Actual Express
Actual Implied
Actual Express Authority
The principal actually uses words to authorize a transaction (narrowly construed)

Except if the contract itself must be in writing (express authority must be written) or death or lunacy (absent a durable power of attorney)
Actual Implied Authority
Necessary to accomplish and expressly authorized task

Customarily performed by persons with the agent's title or position

Agent believes the action to be authorized by prior acquiesence
Apparent Authority
Third party reasonably relied on agent's apparent authority and that appearance is traceable to the principal's actions.
Ratification
Principal has knowledge of all material facts AND\
Principal accepts benefits

(ratification cannot alter terms of the agreement)
Agent Liability on an authorized Contract
Undisclosed principal - Ambiguity about identity or existence of principal

(at third party's option)
Agent Duties
Duty of Care

Duty to Obey Reasonable Instructions

Duty of Loyalty
Agent's duty of Loyalty
Self Dealing

Usurping principal's opportunity

Secret profits at principal's expense
Remedies of breach of duty of loyalty
Losses caused by breach

Disgorge profits
Partnership Formation
No writing or formality requirement

Intent of two or more persons to carry on a business for profit as coowners and share in the profits and losses
Liabilities of General Partners to Third Parties
Partners are agents of the partnership and therefore liable for each partner's torts in the scope of the partnership business and each partner's authorized contracts
Ending Liability for Partners
Notice of dissociation is given to creditors or until 90 days after filing notice of dissociation with the state
General Partnership by Estoppel
One representing to a third party that a general partnership exists will be liable as if a general partnership exists
Rights and Liabilities among General Partners
Duty of loyalty
Remedy for partnership against breaching partner
Action for Accounting - losses caused by breach disgorge profits
Types of Partnership Property (generally cannot be transferred by individual partners)
Specific Partnership Assets - Land, Leases, or Equipment

Share of Profits (transferrable)

Share in Management
Partnership Profit Sharing
Absent agreement, shared equally

(agreement as to losses has no effect)
Partnership Loss Sharing
Absent agreement, shared equally

If there is an agreement as to profits, then share losses likewise
General Partnership Dissolution
Dissolution - absent agreement, partnership dissolves upon notice of express will of any partner to dissociate.
Winding Up Partnership
Time between dissolution and termination

Liquidation of assets to satisfy debts, capital contributions, and then distribute profits or losses.
Alternative Unincorporated Business Organizations
Limited - One general and at least one limited.

Registered LLP

LLC
Formation of Limited Partnership
File certificate that gives names of all general partners
Formation of Registered Limited Partnership
File Statement of Qualification plus annual reports

(No partner is personally liable)
Formation of LLC
Hybrid corporation and partnership

Owners have same rights and limited liabilities as shareholders in a corporation and also the benefits of partnership tax treatment

Articles of organization filed

May adopt operating agreement

May operate the business or delegate to a team of managers
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