Académique Documents
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Culture Documents
CHECKLIST
I. AGENCY
a. FORMATION
b. DUTIES OF AGENT
c. DUTIES OF PRINCIPAL
d. REMEDIES
e. CONTRACT LIABILITY
i. Agent's Authority
ii. Liability of Agent/Principal
f. TORT LIABILITY
i. Vicarious Liability
II. PARTNERSHIP
a. FORMATION
b. PARTNERSHIP PROPERTY
c. RIGHTS & DUTIES OF PARTNERS
d. LIABILITY TO THIRD PARTIES
e. DISSOCIATION & DISSOLUTION
f. LPs
g. LLPs
h. LLCs
i. TAXATION
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AGENCY & PARTNERSHIP SHORT OUTLINE/CHECKLIST
I. AGENCY
A. FORMATION
i. Agency is a fiduciary relationship which results from the manifestation of consent by one person
to another that the other shall act on his behalf and subject to his control, and consent by the
other so to act. Each of the following must be met:
1. (1) the principal must have capacity (agent need not have capacity)
2. (2) consent by both parties
3. (3) a writing is NOT required (SoF may still require it), and consideration is NOT required
ii. It can be created by actions of the parties, or by operation of law (estoppel or by statute)
B. DUTIES OF AGENT
i. An agent is a fiduciary of its principal. It owes the following duties:
1. Duty of CARE – owes a duty to carry out agency with reasonable care
2. Duty of LOYALTY – duty of loyalty, which includes (1) account for profits, (2) act solely
for principal’s benefit, (3) not self-deal, (4) not deal adversely to principal, (5) not
compete, (6) not use principal’s property for own benefit.
3. Duty of OBEDIANCE – obey all reasonable directions of principal
C. DUTIES OF PRINCIPAL
i. The principal’s duties are NOT fiduciary. But, a principal still has any express contractual duties,
as well as:
1. Duty to INDEMNIFY – pay agent’s losses/expenses incurred in carrying out principal’s
instructions
2. Duty to COMPENSATE – pay agent for services unless otherwise agreed
3. Duty to COOPERATE – and not interfere with agent’s performance
D. REMEDIES
i. Principal’s Remedies
1. Usual K remedies, tort actions, actions for secret profits, equitable actions for
accounting, withholding compensation for torts/breaches of fiduciary duty.
ii. Agent’s Remedies
1. Usual K remedies, plus right to possessory lien for any money due from the principal,
including compensation owed for services.
E. CONTRACT LIABILITY
i. AGENT’S AUTHORITY:
1. Actual Authority
a. Actual authority is authority that the agent reasonably thinks she possesses
based on the principal’s dealings with her. It is either express or implied.
b. Express Authority
i. Express authority is authority granted by the principal by in words,
whether written or oral.
c. Implied Authority
i. Implied authority exists when the agent reasonably believes she has
authority as a result of the principal's conduct or circumstances, such as
incidental/necessary acts to authority given, custom b/w the parties,
prior dealings, emergency measures – anything inferred from principal’s
words/conduct.
1. Can exist through an agent’s title or position.
d. Termination of Actual Authority
i. Lapse of time, happening of specific event, change in circumstances,
agent’s breach of fiduciary duty, unilateral termination by one of the
parties, death/incapacity of one of the parties
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AGENCY & PARTNERSHIP SHORT OUTLINE/CHECKLIST
2. Apparent Authority
a. Apparent authority exists where the principal's words or conduct would lead a
reasonable person in the third party’s position to believe that the agent has
authority to bind the principal. Can exist through an agent’s title or position.
i. Lingering Apparent Authority – If agent’s actual authority is terminated,
agent will still have apparent authority until the third party receives
notice of the termination.
b. Apparent authority cannot be created by the mere representations of an agent
or other actor (there must be something from the principal…)
3. Ratification
a. Even if the agent lacked authority at the time of entering into the K, the
principal can still be bound by the agent's actions if the principal ratifies the K
b. Ratification can be express or implied. Express ratification is usually and oral or
written affirmation of the K. Implied ratification is when the principal accepts
the benefits of the K and has knowledge of all material facts regarding the
contract.
i. Must accept the ENTIRE transaction, not just a portion
ii. Cannot alter the terms of the contract
iii. Cannot interfere with third-party rights
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AGENCY & PARTNERSHIP SHORT OUTLINE/CHECKLIST
II. PARTNERSHIP
A. FORMATION
i. General Rule: A general partnership is formed when two or more persons associate to carry on,
as co-owners, a business for profit for any lawful purpose. There are no formalities or
agreement required to form the GP, the parties’ intent is implied through their conduct.
1. A GP is a separate legal entity.
2. All partners must have capacity & all partners must consent to any new partners joining
iii. Writing - Partnership law does not require a writing, but the SoF may
iv. Partnership by Estoppel: If no partnership is formed in fact, parties may still be liable as if they
were partners to protect reasonable reliance by third parties (apparent partnership).
B. TYPE OF PARTNERSHIP
i. At will partnership - Default form of partnership - Partnership has no agreed upon duration
ii. Term Partnership - Agmt to remain partners for a definite term or until completion of a
particular undertaking
C. PARTNERSHIP PROPERTY
i. Determining Partnership Property
1. Partnership Property – partnership property is any property (1) titled in the
partnership’s name or (2) in partner’s name where it is apparent from the transferring
document that the partner is acting for the partnership.
2. Presumed Partnership Property – Property is presumed to be partnership property if
partnership funds are used to obtain the property, regardless of title.
3. Presumed Partner Separate Property – Property is presumed to be a partner’s separate
property if property is in the partner’s name, partnership funds were not used, and
there is no sign the partner is acting for the partnership.
ii. Rights in Partnership Property
1. The partnership's rights to partnership property is completely unrestricted
2. Partners are not co-owners of partnership property and have no interest in it that can
be transferred, although they can use the property for partnership purposes
3. Partner's Ownership Interest in the Partnership itself - Partnership interest is personal
property of the partner, but there are restrictions to its use
a. Partnership interest = management rights and financial rights
i. Mngmt rights cannot be transferred w/o unanimous vote of partners
ii. Financial rights can be unilaterally transferred, but transferor does not
become a partner
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AGENCY & PARTNERSHIP SHORT OUTLINE/CHECKLIST
a. Partners may not limit liability to third parties w/o third parties's consent
3. Although each partner is liable for the entire amount of partnership obligations, a
partner who pays more than his fair share is entitled to reimbursement/contribution
from the other partners.
4. An incoming partner is NOT liable for any obligations of the partnership before
becoming partner.
5. An outgoing partner is still liable for any obligations that the partnership incurred while
he was a partner.
iii. Criminal Liability
1. Partners are NOT liable for crimes of other partners committed in the scope of the
partnership unless that partner participated in the crime.
2. Note - A LP can also file as a LLP, making it a LLLP (limited liability limited partnership)
where both the general partners and the limited partnerships have limited liability
iii. Liability of Partners
1. All of the partners have LIMITED LIABILITY, meaning that the partners are NOT
personally liable for any of the partnership’s obligations. Partners can still lose their
contributions to the partnership though
2. A partner of course remains liable for his own personal acts.
J. TAXATION - Partnerships and LLCs have no entity-level tax and are taxed on a "pass-through" basis
where business profits are reported on owner's individual tax returns, even if not actually distributed
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