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Agency (Torts (Agent is Employee respndeat superior: vicarious…
Agency
Torts
Agent is Employee
respndeat superior: vicarious liability for torts the agent commits in the scope of his employment
serves employer's purpose 4
no frolicking
can return to employment after the frolic
detours are questionable
E and EE joint and severally liable
EE liability in addition to Agent's
Agent is an Independent Contractor
General Rule of no Liability
Inherently dangerous activities
there are exceptions
nondelegable duty
loan agent
negligent selection of contractor
Third Party v. Agent
individuals are always liable for their own torts
Principal v. Agent
Agents are liable for the breach of duty
C
are
O
bedience
L
oyalty
A
ccount
Who is suing whom
tort or contract
Agent? Principal? Third Party?
1) Identify Parties
2) Why are they suing
use
CRAC
format for MEE Q
Contracts
Third Party v. Principal
agent acting within the scope of his authority
Actual Authority
Express
implied
Apparent
cloaked in authority
third party has reasonable belief
based on principal's representation to 3rd party
Ratification
p grants retroactive authority
Third Party v. Agent
Disclosed v. undisclosed
fully disclosed principal- agent not liable in the contract
undisclosed principal- agent fully liable in the contract
Partially disclosed p- agent fully liable
Breach of warranty of authority- contractual duties owed to agents
compensate
Indemnify
reimburse
cooperate
IS there an agency relationship?
IS the servant an employee or an independent contractor?
Elements of an Agency Relationship
principal assents to another person(agent) to act on principal's behalf
Independent Contractor or Employee
Common Law Test
*control
distinct occupation or business
Skill required to preform the job
who supplies the tools and place of performance
length of time
paid by job or hour?
intent of parties
supervision
scheduling
Partnership
Winding up/ termination
Partnership Property
originally bought in- part of capital partnership
subsequently Acquired
Purchased with partnership funds
Partner's Individual Property
intent that it was not shared
contrary intent from the applicable law
Like a Divorce Settlement
Cost of Sale
Outside Creditors
Inside Creditors
Capital Contributions
Profits
Issues to Look For
did someone ask for a lot of advances?
Is there enough money to dissolve
Working Life
Partner's Powers
Every partner is an agent of the partnership got the purpose of the business
Authority
Express
Apparent
Restrictions- third party must know
Partner who acted without authority may be liable for breach of partnership agreement
Renumeration
NOT entitled to it unless it is specified in the partnership agreement
Liability
All P's joint and severally liable for all obligations
each p individually liable for the entire amount of partnership obligation
partner entitled to indemnification for payments made on pship behalf
P may seek contributions from other partners
Retired P still liable for for obligation before retirement
Incoming partner not personally liable for obligations that occurred before they became a P
Creation
Types of Partnerships
General Partnership
No writing required
no statutory formalities
for a specific undertaking
A term
at will
KEY TEST- intent of parties
Sharing profits is prima facie evidence of a partnership
Limited Partnership
General partners- manage business and are personally liable without limitations for partnership obligations
Limited Partners- contribute capital and share in profits but take no part in control or management of business and their liability is limited on contributions
Formation- must file certificate of limited partnership with the secretary of the state
must have at least one general partner and one limited partner
2 or more persons to carry on as co-owners in a business for profit
Dissociation/ dissolution
Dissociation
Death
Bankruptcy
Withdrawal
Expulsion
Does the P have the right to leave?
May still be liable for wrongful dissociation
Dissolved?
THe partnership continues but only for the purposes of winding down
Questions to ask self
is it a partnership?
is it a corporation?
Are there facts about filing articles of incorporation?
Corporations
Formation
Commencement
Articles of Incorporation filed with SOS
Promoter Liability
P- person who causes the corp to be formed, organized and financed
Usually they become shareholders/officers/directors
P are personally liable as corps agent on preincorporation contracts entered into on corps behalf
K can specifically disclaim a P's personal liability
Personal liability continues until novation - corp agrees to discharge P from the contract
Corp not liable for preincorporation K unless it assumes liability in its articles of incorporation
Can be express or implied
Defective Corporation
De jure Corporation- organized in compliance with statute but failed to comply with statutory provision
De Facto Corporation- statutory compliance is insufficient for de jure status
good faith/ attempt to comply
Corporate principals in good faith acted as if they were a corporation
Corporation by Estoppel
creditor is estopped from alleging that the corporation is defective if they have always dealt with them as if they were a corporation
d cannot claim they were not a corp if they held themselves out as one
Limited Liability Corporation
if properly organized for limited liability purposes
federal income tax treatment w/ attributes of a partnership
formed through filing articles of organization with SOS
members added with consent of other members
control lies with the members in portion with their equity in the llc at the time their vote is taken
each member has equal rights in management
authority to bind LLC
matters outside the ordinary course of business require consent of all members of the LLC
may appoint more than one manager to operate business
managers owe duty of care and loyalty
presumption of member managed
withdrawal of member- dissolution
disassociation does not mean dissolution
dissolution requires consent of all members
Directors/ Officers/ Shareholders' rights and responsibilities
Shareholders
no personal liability for corps debts
exception- Challenger may pierce the corporate veil
court holds shareholders liable
challenger goes against corporate assets then against shareholders and their assets
Grounds
Alter ego
corporation has no existence of its own
corp form used fraudulently or for improper purpose
injury or unjust loss resulted
Inadequate capitalization- not sufficient alone with corp formalities are observed
failure to comply with corporate formalities
*
Voting Agreements
contracts to ensure shareholders will vote
Often used to ensure election of certain directors
Voting Trusts
involved in the transfer of legal title to a trustee who votes the shares according to the trust terms
Shareholder Derivative Suit
sues on behalf of corporation
must be sh at time of transaction
must make a demand upon corp, unless futile
majority shareholders owe a fiduciary duty
Directors
manage the corporation
protected from liability by business judgement rule
Fiduciaries
Duty of care
Duty of loyalty
Conflict of interests
Officers
same duties as directors
agents of the corporation
hired/ removed by directors
Fundamental corporate change
Definition
: sale of all or substantially all of the corporation's assets
Procedure:
Notice to directors to hold a meeting
board enters a resolution to hold a special meeting of shareholders
notice is sent to shareholders
written
states place, date, hour, and purpose of meeting
no less than ten and no more than sixty days prior to meeting
notice can be waived
approval by majority of all shares entitled to vote and by majority of each group adversely effected by the change
possibility of dissenting shareholder's right of appraisal
objector to action is entitled to appraisal and payment for stock
dissenter must file written objection before the shareholders vote
if agreement cannot be reach regarding the value of the stock then the court decides
File notice with the state
Pay attention to meeting
Identify who is there
go through all the steps of the procedure
Federal Securities Law
Section 10(b) of Federal Securities Law Act
available causes of action against those who made misrepresentations in connection with securities
duty to disclose or abstain from trading until inside information is disclosed
Elements
misrepresentation of material fact
knowledge of d of misrepresentation or reckless disregard for the truth
Scienter
reliance on plaintiff
Damages
Sec 16(b)
Recovery of short swing profits
only applies to publicly traded companies
*Prevent unfair use of information and manipulation of price
profit recoverable
Requires two transactions of stock
Strict liability offense
Damages
Issuance of Stock
any unissued stock may be issued and voted on by shareholders or directors
Judgement of board of directors is conclusive as to the value of consideration received for shares
preemptive rights- right of existing shareholders to acquire unissued shares in the corporation when the corp seeks to issue additional stock
not automatic
must be in Articles of incorporation
Dividends
distribution of cash or property of the corporation
shareholder has no inherent right to be paid a div
board of directors has discretion to decide whether and when to declare a dividend
Voting- each share is entitled to a vote unless the articles of incorporation state otherwise
As always i relied Heavily on the Temm Textbook for these mindmaps