BLAW ch10

Power of the principal to ratify must meet following qualifications:

1) 3rd party can set a reasonable time for ratification 2) agent must have been acting for a specific principal 3) principal must be capable of entering a contract (when it is entered into and ratified) 4) ratification can take place inadvertently

principal-agent relationship may be formed by:

1) by contract 2) gratuitously 3) by estoppel (apparent authority) 4) by ratification 5) by necessity

agency ends when:

1) contract ends 2) principal notifies agent of termination 3) death or loss of legal capacity of principal

limited partners can lose limited liability status if they do what?

1) contribute services 2) take part in management 3) allow their name to be used

advantages of partnership

1) insurance can overcome difficulties 2) unanimous consent protection 3) less costly to form and operate 4)good for small businesses in low risk industry 5) good for start up businesses because can take advantages of losses for tax purposes

dissolution of partnership can occur how?

1) partners agreed in partnership agreement 2)upon notice to the effect from a partner 3) upon death/bankruptcy of one partner

duties of the principal towards the agent:

1) pay reasonable compensation (quantum meruit) 2) reimburse reasonable expenses

duties of agent toward the principal

1) reasonable care 2) follow instructions 3) cannot delegate 4) account for all monies 5)fiduciary duty

duties/liability of an agent to 3rd party:

1) undisclosed principals 2) the unidentified principal 3) breach of warranty of authority 4) negligence, duty of care

how many contracts are involved in a agency

2 contracts. There is no relationship legally between agent and third party (just a go between)

what is an agent relationship created by estoppel

Agent goes beyond actual instructions but still within apparent authority (3rd party believe he has power to do so) than principal is bound by it

agency by necessity (rare today)

Agent might have to sell deteriorating goods to preserve some value for principal without authorization from principal Authority arises on basis of necessity

what happens with underage agents?

An underage agent may not be bound by his agreement with principle, but any contracts he entered into with authority on the principal's behalf will still be binding on that principle

what is an agent relationship created by ratification

If agent makes contract with principal and 3rd party, and goes farther his reasonable apparent authority and beyond instructional authority. Principal is not bound, but can accept it. If he accepts it it's bound and ratification

example of gratuitously principal-agent relationship

If you ask a friend for a favour to get car insurance for you since you are out of town

when a partnership is presumed:

Joint contribution of capital to establish business Intention to share expenses, profits, or losses Joint participation in the management of a business

what are partners liable for?

Unlimited liable for the contracts and torts of the other partners and employees.

what happens when misleading indication of authority comes from agent rather than principal?

When misleading indication of authority comes from agent rather than principal, and the action is unauthorized, the third party will have no claim against principle

corporation

a business organization that is a separate legal entity from its shareholders.

joint venture can be accomplished through

a corporation or a partnership

holding corporation

a corporation that owns shares in other corporations.

limited liability partnership (LLP)

a new form of partnership where only the partner responsible for the loss faces unlimited liability.

limited partnership

a partnership with general and limited partners; limited partners are liable only to the extent of their original investment.

agents act for

a principal in dealings with third parties

undisclosed principal

a principal whose identity is concealed from the third parties with whom the agent is dealing; the rights and obligations of the parties depend on whether the agent makes it clear that she is representing an undisclosed principal rather than operating on his own behalf.

non-profit society

a separate legal entity with different rules for incorporation than corporations.

a partnership involves two or more partners carrying on business together with ______

a view to profits

agent has an obligation to ____

act in the best interests of the principal

If given the conflict of instructions or act in the best interest of the principal what do you choose

after trying to contact the principal if no answer then you must follow instructions over best interest

in the case of undisclosed principal a third party's resource is ....

against agent if existence of principal is not disclosed

power of attorny

an agency agreement in writing and under seal.

agency agreement

an agreement creating an agency relationship between principal and agent.

estoppel

an equitable remedy that stops a party from trying to establish a position or deny something that, if allowed, would create an injustice.

sole proprietorship

an individual carrying on business alone.

apparent authorities of an agent is what?

apparent authority arises from the position of the agent or from the conduct of the principal.

apparent authority

authority as suggested to a third party by the conduct of a principal; may exist even when there is no actual authority.

actual authority

authority given to an agent expressly or by implication.

what else can terminate agents authority?

bankruptcy/death/insanity of the principal OR if principal is a corporation, the dissolution of the corporation also terminates authority

partners are liable for actions of other partners in the course of the business including

being vicariously liable for torts and partners are deemed agents of each other for contracts

if an agent doesn't act in best interest of principal he can be sued for

breach of fiduciary duty

apparent authority is also called

by estoppel

agency relationship is typically terminated how?

by simple notification or as agreed upon in the agency contract

Where the agent acts ambiguously as to whether he is the principal or agent, the third party cannot or can sue either or be sued by either

can

Third party can or cannot sue an agent for unauthorized act

can If agent does not have authority claimed (actual or apparent) that agent may be sued by third party for breach of "warranty of authority"

how can partnerships be created?

can be created by agreement, but often come into existence by inadvertence when people work together in concert in a business activity

Where the agent makes it clear she is acting as agent for an undisclosed principal, the third party cannot or can sue or be sued by the agent

cannot

Where the contract is made under seal the undisclosed principal cannot or can be sued

cannot

agency exists with ______ from the principal

consent

what is the essential requirement of agency

consent

agency by necessity

consent to act as an agent that is implied when there is an urgent reason.

how are partnerships controlled

controlled by partnership legislation and by specific agreement of the partners

what happens upon dissolution of a partnership?

debts are paid and assets distributed according to law

principal is Vicarious liability where the independent agent is ____

deceitful

Apparent authority _______ where the principal is undisclosed

does not apply

to have agency when someone dies or insane you need

enduring power of attorney (regular power of attorney not good enough)

delegation

entrusting someone else to act in one's place; an agent normally cannot turn his responsibilities over to someone else.

where does a fiduciary relationship exist?

exists between agent and principal

____ by the agent is required

full disclosure

Limited partners involve

general and limited partners

what rules apply to agency agreement

general contract rules apply Consensus, consideration, legality, intention to be bound and capacity must be present for an agency agreement to be binding (if not all it is void)

what can happen to an agent who act beyond all authority ?

he can be sued for breach of warranty of authority (by 3rd party)

where is there undisclosed principals

if agent fails to tell 3rd party he is an agent (acting on behalf of principal)

tort liability of an agent

if agent is an employee, principal is vicariously liable for torts of the agent If agent is an independent contractor principal is generally not vicariously liable- except for theft (conversion), misrepresentation

when might the principal be vicariously liable?

if misconduct of agent applies to acts within the agent's actual or apparent authority

the Partnership Act ____ terms unless otherwise agreed

implies

partners must act...

in best interest of the partnership (fiduciary duty)

when can principal escape vicarious liability for the acts of an agent?

in the absence of an employment relationship, principal may escape vicarious liability, except when fraud or negligent misrepresentation is involved

___ and ___ can come together to form joint venture partnerships

individuals and corporations

actual authority of an agent is what?

is defined in the contract and may be expressed or implied

what happens if a principal commits a tort by the use of an agent?

is directly as well as vicariously liable

to create an agency relationship what is the key element

key element of granting authority

_____ can be used to form a joint venture, providing there is at least one ______

limited partners general partner

when is unidentified principal an issue for agents

must tell 3rd party they are an agent but can't say who principal is. If 3rd party does deal on that basis- he is bound by contract as long as he know there is a principal Exception; that when he learns who is the principal if the principal is harmful to him. Can back out because principal is harmful to 3rd party

are all employees agents?

no

what does fiduciary duty consist of

no conflict of interest, full disclosure, confidentiality, best interest of principal

is a relator an employee?

no usually an independent contractor

can an agent's duties be delegated?

normally they cannot be delegated

Limited partners liability

only liable to the extent of the investment made in the business, but must be careful to protect that limited liability status

agent's duties are?

performing terms of contract without negligence, providing an accounting of funds, and fiduciary duty

apparent authority is based on the statements and conduct of the ___

principle not the agent

what test is used to determine existence of apparent authority

reasonable person test

Third party can ___ when identity of undisclosed principal is important

repudiate

what is a individual carrying on business independently without co-owners

sole proprietorship

necessity agent relationship created when...

someone is acting in an emergency situation on the behalf of someone else

express authority

the authority of the agent as actually stated by the principal.

joint venture

the collaboration of several businesses to accomplish a major project.

unlimited liability

the liability of the business owner or partners for all debts incurred by the business to the extent of their personal resources.

full disclosure

the obligation to reveal all details of a transaction.

enduring power of attorney

the power to act as the donor's trustee or representative following the donor's lack of capacity.

if agent is negligence who is he liable to

the principal

authority

the right or power to act or to make a decision.

agency

the service an agent performs on behalf of a principal.

in the case of undisclosed principal who can the third party sue?

third party has a choice to sue the agent or the undisclosed principal to enforce the contract once the existence of the principal is revealed

principal duties are what?

to honour terms of contract and reimburse agent's expenses

what is needed in a partnership to make major changes?

unanimous agreement required to effect major changes, offering partners control over the firm's direction

jointly liable

under joint liability, all parties must be sued together; partners may face joint liability for debts of the firm.

severally liable

under several liabilities, each partner can be sued separately.

can a undisclosed principal ratify contracts?

undisclosed principal cannot ratify contracts

what liability does a sole proprietor have?

unlimited liability for her debts and obligations

is registration required for partnerships

usually, but in BC require registration only when the partnership involves trading, manufacturing and mining. Failure can result in a fine

express agreement can be ____ or ___ conduct is also known as ___

verbal or written estoppel

implied authority

when the authority of the agent as implied from surrounding circumstances, such as the position or title given (by the principal) to the agent.

ratification

when the majority agrees with the terms of a collective bargain; when a principal confirms a contract entered into by his agent.

partnership

when the ownership and responsibilities of a business are shared by two or more people with a view toward profit.

joint venture relates to partnerships because

where partnership is involved normal rules of partnership apply

where is there unidentified principal

where principal wants to remain anonymous.

is a cashier an agent?

yes

can authority exists when the principal has done something to lead a third party to believe the agent has authority, even when it is specifically withheld?

yes (apparent)

can the principal still ratify the agreement even if the agent has exceeded both the actual and apparent authority?

yes principal may ratify the agreement

in a LLP are partners liable for who they supervise?

yes they can still be liable for actions of those they supervise, other torts, contract issues