keywords:
Bookmark and Share



Front Back
Elements regarding Principal/Agency liability
  • Assent
  • Benefit
  • Control
  • Within Scope of Agent's Duties
Note: Intentional torts are no generally inside the scope, unless naturally part of the work or Agent is doing it with the intent to benefit the Principal
Principal's Liability for Agent's Contracts when:
Agent is authorized to enter into such contracts

  • Express Authority: Can be oral (except related to land) and is revocable.
  • Actual Implied Authority: Established through necessity, custom or prior dealings
  • Apparent Authority: Principal cloaks & 3rd party relies.
  • Lingering Authority: After agency power terminated, P may still be liable for K's made by agent if P did not put those parties on notice
A Principal can ratify an Agent's K through:
  • Knowledge of the contract, and
  • Acceptance of its benefits
  • In NY, ratification cannot alter the terms of the contract
When can express authority be revoked
  • Revocable when either party indicates through action or words, or by death of the Principal
  • Cannot revoke if durable power of attorney is given in writing
When is an Agent liable for persoally for a K made
When there is an undisclosed principal
Duties Agent owes his Principal
  • Duty of Care
  • Obey Reasonable Instructions
  • Duty of Loyalty (Disgorge profits if breach)
Formation requirements for general partnerships
  • No formalities are required
  • Need an association b/w two or more persons carrying on as co-owerns of business's profits
General Partner's liability to third parties in regards to pre-existing debts
Incoming partners are not liable for prior debts, but their contributions can be used to pay those debts
An outgoing General Partner's Liability to third parties
Retains liability on future debts until they die, unless notice of their withdrawal has been given to all known and even potential creditors
Liability by Estoppel
If one represents himself as a general partner, he will be liable as if a general partner
Definition of a Limited Partnership and each member's liabilities
Defined: At least one General Partner and one Limited Partner

General Partners: Liable for limited partners liability

Limited Partners: Not liable for partnership's obligation, but are for their own contributions
Formation requirements for a Limited Partnership
There must be a formal filing with the state where the names of all general partners are disclosed
Registered Limited Liability Partnerships (formalities and liabilities)
Formal filing indicating profession

No partner is liable for its debts and obligations
Limited Liability Corporation: Formation
File articles of organization and must publish a summary of them once a week for six weeks in a row in two newspapers
Limited Liability Corporation: Liabilities
Members who are owners are not liable for debts and obligations of the LLC itself
Limited Liability Corporation: Partnership Characteristics
  • Member control, but may delegate to managers
  • Limited Liquidity
  • Limited Life
Duty between Partners
Partner is a fiduciairy

Duty of Loyalty (Remedy: Accounting and Disgorging)
Partnership Rights in Partnership Property
  • Specific Partnership Assets: Land, leases, equipment owned by partnership; cannot transfer to 3rd parties w/out partnership authority
  • Profits and surplus are partner’s personal property of the partner and may be transferred to a 3rd party
  • Share in management is not transferable
  • Conflict b/w specific partnership assets and personal property: Look to the money
Partner's right to management
Absent an agreement, each partner is entitled to EQUAL control
Partner's right to salary
Absent an agreement, partners get no salary
Partners Share of profits and losses
  • Absent an agreement, Profits shared equally
  • Absent an agreement, losses shared like profits
Rights of partner to the partnership
  • General rule is that a partner may not sue the partnership, can only sue for accounting
  • EXCEPTION: Disputes over one fully completed, but unadjusted transaction.  No complex accounting is necessary to adjust the rights of the parties.
Causes for Dissolution of a Partnership
Any material change in the partnership consisting of the withdrawal or death of any general partner - > automatic dissolution
Stages of Dissolution
Dissolution
Winding up
Termination
Winding up involves
Assets are liquidated to satisfy any creditors
Partnership's Liability during the winding up period
  • Old business: Partnership and therefore its general partners retain liability to wind up old business
  • New business: The partnership and therefore its partners still retain liability for new business until notice of dissolution is given to all existing and potential creditors
Priority of distribution
Outside creditors, then inside creditors, then partners capital contributions, then Profits minus Losses
x of y cards