VA - Agency & Partnership

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VA - Agency & Partnership
2012-01-17 21:54:28
VA barbri

VA - Agency & Partnership
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  1. Liability of Principal to 3d Parties for Torts of an Agent
    Two part test
    • 1. Principal-agent relationship and
    • 2. the tort was committed by the agent w/in the scope of that relationship
  2. Principal-Agent Relationship
    • 1. Assent - an informal agreement b/t principal w/ capacity and agent
    • 2. Benefit - agent's conduct must be for principal's benefit
    • 3. Control - principal must have the right to control the agent by having the power to supervise the manner of the agent's performance
  3. Liability for Sub-Agents
    • The principal will be liable for a sub-agent's tor t if there is assent, benefit and right to control between principal and sub-agent tortfeasor
    • will find benefit but no assent and no control = no vicarious liability
  4. Liability for Borrowed Agents
    • The principal will be liable for a borrowed agent's tort if there is assent, benefit, and right to control
    • will find assent and benefit but never find right to control = no vicarious liability
  5. Contrast Agents with Independent Contractors
    • 1. key distinction: there is no right to control an IC b/c no power to supervise the manner of performance
    • 2. no vicarious liability for IC's torts
    • 3. Exceptions: ultra-hazardous activities and if P holds ou the IC as an agent (estoppel)
  6. Scope of P-A Relationship Factors
    • 1. Was conduct "of the kind" agent was hired to perform? If so, likely w/in scope.
    • 2. Did the tort occur "on the job"? frolic and detour
    • frolic: new and independent journey - outside scope
    • detour: mere departure from assigned task - w/in scope
    • 3. Did the agent intend to benefit the principal? if so, even in part, is enough to be w/in scope
  7. Intentional Torts
    • generally outside the scope
    • Exceptions: if the conduct was
    • 1. authorized by principal
    • 2. natural to employment
    • 3. motivated by a desire to serve Principal
  8. Liability of Principal for Contracts Entered by Agents
    P is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract (types of authority follow)
  9. Four types of Authority
    • actual express
    • actual implied
    • apparent
    • ratification
  10. Actual Express Authority
    • can be oral and private, but it is narrowly construed
    • Exception:
    • if the underlying K itself must be in writing then the express authority must be in writing as well (eg, land contracts)
    • Revocation: 1) unilateral act of either P or A, or 2) death or capcity of P
    • Exception to revocation: authority will not be revoked if P gives A a durable power of attorney (written expression of authority to enter transaction w/ conspicuous survival language)
  11. Actual Implied Authority
    • authority P gives the A through conduct or circumstance
    • 1. Necessity: all tasks necessary to accomplish an expressly authorized task
    • 2. Custom: all tasks customarily performed by persons w/ agent's title or position
    • 3. Prior dealings b/t P and A: all tasks A believes to be authorized to do from prior acquiescence by P
  12. Apparent Authority
    • Two part test:
    • 1. P "cloaked" A w/ the appearance of authority and
    • 2. 3d party reasonably relies on appearance of authority
  13. Ratification
    • Authority can be granted after the K has been entered, if
    • 1. P has knowledge of all material facts regarding K, and
    • 2. P accepts its benefits.
    • Exception: Ratification cannot alter the terms of the K.
  14. Rules of Liability on the K
    • P is liable on its authorized Ks, and therefore as a rule an authorized agent is not liable on its authorized Ks.
    • Exception: Undisclosed principal - If P is partially disclosed (only the identify of P concealed) or undisclosed (fact of P concealed), authorized agent may nonetheless be liable at the election of the 3d party.
    • 1. Duty of care
    • 2. Duty to obey instructions that are reasonable
    • 3. Duty of loyalty. Agent may not do following: a) self-dealing (can't receive a benefit to the detriment of P) b) Usurping the P's opportunity, or c) secret profits (making profit at P's expense w/out disclosure)
  17. General Partnership Formation
    • Formalities: No formalities to becoming a general partnership.
    • Definition: A GP is an association of 2 or more persons who are carrying on as co-owners of a business for profit.
    • Sharing of Profits: the contribution of money or services in return for a share of profits creates a presumption that a GP exists (not comissions, salary, fixed rate of interest...)
  18. Liabilities of General Partners to 3d Parties
    • Agency principles apply: partners are agents of the partnership for apparently carrying on usual partnership business; Therefore, GP is liable for each partner's torts in scope of partnership and authorized contracts
    • Each GP is personally liable for all debts of the partnership and each co-partners torts (unique!)
    • Incoming partner has no liability for prior debts but any $ paid in to partnership can be used to satisfy prior debts.
    • Dissociating partner retains liability on future debts until actual notice of dissocation is given to creditors or until 90 days after filing a notice of dissociation w/ CW
    • Liability by Estoppel: represent yourself as a partner to 3d parties then GP liable as if a GP exists
  19. Rights and Liabilities Between General Partners
    • GPs are fiduciaries of each other and the partnership. GPs owe to each other an the partnership the duty of loyalty (no self-dealing, usurping opps, secret profits). Then, the remedy is action for accounting, which is partnerhsip may recover losses caused by breach and may disgorge profits made by partner.
    • Rights in Partnership property and liquidity
    • 1. specific partnership assets: land, leases, or equipment owned only by the partnership therefore may not be transferred by any individual partner w/out partnership authority
    • 2. share of profits and surplus: personal property owned as such by individual partners and therefore may be transferred to 3d parties
    • 3. share in management: asset owned only by partnership itself and therefore may not be transferred by individual partners
    • 4. test: if personal $ used to buy property, then personal property; if partnership $ used to buy property, then partnership property
  20. Rights & Liabilities for GPs
    Absent an agreement, each partner entitled to equal control (vote) (one partner, one vote)
  21. Rights & Liabilities for GPs
    • Absent an agreement, partners get no salary
    • Exception: compensation for winding up partnership's business
  22. Rights & Liabilities for GPs
    Partner's Share of Profits and Losses
    • Absent an agreement, profits shared equally
    • Absent an agreement, losses shared like profits
    • If agreement on losses, and silent on profits, profits shared equally.
  23. General Partnership Dissolution
    • a process, not a moment in time
    • dissolution: in the absence of an agreement setting forth events of dissolution, a general partnership dissolves upon notice of the express will of any single general partner to dissociate
    • end of partnership is called termination
    • winding up is the period b/t dissolution and termination in which the remaining partners liquidate the partnership's assets to satisfy partnership creditors
    • Partnership's liability: 1) old business - individual general partners liable for all transactions entered into to wind up old business w/ exiting creditors 2) new business - individual general partners liable until actual notice of dissolution is given to creditorsor until 90 days after filing "statement of dissolution" w/ CW
    • Priority of Distribution
    • 1. All creditors must be paid (outside trade creditors and all partners who have loaned $ to partnership)
    • 2. All capital contributions by partners must be paid
    • 3. Profits and surplus, if any, shared equally w/out agreement
    • Rule: Each partner must be repaid his or her loans and capital contributions, plus that partner's share of the profits or minus that partner's share of the losses.
  25. Limited Partnerships
    • a partnership with at least one general partner and at least one limited partner
    • formation by filing a limited partnership certificate including names of all general partners (failure to file is a general partnership)
    • Liability and Control:
    • 1. General Partners - liable for all limited parnership debts - right to control the business
    • 2. Limited Partners - have limited liability and therefore are not liable for debts of limited partnerships - in VA, limited partners may not manage the business w/out forfeiting limited liability status
  26. Registered Limited Liability Partnership (RLLP)
    • Formation: register w/ CW by filing a "statement of qualification" plus annual reports
    • Liabilities: no partner is liable for the debts of the partnership; can still sue partner for own wrongdoing