Agency and Partnerships Flashcards

Flashcards on Agency and Partnership Law

Agency Relationship

A principal-agent relationship is created when the agent is given authority to act on behalf of the principal.

Principal Liability for Agent Acts

The principal is NOT liable for acts outside the scope of agency, but LIABLE for agent acts if acting within the agency.

Scope of Agency

It is determined by the totality of circumstances, not just the agency agreement (who, what, where, when, and why).

Intentional Torts Exception

If the agent commits the tort while doing a fundamental function of the job, the principal is liable.

Agent vs. Independent Contractor Test

The amount of control the principal has over third-party work; the more control the more likely to be an agent.

Exceptions to Principal Liability Bar for IC Work

Ultrahazardous/inherently dangerous activities, incompetent ICs, and non-delegable duties.

Determining Authority to Bind the Principal

Considers similar factors to agency/employee/IC status, but is a separate analysis.

Actual Authority - Express

Based on the principal's perspective - what did the principal do?

Actual Authority - Implied

Based on the agent's perspective – did the agent reasonably believe based on what the principal had done that the agent was authorized?

Apparent Authority

Based on the Third Party Perspective, did the 3d party REASONABLY BELIEVE based on the principal’s conduct, that the alleged agent was authorized or acting for the principal?

Inherent Authority

Expected authority so commonly known and assumed in community that it should be upheld.

Ratification of Authority

Affirmative acceptance of transaction or acceptance of benefits with failure to repudiate.

Estoppel

Reasonable reliance on authority and injustice if not upheld.

Revised Uniform Partnership Act (RUPA)

A gap filler statute for partnerships; the agreement is enforced unless it violates public policy.

General Partnership (GP)

Default entity for any group of two or more who go into business together.

Jointly and Severally Liable

Each party is jointly responsible and can be sued individually.

Fiduciary Duties - Loyalty

Honesty, disclosure, and non-compete.

Fiduciary Duties - Care

Competence.

Partnership Indemnity

The partnership promises to cover or reimburse a partner for costs, losses, or liabilities.

Partnership AT WILL

Continues until one leaves – disassociates.

Partnership FOR A TERM

Set by agreed time period or specific project completion.

Disassociation

When a partner withdraws or is removed from the partnership — but it does not necessarily mean the partnership itself ends.

Rightful Disassociation

You are entitled to immediate buy-out.

Wrongful Disassociation

Reduced by any damages you caused by wrongfully disassociating.

Wind-up

Wind-up: Ending operations of a business by settling debts and liquidating assets – occurs before dissolution.

Dissolution

When a partnership dissolves it does not cease to exist immediately, it continues to exist until it is fully wound-up and terminated.

Mandatory Dissolution

Mandatory in a partnership at will if a partner leaves rightfully.

General Partners in Limited Partnerships

They owe fiduciary duties. They are fully personally liable jointly and severally for all partnership debts.

Limited Partners in Limited Partnerships

They do not owe fiduciary duties. They are not liable for the debts. The most they can lose is what they invested.

Limited Liability Partnerships

Gives the partners a liability shield for third party claims.

Limited Liability Limited Partnership

A limited partnership that now has additional third-party liability shield for the general partners in that limited partnership.