Business Law

Agency

Definition of agency

Torts

Contracts

3rd party v. principal

3rd party v. agent

agent v. principal

principal v. agent

agent v. principal

3rd party v. agent

3rd party v. principal

principal v. agent

only three possible people: agent, principal, third party. identify those first to narrow the question.

agency relationship: person (principal) assents to another person (agent) to act on principals behalf, and agent assents to acting on principal's behalf

distinction between independent contractor and employee is only relevant for torts

employee: employer has authority to control details of employee's conduct regarding both result and means to achieving result

independent contractor: employer may not control details of performance.

when distinguishing, think: distinct occupation or business? is this type of work typically done under a principal's supervision? skill required for agent's occupation? who supplies tools & place of performance? Length of time agent engaged by principal? paid by job or hour? intent of parties? is principal in business?

respondeat superior: principal may be vicariously liable for actions an agent performs in the scope of his/her employment.

Scope: employer not responsible for substantial deviations from authorized route ("frolic"), but is still responsible for slight deviations (detour)

employer's liability is on top of agent's--employer and employee are jointly and severally liable

strict liability = no defenses except for inherently dangerous activities, work performed carries high risk of injury to others unless precautions taken

agents liable to principal for breach of duties

COLA: duties of care, obedience, loyalty (no self-dealing, may not usurp business opportunity, duty not to compete), and account

individuals responsible for their own conduct

agent acting within the scope of her/his authority may bind principal to a contract

CRAC/IRAC every type of authority even if I figure out right away which one applies!

actual authority = "manifestation of the principal to the agent that the agent acts for the benefit of the principal in a particular way and that the principal agrees to be bond by the agent's actions"

express actual authority = principal directly request the agent to act

implied actual authority = authority to accomplish express request or things agent believes the principal wishes to be done based on agent's reasonable understanding of principal's expressed request

apparent authority = agent is "cloaked" with authority. (third party reasonably believes agent has authority to act on principal's behalf, and that belief is based on the principal's representations made to the third party)

ratification = principal retroactively authorizes agent for actions already taken that were unauthorized when taken, but which the principal could have authorized at the time taken. Once ratified, some effect as if the act had been authorized when originally taken.

disclosed principal = agent not liable

undisclosed principal = agent liable

partially disclosed principal = agent personally liable. when third party learns who the principal is, third party may go after either agent or principal but not both

breach of warranty of authority = agent is personally liable when acting beyond scope of authority on behalf of principal

liability is determined by the terms in the K. not likely to be tested on the bar--bar would have to provide terms of the K

compensate per the k

indemnify for reasonably incurred legal liabilities

reimbuse reasonably incurred expenses

cooperate = principal may not interfere with agent's performance and must affirmatively aid where reasonably required

Partnership

Creation

Working Life

Ending a Partnership

Winding up/Termination

if question says "A&B had a valid partnership," skip creation. If it says "A&B have a business," analyze whether its partnership or corporations (the latter of which will have "Inc" or Articles of Corporation, etc.)

partnership = association of two or more persons to carry on as co-owners of a business for profit

general partnership = an association or two or more persons carrying on as co-owners of business for profit--no writing required, no statutory requirements. can be for a specific undertaking, for a term, or at will.

intent of the parties

profit sharing = prima facie evidence that a partnership exists

limited partnership

general partners: manage business, are personally liable without limitation for partnership obligations

limited partners contribute capital, share in profits, no control re: management of the business. liability limited to contributions made

formed when certificate of limited partnership filed with Secretary of State, must have at least one general partner and one limited partner

every partner is agent of the partnership

partner acting without authority may be liable for breach of parternship agreement

apparent authority based on nature and course of business

third party must know about restrictions--otherwise, partnership will be bound by partner's actions

partners not entitled to remuneration unless specified in partnership agreement

liability varies

all partners jointly and severally liable for entire partnership

each partner individually liable for entire partnership

partner may indemnify partnership for payments made on partnership's behalf

partner may seek reimbursement from other partners if partner paid more than her/his share of liability

retired partner = liable for all obligations that happened before the partner retired

incoming partner not liable for obligations incurred before starting

Dissociation

partnership continues/is still alive = business continues

examples: death, withdrawal from partnership, bankruptcy, expulsion

Dissolution

partner always has the right to dissociate, but may be liable for wrongful dissociation in certain circumstances

first look at whether partner dissociated, then look at whether partnership dissolved

after dissolution: winding up

dissolved partnership must go through winding up before partnership may actually be terminated

wind up process = reducing assets to cash and distributing that cash to entitled parties

property of the partnership = part of capital originally brought in, subsequently acquired property, or property purchased with partnership funds

property of individual partner = evidence that the property was not intended to belong to the partnership

first distribute to cover costs of the sale

second distribute to outside creditors

third distribute to inside creditors

fourth distribute capital contributions

fifth/finally distribute profits

partners must contribute amount needed to cover liabilities. if one partner has to pay extra to make up difference from an unpaid partner, may seek reimbursement from other partners

"advances" from business partner to keep business from folding count as inside creditor loan, not capital contribution

if not enough cash: add loans and capital contributions, subtract cash, then divide losses equally between partners