Please enable JavaScript.

Coggle requires JavaScript to display documents.

Business Associations (Partnerships (Dissolution/ dissociation (When a…

- - - - Respondeat superior: A third party can sue a principal for tort actions of an agent
        
        normally only applies to negligence, not intentional torts
        
        Typically, an employer will not be liable to third-parties for the actions of an independent contractor
        
        The difference between an employee and an independent contractor is the amount of control the employer has over their actions.
      - Aside from third-parties against a principal, a principal can also have a tort action against the agent for the actions of the agent.
        
        Agents owe the duties of care, loyalty, obedience, and account to principals.
        
        If the agent breaches any of these duties, the principal can sue the agent.
    - - An agent can also make a principal liable to third-parties under contract law. If the agent has authority to bind the principal, the principal will have to fulfill the obligation entered into by the agent. This authority can be actual, apparent, or by ratification.
      - Actual, Apparent or by Ratification Defined
        
        Actual means that the principal either gave express or implied permission for the agent to bind.
        
        Apparent means that a third-party would reasonably believe that the agent had authority to bind.
        
        Ratification is when the agent did not have authority to bind, but the principal ratified after and agreed to fulfill the agent’s representation.
      - A third-party normally cannot sue an agent unless there is an undisclosed principal or a breach of warranty of authority.
      - An agent can also sue the principal for breach of contract.
        
        The principal agrees to compensate, indemnify, reimburse, and cooperate with the agent. If they do not do one of these things, they may be liable for breach of contract to the agent.
- - - - For power, every partner is an agent of the partnership. Each can bind the partnership.
      - For pay, partners are not entitled to pay by default.
      - For liability, every partner is personally liable for the obligations of the partnership.
  - - - Costs of the sale of the partnership
      - Payments to outside creditors
      - Payments to inside creditors (creditors who are also part of the partnership—such as an advance one partner gives to the partnership)
      - Capital contributions
      - Remaining profits are split among the partners
- - - - Requirements for forming a de facto corporation
        
        There is a statute under which you could have incorporated properly
        
        You exercised a good faith attempt to comply with the statute
        
        You exercise corporate privileges (you act like a corporation would act and follow corporate formalities.
  - - - Business Judgement Rule: creates a rebuttable presumption that the director or officer did not breach the duty of care. The burden is on the challenger to show otherwise.
      - If the director or officer acts in good faith, with the care that a reasonably prudent person would under the circumstances, and in a manner he or she reasonably believes is in the best interest of the corporation, then they will not be liable if it does not work out.
      - The duty of loyalty for directors and officers prevent them from entering into an arrangement that is a conflict of interest with the corporation.
        
        A director or officer will have a conflict of interest if they are the party to a transaction with the corporation, they have a beneficial interest in the transaction, or they are a director, partner, agent, or employee of the entity with whom the corporation is entering a transaction