agency and partnership notecards_1.txt

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agency and partnership notecards_1.txt
2013-06-23 21:17:12
agency partnership notecards

agency and partnership notecards_1
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  1. P will become liable to 3P based on the actions of A if
    (1) both a & p consent; & (2) A is subject to P's control
  2. Capacity & agency
    P must have contractual capacity. an agent need only have minimal capacity
  3. writings & agency law
    nothing required by agency law, but SOF may require it
  4. consideration & agency law
    no consideration is rquired to become an agent
  5. actual authority can be created either by
    express or implied agreement
  6. if an agent repeatedly does something w/o permission, but the actions of the P imply permission
    then the P will be bound
  7. actual authority can be terminated 6 ways
    (1) after a specified time/event OR a rznable time. (2) By change of circumstances (for example, if the subject matter of the agency relationship is destroyed). (3) if agent acquires an adverse interest. (4) when AGENT says so (as agency is consensual). (5) When principal says so (unless the agency is irrevocableb/c it is "coupled w/ an interest"). (6) By death/incapacity/bankruptcy unless coupled w/ an interest
  8. delegation
    this is all right if expressly/impliedly consented to by P
  9. irrevocable agency
    not based on words or agreement alone--an interest or consideration is required
  10. apparent authority situation
    where P has led 3P to incorrectly believe that A has authority to act on P's behalf. must be created by P (not A acting alone). apparent authority can linger after actual authority ends.
  11. how to destroy apparent authority
    tell 3P that A has no authority
  12. what is ratification?
    even if A had no authority, the P can ratify (1) expressly, (2) by accepting the benefits of the k, (2) suing under the k
  13. requirements for ratification by P
    P must know all material facts. The acceptance is ALL OR NOTHING--have to accept the entire k. CAPACITY (most important): P must have capacity BOTH at ratification AND at time of original k b/c ratification is RETROACTIVE
  14. intervening rights & ratification
    P can't cutt off intervening rights of a BFP by ratifying an unauthorized commitment made by A
  15. different b/w adoption & ratification
    adoption is not retroactive to the time of the agreement; ratification is
  16. adoption & capacity
    b/c adoption is not retroactive, the P did not need to have capacity at the time the initial K was made--can simply adopt it once gaining capacity
  17. adoption & liability for A
    doesn't relieve A of liability, merely makes P liable as well
  18. fid obligations for A
    duties of loyalty (P's interests above own), care (sliding scale), obedience
  19. obligations for P
    pay, reimburse, indemnify
  20. constructive trust
    equitable remedy to protect P when A acquires by breach of trust
  21. a P will be liable to 3P if
    actual authority or substitute
  22. 3P will be liable to principal unless
  23. liability of 3P to A
    generally no liability
  24. test for liability in tort
    was the tort commited by a SERVANT who was acting within the SCSOPE OF HIS EMPLOYMENT? if so, both parties will be JOINTLY & SEVERALLY LIABLE. POLICY: protect innocent 3P
  25. servant vs IC?
    did ER have right to control have EE did job? who supplied tools/workplace? part of ER's regular business? long-term? skill required? salaried?
  26. detour
    this is a minor deviation that is usually WITHIN the scope (thus master will be liable)
  27. frolic
    this is a substantial deviation that is usually OUTSIDE the scope (thus master will NOT be liable)
  28. intentional torts & respondeat superior
    intentional tort by S is outside the scope unless force is used to further M's business; if M ratifies the use of force; or if M had authorized S to commit the tort
  29. borrowed servant doctrine
    the borrower master will be liable if he had the right to control the servant when the accident occurred
  30. OVERVIEW of agency K: liability of P to 3P on K entered by A
    (1) did A have actual/apparent authority at the time of the K OR did P ratify/adopt the K? (2) if YES to ANY of those, P is liable on K (A is not)
  31. OVERVIEW of agency tort: is ER liable for tort committed by EE?
    (1) was the tort commited by a SERVANT acting in the SCOPE of his employment? (2) if YES, the master & servant will be JOINTLY & SEVERALLY LIABLE to 3P
  32. DEFINE: general partnership
    association of 2+ persons as co-owners carrying on a business for profit. INTENTION to form a parternship or lack thereof is NOT relevant to the issue of whether a partnership exists.
  33. factors for determining who is a partner in a general partnership
    (1) CAPITAL (cap contribution not required for partner status. (2) CONTROL (the RIGHT to control might be enough even if it is NEVER exercised). (3) SHARING OF PROFITS (this is just a FACTOR, however, it is not determinative & there is no presumption of partnership).
  34. receiving profits from a partnership for WAGES, RENT, REPAYMENT OF DEBT, OR INTEREST ON A LOAN. GROSS receipts instead of PROFIT.
    these are not a factor for determining whether an individual is a partner
  35. joint venture
    this is like a partnership but there must be an EXPRESS AGREEMENT re: how the LOSSES will be shared
  36. estoppel & partnership
    parties may be liable as if partners to protect REASONABLE RELIANCE by 3P. functions like apparent authority. can recover against the person holding out as well as the person on whose behalf the A is acting. whether other 3P relied will be determined on a case by case basis
  37. rules to determine partnership property
    (1) the property is parternship property if it is acquired in the partnership's name OR in a partner's name where it's apparent from the document that he's acting for the parternship (for example, stating he is a partner). (2) there is a rebuttable presumption that it is partnership property if partnership funds are used. (3) there is a rebuttable presumption that is is a PARTNER'S property it is acquired in the partner's name W/O partnership funds & there isn't any indication that he's acting on behalf of the partnership.
  38. PARTNERSHIP'S rights in partnership property
    rights are totally unrestricted as the partnership owns the property
  39. PARTNER'S rights in partnership property
    partner has extremely limited rights--can only use for partnership purposes. this is a nontransferable right
  40. partner's economic interest in partnership
    i.e., a partner's share of the profits. this IS a transferable right.
  41. how is profit split where capital contributions are not equal?
    profit is split equally UOA--NOT in proportion to capital contribution
  42. how are losses shared UOA?
    the same as profits. Thus, UOA, they will be shared equally by the partners.
  43. limiting liability to a 3P via partnership agreement
    partners cannot limit limiability to a 3P w/o 3P consent. agreement CAN have affect amongst the partners, but only amongst the partners
  44. does running the day-to-day operations of the partnership entitle one to compensation?
  45. conflicting rules regarding management rights
    UOA, partners have equal management rights. BUT UOA, matters of ordinary business are decided by a majority in interest. simply note the conflicting rules where relevant.
  46. if a partner pays on partnership debt, what are their rights against the partnership?
    he will get paid back w/ interest
  47. partnership duties
    owe duties of care, loyalty, & good faith. partners can't eliminate these duties, but can set standards so long as they are not manifestly unrznable. Partners must provide full information re: the partnership on request.
  48. what happens if a partner objects to te admission of a new partner?
    he will not be admitted. UOA, new partners require unanimous consent from existing partners.
  49. is a new partner liable for the past liabilities of the partnership incurred before his partnership status?
    yes, but not to the same extent. a new partner can lose their economic interest int he partnership, but nothing beyond that--unlike old partners, the new partner will not be personally liable.
  50. how do agency-principal relationship apply to partnerships?
    the partnership is the principal; the partner is the agent.
  51. actual authority & partnership
    actual authority si created by a partnership agreement, a majority vote of partners, or statutorily
  52. apparent authority & partnership
    look to the partner's title & prior conduct/dealings
  53. real property convey w/o authority
    partnership can get the property back from initial transferee (as they were at least partially at fault), but from a subsequent BFP
  54. general partnership & torts
    partners are liable for torts committed within the ordinary course of business
  55. general partnership: partner's liability for partnership obligations
    partners are JOINTLY & SEVERALLY LIABLE. HOWEVER, must first exhaust PARTNERSHIP resources in satisfying liability. Thus, this makes the partners basically guarantors. Balancing interests
  56. partner's liability for partnership obligations: EXCEPTION for Limited Liability Partnerships
    no k liability. also, no tort liability for torts committed by OTHERS UNLESS directly involved, supervising tortfeasor, or aware of the tort & did nothing to stop the action
  57. how do you form an LLP?
    (1) FILE a certificate w/ the sec. of state & pay annual fee; (2) NAME must include LLP; (3) BUY at least 100k in liability insurance or segregate that amount of money
  58. what will qualify as withdrawal from the partnership
    express will; occurrence of an agreed upon event; partner's expulsion, death, bankruptcy, or incapacity; appointment of a trustee, receiver, or liquidator for a partner; or redemption of a transferee's interest
  59. effect of withdrawal of a partner from the partnership
    this is not a problem--just buy out the partner & continue
  60. the liability of a withdrawing partner
    liable to existing creditors (unless released expressly/impliedly); to subsequent creditors IF they were unaware of the withdrawal (thus should protect self by providing notice). should also look for liability to other partners for breach of k
  61. when would winding up a partnership be required
    business becomes illegal; all assets sold outside usual course; judicial order; term/goal met; unanimous consent (unless partnership at will, in which majority-in interest will suffice)
  62. apparent authority after winding up required
    a partnership can still become bound to an innocent 3P on NEW business despite an event requiring winding up of the partnership. can pre-empt this posssibility by notifying any potential creditors
  63. distribution of assets upon winding up of partnership
    1. creditors 2. partners (this is contribution + share of profits - share of losses)
  64. what if partnership assets are insufficient to cover liabilities upon dissolution of the parntership
    the creditors will get the assets pro rata based upon what the proportionality of debt owed to them
  65. partnership creditors have priority over ____ on partnership property
    partner's creditors
  66. partnership creditors have _______ w/r/t a claim on a partner's separate property
    equal claims
  67. DEFINE: limited partnership (LP)
    partners w/ at least one GENERAL partner & at least 1 LIMITED partner
  68. what is the benefit of being a limited partner?
    THE GENERAL RULE: a limited partner can only lose the amount of their capital contribution. HOWEVER there is an EXCEPTION to this general rule where the partner takes part in control.
  69. formalities of becoming an LP
    file a cert. of formation w/ the sec. of state & pay fee; must have a WRITTEN limited partnership agreement. must have LP or limited in the name. The general law of LPs is the same except where LP statute contradicts general partnership law.
  70. LP: RELIANCE TEST & liability for participating in control
    a limited partner will be liable beyond contribution (like a general partner) if it causes a creditor to mistakenly believe they are a GP. This is determined on a case by case basis, looking to whether there was reliance, just as w/ apparent authority.
  71. rights & obligations of a limited partner in an LP
    1. promise to contribute must be in signed writing or it is unenforceable. 2. a partner may withdraw only if agreement permits. thus it is easy to get into an LP & hard to get out.
  72. General partners in an LP
    they are jointly & severally liable
  73. EXCEPTION created to the LP rule that general partners are jointly & severally liable
    The exception is an LLLP (Limited liability/limited partnership). this will shield a general partner from personal liability. The formula: LP [shields limited partners] + LLP [shields general partners] = LLLP. Thus, an LLLP is ALWAYS superior to an LP & we will only see an LP as a bar question
  74. Characteristics of an LLC
    Limited liability company. must file/pay sec. of state. must including LLC or LC in name. to be a PLLC must be licensed. PROFITS & LOSSES are split in PROPORTION to capital CONTRIBUTIONS, UOA
  75. management of an LLC
    managers run an LLC unless otherwise provided by certificate. Can partition liabilities/assets among separate independent sesries via a SERIES LLC.
  76. vicarious liability & LLCs
  77. what are the best type of organizations? That is, what should you reccommend if someone comes to for advice
    LLP & LLC are the best options. This is b/c all owners are shielded from vicarious liabilty (this is not the case w/ a GP or LP). There is flexible management (all owners can exercise control, unlike w/ a LP which will impose liability upon control by a limited partner). There is less tax to pay b/c income is passed through to the owners, unlike a corporation which is subject to DOUBLE TAXATION (corp. pays, shareholder pays). If you are in the wrong form, you can solve this by CONVERSION OR MERGER. Change the status of the entity via approval & filing appropriate documents.