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AGENCY, 3rd Party v. Principal:, 3rd Party v. Principal:
Agent acting…
AGENCY
Contracts
3rd Party v. Agent:
- Disclosed v. undisclosed P:
- Fully disclosed P - Agent is not liable in contract
- Undisclosed P - Agent is personally liable in contract
- Partially disclosed P - Agent is personally liable in contract
- when the 3rd party learns the identity of the P, the 3rd party must elect to go after either the agent or P, but not both
- Breach of warranty of authority - Agent acts beyond her authority on behalf of a P. Agent is personally liable
Agent v. Principal:
Contractual duties owed to agents.
- Compensate - per the agency contract
- Indemnify - for reasonably incurred legal liabilities
- Reimburse - for reasonably incurred expenses
- Cooperate:
- P may not interfere with the agent's performance
- P must affirmatively aid where reasonably required to do so
- Types of authority:
- Actual - manifestation of the P to the agent that the agent acts for the benefit of the P in a particular way and that the P agrees to be bound by the agent's actions
- Express - P directly requests the agent to act
- Implied:
- Authority to accomplish the P's express request; or
- Things the agent believes the P wishes him to do based on his reasonable understanding of the P's expressed request
- Apparent - Agent has authority
- 3rd party reasonably believes the agent has authority to act on behalf of the P, and
- Belief is based on the P's representations made to the 3rd party
- Ratification - P grants retroactive authority for his agent's earlier unauthorized actions
Principal v. Agent:
Contract liability based on the terms of their contract.
- would be highly unusual to be a test area as examiners would have to give you the contract terms
Partnership
Winding Up/Termination:
- Partnership property:
- originally brought in - part of capital of partnership
- may contrarily contend in agreement
- Subsequently acquired
- Purchased with partnership funds
- Partner's individual property:
- Intent evidenced that any property originally brought in was not to be partnership property
- Partners have a contrary intention from the applicable law
Once that is decided:
Assets sold in order:
- cost of the sale
- inside creditors
- capital contributions
- profits
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- General partnership - an association of two or more persons to carry on as co-owners a business for profit
- No writing required
- No statutory formalities required
- Types:
- for a specific undertaking
- for a term
- at will
- Key test - intent of the parties, no matter what is called
- Sharing of profits is prima facie evidence of a partnership
- Limited partnership:
- Types of partners:
- general partners - manage the business and are personally liable without limitation for partnership obligations
- limited partners - contribute capital and share in profits, but take no part in the control or management of the business, and whose liability is limited to their contributions
Formation:
- filing a certificate of limited partnership with the Secretary of State
- must have at least on general partner and at least one limited partner
Dissociation/Dissolution:
refers to a partner's separation from the partnership including death, withdrawal, bankruptcy, or expulsion
Working Life:
- Partners' powers:
- Every partner is an agent of the partnership of the purpose of its business
- Authority:
- Express
- Apparent - based on the nature and course of business
- Restrictions - 3rd party must know about restrictions and authority or the partnership will be bound
- Partner who acted without authority may be liable for breach of the partnership agreement
- Remuneration - Partners are not entitled unless specified in the partnership agreement
- Liability:
- all partners are jointly and severally liable
- each partner is individually liable for the entire amount of the partnership obligation
- partner is entitled to indemnification by the partnership for any payments he makes on the partnership's behalf
- partner may seek contribution from other partners
- retiring partner remains liable
- incoming partner is not personally liable
Torts
3rd Party v. Agent:
- Individuals are always liable for their own torts
Agent v. Principal:
- Individuals are always liable for their own torts
- Agent is employee:
- Respondeat superior: vicarious liability --> principal for torts of his agent -- in scope of employment
- Agent performs tasks assigned by the Er or engages in a course of conduct subject to Er's control
- Serves Er's purposes
- Er not liable if Ee substantially deviates from the authorized route
- Ee can return to the scope of the employment after
- Er is still liable for slight deviations (detour)
- Er's liability is in addition to the agent's liability
- Er's and Ee are jointly and severally liable
- Strict liability doctrine, so no defenses
Agent is independent contractor:
- General rule: No liability
- Exceptions:
- Inherently dangerous activities
- Nondelegable duty
- Loaned agent
- Negligent selection of contractor
Principal v. Agent:
- Agents are liable for breach of their duties to the principal (COLA):
- Duty of Care
- Duty of Obedience
- Duty of Loyalty:
- no self-dealing
- may not usurp a business opportunity belonging to the principal
- duty not to compete
- no dual agency
- Duty to Account
Corporations
Formation:
- Commencement - Corporate entity begins at the filing of the Articles of Incorp. with the Sec. of State's office
- Promoter liability
- Defective Incorporation
- De jure corporation
- De facto corporation
- Corporation by Estoppel
- Limited liability Companies (LLC)
- Shareholders
Federal Securities Law:
- Section 10(b) action of the SEA of 1934 applies to all corps.
- Available cause of action:
- against those who made misrepresentations in connection with the purchase of securities
- Section 16(b) action - recovery of short-swing profits
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Fundamental Corporate Change:
- Notice to directors to hold meeting
- Board enters resolution to hold a special meeting of shareholders
- Notice of special meeting is sent to shareholders. This notice has specific requirements:
- written
- state place, date, hour, purpose of meeting
- no less than 10 and no more than 60 days prior to the meeting
- notice can be waived
- Approval by a majority of all shares entitled to vote and by majority of each voting group adversely affected by the change
- Possibility of dissenting shareholder's right of appraisal
- File notice with state
Issuance of Stock
- Any unissued stock may be issued by the vote of the shareholders or by the vote of the directors
- Judgment of BODs is conclusive as the value of consideration received for shares
- Shareholder's preemptive rights:
- not automatic
- must be in AOI
- Dividends
- Voting
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3rd Party v. Principal:
- Agent acting within scope of his authority may bind his principal in contract
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Two questions:
- Who is suing whom?
- Torts or Contract?
Step 1:
Three types of people:
- Agent
- Principal
- Third Party
Step 2:
Torts or ContractTorts:
- Agent Authority:
- actual
- apparent
- ratification
Contract
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