Business Structures, Fiduciary Duties, Agency, and Negligent Misstatement

Flashcards on Business Structures, Fiduciary Duties, Agency, and Negligent Misstatement based on lecture notes.

Sole Proprietorship

A business structure where one person owns and runs the business.

Partnership

A business structure involving two or more persons carrying on a business with a view to profit.

Company

A business structure registered under the Companies Act 1993, with shareholders, directors, and limited liability.

Trading Trust

A business structure created by a trust deed, involving a settlor, trustees, and beneficiaries.

Franchise

A business arrangement operating under a franchise agreement, with a franchisor and franchisee.

Joint Venture (Unincorporated)

An unincorporated business arrangement where parties contribute resources and share risks temporarily.

Fiduciary Duty

A duty to act in good faith and in the best interests of another person, based on a relationship of trust and confidence.

Who is a Fiduciary?

Someone who agrees to act on behalf of another where the circumstances give rise to a relationship of trust and confidence

Agent

A person who is authorized to act on behalf of another (the principal).

Agency

The fiduciary relationship which exists between two persons (between the principal and agent).

Actual Authority (Express)

Authority clearly stated by the principal to the agent.

Actual Authority (Implied)

Authority arising from job role or usual tasks.

Apparent (Ostensible) Authority

Agent does not have authority but principal allows third party to reasonably believe the agent has authority.

Negligent Misstatement

When someone gives advice or information without due care and attention, causing financial loss.

Actual Reliance on Careless Statement

There must be actual reliance on the statement by the person making the claim.

Contributory Negligence

The claimant is partly to blame for the loss they suffered