Book 1 Business Association Hypos (Agency and Partnerships and LLCs)

. The partnership agreement of a law firm provides a complicated formula for determining each partner's annual profit share. The formula takes into account billable hours, payments actually received on account of work billed, and work brought into the firm. At the end of one year, one partner seeks "a more egalitarian approach" and contends that the partnership [ statute requires partners to share profits equally. Is that partner, correct?

no they have a differing agreement. Sharing equally is the default rule when there is no agreement.

Wainright, LLC has existed for 5 years and since its formation has an oral operating agreement. Gideon is admitted as a new member without expressly agreeing to the operating agreement, and later asserts that a particular provision of the operating agreement is not binding on him. The operating agreement is silent on the issue. From the perspective of the LLC, would Delaware LLC Act or UCCLA 2013 be more favorable statute?

. ULLCA 2013, it provides a person that becomes a member of an LLC is deemed to assent to the operating agreement and does not limit its scope to written operating agreements. The Del provision appears to render toa written operating agreement: "A member or manager of an LLC or an assignee of an LLC interest is bound by the LLC agreement whether or not the member or manager or assignee executes the LLC agreement.

For 10 years Paul has operated PAUL'S, an auto salvage business. The business buys wreck cars from insurance companies or at auction, and then wither rebuilds them or cannibalizes them for parts. PAUL'sS sells rebuilt and used parts to car dealers, service stations, and the public. For the past 3 years, Eli has been working in the business with Paul. Eli has only a 3rd grade education but is an excellent, street-smart auto mechanic. He is active in almost all aspects of the business: bidding at auctions, buying cars from insurance companies, and fixing cars and parts. However, on Paul determines the selling price for the cars and parts which the business sells/ {aul also maintains all the business records and takes care of the business's various tax returns. Paul first approached Eli to come work with him when Paul learned Eli had won $9k at the racetrack. Eli gave the money to Paul. Who used it to buy cars at

. Eli is a partner. He shares in the profits and has made a capital contribution. Although Paul has exclusive responsibility in two areas Eli shares management authority over other areas that are crucial to the business. The company's books and tax returns do describe Eli as an employee, but that fact does not undermine Eli's partner status. The parties' self-descriptions can give insight into their intents, but only when the parties genuinely assent to the description. There is no evidence that Eli was aware of the way he was described in the company's records, other than the withholding of social security from his checks. With his lack of formal education, Eli was probably unaware of what that withholding implied about his status.

Carolyn acts as the organizer of an LLC formed under the law of a state whose statute has typical provisions so far as may be relevant to this question. Which of the following statements are/is true? 1. . Carolyn may be, but need not be, an initial member of the LLC. 2. In acting as an organizer, Carolyn do not act as an agent of the LLC 3. For some purposes, the law requires at least one additional organizer. 4. . Carolyn is acting on behalf of the person or persons who will become the LLC's initial member or members 5. . Carolyn is acting as a gratuitous agent

1. True 2. True- until Carolyn has completed the tasks necessary to form the LLC, the LLC does not exist. A person cannot act as an agent for a company that does not exist. 3. False 4. Close call- the proposition is arguably true under most LLC statutes but problematic for those statutes that permit "shelf" LLC's 5. Ambiguous- LLC law does not address this point. The answer varies

Since graduating law school 5 years ago, A, B, and C have practiced law in a partnership that is not an LLP. The partners "cover" for each other during vacations, and the partnership has in place a system for avoiding conflicts of interests. Otherwise, however, each partner is responsible for his or her own files. 3 years ago, attorney A filed a consumer fraud lawsuit in state district court against D Inc. Consumer fraud was one of A's principal areas of practice, but in this instance the claims were frivolous. A had signed the complaint without having made any investigating to the facts. Either B or C had any involvement in the case. Indeed, B was not even aware that the case had been field. The court eventually dismissed the lawsuit and, citing Rule 11 of the state Rules of Civil Procedure, ordered A to pay D Inc., the 47k in attorney's fees the D had incurred in the lawsuit. The court specifically found th

B and C are liable jointly and severally under 1914 §15(a) because the partnership is liable udner1914 §13. To establish the partnership's liability under UPA1914 §13. D inc. must show that: 1. It suffered harm from a partner's wrongful act or omission; and 2. The conduct occurred either int the OCB or with the authority of the other partners. A was a partner and filing a frivolous lawsuit is clearly a wrongful act. D will therefore have no trouble in establishing the first requirement. As to the second, D can actually meet both tests. The business of the partnership ordinarily included filing lawsuits. Therefore, when A filed the claim, he was acting in OCB. A was also acting with actual authority. UPA 1914 §18(e) gives all partners "equal rights in the conduct of partnership business." The partners augmented this statutory authority by granting each partner autonomous authority over his or her own files. It is not clear from the facts whether the partners agreed to this grant expressly but the way they conducted their business certainly implied an agreement. The fact that B and C had no part in these misconducts irrelevant to D's claim. UPA 1914§13 states a rule of vicarious liability and UPA 1914 §15 states a rule of liability via status. Analysis is the same under 2013.5.

Paul and Dennis operate a basketball camp as an ordinary general partnership. Theirs is a handshake deal; they have no written agreement. A camper who is hurt at the camp successfully sues the partnership for negligence and recovers a judgement of $250k. The partnership has no many and the camper collects the entire amount from Paul. Assuming that the partnership has sustained no other losses but has no money with which to reimburse Paul, how much, if anything van Paul collect from Dennis? Can Dennis successfully argue that "the losses should lie where they fall"?

Dennis owes $125,000. Absent a contrary agreement, partners share losses as they do profits- equally. Collection by a 3rd party does not change how losses are allocated.

Hiview Company is a UPA (1914) partnership which operates a drive-in movie theater. Rachael, its managing partner, purports to sell the land where the theater is located to a development company. The partnership agreement authorizes the managing partner to "make all management decisions in the OCB." Has Rachael's action bound the partnership? Would the analysis change under 1997 or 2013?

For 3 reasons, under UPA 1914, Rachael has not bound the partnership. Her "OCB" actual authority does not extend to the extraordinary decision to sell the crucial assets of the business. Her doing so could not have appeared "apparently/usual" to the buyer. Her doing so runs afoul of UPA 1914 §9(3)(c) (partner lacks power to do "any act which would make it impossible to carry on the OCB of a partnership" unless partner has actual authority, or all partners agree). The other 2 agree but there's no analog to UPA §9(3)(c) in either.

Propane LLC is a manager-managed LLC in the business of supplying propane to commercial and residential users. InCharge Inc, is a member of Propane and also its sole manager. HAndsoff, Inc is the other member of Propane. Beth is Executive VP of InCharge, and in that capacity directs both in charge's efforts as manager of Propane and InCharges other day-to-day activities. After a propane accident at the home of one of Propane's customers, the customer sues both Propane and InCharge. Assuming that 1. The accident was proximately and foreseeably caused by Beth's negligence, and 2. Beth's negligence was within the scope of her employment as the VP, does In Charge benefit from the LLC liability shield? Does HAndsoff?

Incharge doesn't because of respondeat superiors. Not through reason of InCharg'e status as a manager or member of Propane. HAndsoff does get the shield.

Standup LLC, an LLC organized up law of the state of Delaware, is for all practical purposes "located" om Iowa. All 3 of its members are individual residents in Iowa, and Standup does all its business within Iowa. After fruitless attempts to collect on an invoice, Standup Sues one of its customers. Which law applies?

Iowa's, Internal affairs doctrine does not apply.

Ralph wants to open a riding stable but does not have enough money. He approaches Sally, who has both experience managing startup businesses and some money to invest. They agree that (1) each will own a half interest in the business, 2 Ralph will run the day-to-day operations while Sally will "handle the books", 3 all major decisions will be made jointly, 4 Sally will invest $50k, 4 and Ralph will get 40% of the profits and Sally will het 60%. Sally is concerned with the liability that comes with being a partner, so the agreement between Ralph and sally states clearly "This relationship shall not be deemed to be a partnership" What legal effect will that disclaimer have on claims by creditors?

Its useless. Sally and Ralph have created a partnership under the law. They are co-own, co-manage, and they share profits. In the face of a claim by a creditor the disclaimer will be disregarded as inaccurate and self-serving.

L, M and C form a partnership to operate a whoopie cushion factory. L invests 100K, M 80k, and C 20k. They agree that 1. Each will work full-time in the business, 2. Each will receive a salary of 20k, separate from whatever profits they may receive, and 3 none will withdraw their capital for at least 3 years. At the end of the 1st year of operation, the partnership has a profit (after salaries) of 100k. L and M want to distribute profits in proportion to the partners respective contribution- 50% to L, 40% to M, and 10% to C. They assert that profits are an ordinary part of partnership business and that therefore a majority vote control. Are the correct under UPA 2013? Under the other UPA?

No UPA (2013) §401(a) provides for partners to share distributions equally. Default rule, and to amend the partnership agreement to change to default rule requires UNANINMOUS CONSENT. Result is identical in UPA (1997)

1. A large corporation is facing a large number of product liability suits venue around the country but involving the same product. For efficiency's sake, the corporation hires a large firm of experienced and expensive lawyers to serve as national coordinating counsel to the corporation. In that capacity the firm acts on the corporation's behalf to (1) retain local counsel to represent the corporation in the various lawsuits, (2) facilitate and coordinate the exchange of information and work product among the various local counsel, (3) to supervise the work of the local counsel. Firm uses due care in carrying out its duties. Unfortunately, however, local counsel in one case commits discovery abuses that result in a $50,000 sanction being assessed against the corporation. Is Firm liable to the corporation for some or all of this amount?

No because local counsel is a subordinate agent of the corporation and not a subagent of Firm. Distinguishing between a subordinate agent and a subagent involves focusing on the manifestations of the principal. In this instance the principal (the corporation) told the intermediary Firm to "retain local counsel to represent the corporation": that is, to retain counsel to act as an agent of the corporation. Therefore, Firm, and local counsel are co-agents of the corporation and Firm is a supervisory agent of local counsel. In that capacity, Firm is not the guarantor of local counsel's conduct and would be liable for local counsel's mistakes only if Firm had breached its duty of care in supervising the local counsel.

Rosebud LP. Is a limited partnership of 30 years. 10 years into the term, an opportunity arises to sell all of the partnership's assets and make a substantial profit. All the LPs wish to take advantage of this opportunity, but the sole general partner believes that heater returns will be available if the LP continues in existence until the end of the term. UN RULPA can the LPs bring about the sale of the Partnership assets? Under ULPA (2001)?

No under either. Exceptions are not relevant. Management authority is vested in the GP. Moreover, neither statute permits limited partners to cause the premature dissolution of the LP and thereby force GP to sell the assets as part of winding up. Under RullPA §801(3_, dissolution by partner consent requires "the written consent of ALL partners." ULPA (2001) §801(2) requires (the consent of all GENERAL partners and of Limited partners owning a majority of the rights to receive distributions al LPs."

Todd, a physician, forms a member managed LLC, Bear LLC, to take title to a plot of land that today has owned individually for 15 years. Todd contributes the land to the LLC in return for becoming the LLC's sole member. Subsequently, Todd learns of a purpose zoning ordinance that would limit the permissible uses of land. He seeks judicial intervention to fight the zoning change. May he appear pro se?

No. A non-lawyer may only represent him or herself in court, and told, as an individual has no standing to object to zoning change. That is the land belongs to Bear, not Todd, and therefore cognizable injury if any, directly affects Bear not Todd. An LLC is a legal person distinct from its members, even when the LLC has only one member. Ted's sole membership is irrelevant.

Rachael and Natasha form into a partnership together to own a natural foods store. They each put up $5,000 and jointly select a storefront to rent. During the first year, Natasha is the "silent partner". She does not work for the business. Rachael, in contrast, works about 50 hours per week in the store, with no vacation. At the end of the year, the partnership has made a profit $30k. Rachael proposes a profit split of $20k for her and $10k for Natasha. She explains "I put in at least 2,500 hours this year, and our lowers paid clerk got $4/hr. I figure I'm worth at least that. 4-time 2500 is $10k leaving another $20k, which we split equally." Is Natasha obliged to agree to Rachael's proposal?

No. When's there's no contrary agreement, Rachael's work in the partnership business brings her no right to extra renumerating. Absent a contrary agreement, the partners split equally.

1. Captain Miles Standish loved the fair damsel Priscilla, but Standish's intense shyness prevented him from speaking to her. One day standish lamented on the situation on his friend John Alden, and Alden offered to speak to Priscilla and, on standish's behalf, invite her to an upcoming community dance. Standish responded, "I dunno. That might be a good idea." Alden took that comment as assent and rode off to see Priscilla. However, Standish did not intend to consent. Right after Alden rode off, Standish wrote in his diary, "Told Alden that I would think about his offer. Have done so and will reject it as soon as I see him next." Before Standish saw Alden again, Alden saw Priscilla. Alden explained Standish's great love, and - purporting to act on standish's behalf- invited Priscilla to accompany Standish to the dance. Priscilla accepted. Later, Standish saw Alden and told him not to talk to Priscil

Standish is Only bound if Alden had actual authority to extend the invitation. The creation of actual authority requires: (1) a manifestation by the principal; (2) the agent's reasonable interpretation of that manifestation as a request that the agent acts for the principal; and (3) the agent's manifestation of consent to act. The first and last certainly occurred. Standish's comment ("That might be a good idea") suffices as a manifestation. Alden's action reflects his consent. The question of the agent's interpretation, however, is more difficult. Although Standish's subjective intent is irrelevant, Standish's response was objectively ambiguous. Especially given what Alden knew of Standish's shyness, it was probably unreasonable for Alden to consider himself authorized without having first sought clarification. Therefore, no actual authority existed, and Standish is not bound on the contract.

. In 2005, Larry, Moe, and Curly became partners in an entertainment business. Their partnership agreement set a term of 20 years and stated: "Profits shall be calculated and paid on an annual basis, with the fiscal year being the calendar year. For any profit made in any fiscal year, Larry will receive 60%, Moe 25%, and Curley 15%. Losses will be shared as provided in the UPA." Each year in the period 2005-2008, the partnership broke even. In 2009 the partnership lost $100k. How should that loss be apportioned under UPA (1914), UPA (1997), UPA (2013)?

The loss should be apportioned 60/25/15. Under all three general partnership acts, absent contrary agreement losses are apportioned the same way as profits.

Mark is the treasurer of the Zenith Vending Machine Company. In that capacity he prepares all of the Company's Tax returns. The company is a partnership, and each year its partners tax returns list the partners as Allen, Betty, Charlotte, and Ralph. As Part of his remuneration, Mark receives a share of zenith's profits. If he later claims that he is a partner in the company what role will the partnership tax returns play in the dispute?

The returns will argue strongly against him because they list the partners and do not include Mark. As the preparer of the returns, Mark evidently assented to the exclusion. This situation therefore differs from efforts to use disclaimers against third parties.

Joseph owns 500 acres of land on which he grows pine trees for harvest and for sale each year at Christmas time. The land is worth $500k and land values in the region are increasing steadily. Joseph asks Vladi to operate the Christmas tree business for him. In return for Vladi's promise to stay for 5 years, Joseph promises Vladi an annual salary of $10,000 plus held the profits. Assume that 1 Vladi makes a number of changes to the land, including harvesting some trees, planting others, and putting in a few dirt roads, 2 at all times relevant title to the land is in Joseph's name, and 3 a court finds that the arrangement between Joseph and Vladi constitutes a partnership with a 5-year term. If UPA (1914) governs, at the end of the 5 years will Joseph still own the land? UPA (1997)? UPA (2013)?

Under all 3 acts the answer depends on whether Joseph has contributed the land to the partnership or merely furnished its use. Under UPA (1914) Case law, there are facts that point in the direction of contribution. The land was of central importance to the partnership and the partnership did (though Vladi) make some improvements to the property. However, it seems unlikely that Joseph intended to give up ownership of the land. Even under 1914, a partnership can own a land in its own name, and Joseph never transferred title to the partnership. More importantly, to view the land as contributed is to construe into existence an extraordinary sweetheart deal for Vladi. The deal was sweet for Vladi even assuming that Joseph merely furnished the use of the land to the partnership. Vladi brought to the partnership only his labor, for which he received a salary and half the profits, at min, Joseph furnished the use of the land worth $500k and contributed any trees that Vladi harvested from the land on behalf of the partnership. For that Joseph received in return less than Vladi (50% profit share). If Joseph contributed the land, then the deal is even sweeter for Vladi. The land itself belongs to the partnership; any appreciation will belong to the partnership; and V will have a right to half of that appreciation. They deal seems too good to be true or intended. UPA 1997 and 2013, the result would be the same with the analysis buttressed by the presumption established by section 204(d) of both acts: Property acquired in the name of 1+ partners, without an indication in the instrument transferring title to the property if the persons capacity as a partner or of the existence of a partnership and without use of partnership asserts is presumes to be separate property even if used for partnership purposes.

Two brothers, Caleb, and Adam, operate a farm as an ordinary general partnership, known as AdCal Farming Company. The two brothers are well respected. Their partnership is well known in the community, as is the fact that each partner regularly makes equipment purchases for the business. One day Caleb goes to the local Ford dealer and buys a 35k pickup truck on credit signing the purchase agreement "Adcal Farming company by Caleb, general partner." In fact, the truck has nothing to do with the business. Caleb has decided to give up farming and go on the road. The truck is for his personal use. Under UPA 2013 may the ford dealer hold Adam liable to the purchase agreement.

Yes Adam is liable under UPA (2013) §§306(a) because the partnership is liable under UPA (2013) §§301(1). Caleb's truck purchase was "for apparently carrying on in the ordinary course of partnership business." The dealer knew Caleb to be a partner and saw nothing unusual in a partner committing to the partnership to an equipment purchase. To the contrary, the partnership had a reputation for doing business this way. Moreover, Caleb asserted that he was acting for the partnership, and nothing in Caleb's reputation gave the dealer any reason to doubt that assertion.

In the aftermath of a bitter divorce, Ronald goes into partnership with Robert in a donut shop. Ronald wishes to hide his income from his ex, so he and Robert agree that Ronald will be a very "silent" partner. Ronald will provide 60% of the capital and will share in all major decisions. Robert will handle all transactions with 3rd parties. He will appear to third parties as the sole owner of the business. Accordingly, after consultation with Ronald, Robert signs a long-term lease for a building in which the donut shop will operate. The business eventually fails, and only afterward doe the lessor discovers the relationship between Robert and Ronald. If UPA 2013 applies, can the lessor hold the partnership liable on Lease? What about 1914?

Yes under either act. Thea arrangement between partners, gave Robert actual authority to sign the lease on behalf of the partnership. The fact that the partnership was undisclosed was immaterial.

The Ventura Company partnership agreement gives wide ranging authority to Beatrice, the partnership's managing partner. However, all decisions to initiate settle litigation must be approved by a majority vote of the partners. On 2 occasions during the past 5 years, Beatrice has recommended to the partners that the partnership arbitrate a dispute, and on each occasion the partners approved. Ventura has a dispute will CCS concerning particular trade. No suit has been filed, but litigation seems inevitable. Aware that Ventura has arbitrated disputes in the past, CCS proposes arbitration. Beatrice agrees, this time without consulting the other partners, in determining whether Ventura is bound to arbitrate the dispute, does it matter which pf the 3 acts apply?

Yes, under UPA 1914, Ventura is not bound. Under the modern acts, the partnership might well be. Under 1914 §9(3)(e), part of UPA's unanimous consent constraining rule, no partner has the power to submit a partnership claim or liability to arbitration unless either all partners consent or the partner agreeing to the arbitration has actual authority to do so. In this instance the other partners have not consented and under the partnership agreement Beatrice lacks actual authority to agree to arbitration on her own. The partnership's past practices conform with and confirm this interpretation of the partnership agreement. To obtain actual authority Beatrice needs the consent of the majority of her partners. In contrast, neither of the modern acts has a unanimous consent constraining rule, and UPA 1997 §301 comment 4 states that "to seems archaic that the submission of a partnership claims to arbitration always require unanimous consent." Because CCS is "aware that Ventura has arbitrated disputes in the past," Beatrice's act is probably withing her "apparently/ordinary' power. If so, the partnership is bound to arbitrate. The result would be the same under UPA 2013§301.

1. A gay man, well known as a gay rights advocate, seeks to buy a house for sale in a fashionable neighborhood, but fears that the owner, a well-known opponent of gay rights, will refuse to sell to him. The would-be buyer, therefore, secretly authorizes a friend to negotiate and consummate the purchase, ostensibly in the friend's name. It never occurs to the seller that the ostensible purchaser might be a front, and the seller ask no questions to that effect. The friend of course makes no comment on the subject. AT closing the seller learns that the gay man is the undisclosed principal. Is the seller obliged to go through with the sale?

Yes. Although both the agent and the undisclosed principal had reason to know that the third party would have refused to deal with the principal there was no affirmative misrepresentation.

Bernard and Suzanne form a partnership to run a dance school. Their agreement delegates all artistic control to Bernard, and states that "All business decisions shall be decided by Suzanne in her sole discretion." The school sells ballet and tap shoes to its students at a very healthy markup. Bernard thinks the shoes should be sold at cost, "We make our money from our teaching." "We are not shopkeepers." Under UPA 201£ does S have a right to continue the partnership to sell at a markup despite Bernard's objections?

Yes. Although under §401(k) partners decide any "difference arising as to a matter in the ordinary course of business" by majority vote, that provisions a default rule. These partners have agreed to allocate the business decision to S.

1. A newspaper provides its customers home delivery through a network of "independent deliver agents". A written contract between the newspaper and each agent: (1) assigns each agent a particular route; (2) provides the agent a percentage commission based on the subscription price of papers delivered; (iii) allows the newspaper to terminate the relationship at any time without cause; and (4) expressly disclaims any master-servant relationship. The newspaper conducts training programs on how to make deliveries and increase sales. Although the contract does not mention these programs, the newspaper considers regular attendance to be mandatory. Each delivery agent supplies his or her own car or ban to make the deliveries. Many of the routes are quite large, and many of the agents have no other gainful employment. The news [a [er does not withhold social security taxes from the commission checks and does not pay the

a. The building owner may well prevail, although several factors from the R @d and R 3d point the other way. The parties apparently did not consider themselves master and servant. The contract expressly disclaimed that relationship, and the principal did not withhold or pay Social Security taxes on account of the commissions. The newspaper did not pay a set wage or salary, and the delivery agent supplied the key instrumentality (i.e. the car). The key question however is the right to exercise control. The newspaper's right to terminate without cause and without advance notice suggests that, practically speaking, the newspaper had considerable control over the agent's performance. The fact that few of the agents were "engaged in a distinct occupation or business" made each especially susceptible to the threat of termination. That the threat carried weight is evidenced but the required attendance policy. Although the R. 3d/R.2d factors may thus point in opposite directions the policies underlying respondent superior clearly favor a finding of servant status. Home delivery is an integral part of the newspaper's enterprise, and that enterprise should bear the costs of accidents foreseeable in that phase of business. As for risk avoidance, the training sessions demonstrate that the newspaper can and already does influence the agent's manner of performance. Moreover, as for risk spreading, the newspaper is far better able to anticipate, calculate, and spread the cost than are the individual agents.

UPA 1914 only 3 law students, Charlotte, Paul, and Sophie, form a partnership to operate a used bookstore at their law school. Nearing graduation, Sophie dissolves the at-will partnership. Charlotte and Paul decide, with Sophies consent, to continue the business. They bring Jacob into the business and with him form a successor partnership. The dissolved partnership assigns its lease with the law school to the successor partnership. The law school consents to the assignment but does not agree to release the dissolved partnership. Always attentive to legal niceties, Charlotte decides that the students who cosigned their used books to the old partnership should be informed that the successor partnership is taking over. In credit, she buys a $40 ad in the law school newspaper. The ad proclaims, "A changing of the guard", and explains the change. Charlotte, Paul, and Jacob decide that the bookstore should expand its p

a. 1. The lease: All four individuals are liable a. Liability of Sophie (dissociated partner): The lease obligation is clearly a debt of the dissolved party. Absent a novation, even a withdrawing partner like Sophie remains liable for such debts. b. Liability of Charlotte and Paul (continuing partners): On 3 diff ground, charlotte, and Paul is liable on his debt. First, like Sophie they are liable as members of the dissolved partnership. Second §41(1) the debts of the dissolved partnership are also debts of the successor partnership, and per §5 Charlotte and Paul are liable as members of successor partnership. §41 does not limit their liability, because they are not new to the business. Third the successor partnership's assumption by contract of the dissolved partnership's obligations makes charlotte and Paul, as members of the successor partnership, liable for this debt. c. Liability of Jacob (New Partner): Jacob is also liable for the lease to the school, but only on 2 grounds. Jacob is not liable as a member of the dissolved partnership, nut he is liable due to the operation of UPA §§41(1) and 15. However, unlike the other 2, Jacob benefits from section 41(7)'s limitation on liability. Jacob is a partner new to the business. Finally, like charlotte and Paul, Jacob is liable under contract law theory. 2. The Study Aids- Liability of Sophie: This debt is exclusively a debt of the successor partnership [, Sophie is not liable. Purchase is not appropriate for winding up. Supplier had proper notice of dissolution. a. Liability of C and P: All 3 partners of the successor partnership agreed to expand the product line, so the study aids purchase binds the partnership. Under §15 Charlotte and Paul are liable for the resulting debt and so is Jacob as members of the successor partnership [. 3. The Newspaper ad. Lia

As a sole proprietor, Bill runs a dry-cleaning store called Bill's Dry cleaning. He is in deep financial trouble. His bank will no longer give him any credit and is threatening to call his loans (demand immediate payment of all his money owed). Bill also owes money to various trade creditors. Bill approached Chris, a well-known venture capitalist and asks her to refinance his business. Chris reviews his books and his operations and says "Listen, you're a great dry cleaner but a lousy businessman. I'll bail you out, but we have to divide up the responsibilities for a while. If we're going to make this business work, we have to be more hardnose about it. First np more credit to law professors. They're lousy risks. Second, I want to determine who gets paid, when. One of the arts of staying in business is stretching out your accounts payable. So, before you pay anyone, check with me. Aksoy, I want some upside

a. 2 different theories hold promise for the creditors: partnership law and constructive agency under R. 2d §14 O. if the creditors can establish that Chris is Bills partner, UPA (2013) §306(a) will make Chris liable with Bill for the partnership's debts. If the creditors successfully invoke 14 O, Chris will be liable to the creditors as Bill's Principal. Although it is unlikely that Bill and Chris though of their relationship as a partnership, they may nonetheless have formed one, their thought about that legal label are largely immaterial. What matters is the nature of the business relationship they have intentionally created. The other creditors will contend that the business relationship fits most of the paradigmatic characteristics of a partnership. Most importantly, Chris has a right to share profits. That right rather than the actual receipt of profits is the fundamental prerequisite to partner status. Chris has also "brought something to the party": not only essential working capital but also key management services. Moreover, like a paradigmatic partner, Chris has helped run the business, exercising management control over key financial issues. She has not "contributed" any property in the partnership law sense, because she has a contractual right to be repaid in her loan. But not all partners contribute property. There are no express agreements to share losses, but most jurisdictions do not require one. In short, Bill and Chris have shared control over the business and its assets. They have linked their economic fate to each other and to the business by agreeing to share profits. They have this arranged to "carry on as co-owners a business for profit". Chris' response will be to characterize her right to share profits as mere "interest or other charge on a loan" and therefore not proba

1. Sidney hires same, a private detective, to locate and deliver to Sidney, a valuable statute of a bird. Sidney agrees to a fee of $200 per day, plus reasonable expenses, with a $15k bonus if Sam succeeds in finding and delivering the statue. Sam is on the verge of locating the statue when Sidney learns that Sam is carrying a gun. Sam is properly licensed to do so, but Sidney tells Same, "I abhor violence. You may not carry that thing when you are working for me." Must Sam obey? Does he have any recourse against Sidney?

a. A principal ALWAYS has the power to control an agent, so Sam must either obey or resign. Sam may nonetheless have a claim against Sidney for breach of contract. If, for example, the local custom is for detectives to use whatever lawful tactics they choose, that custom may have implied an agreement requiring Sidney to respect Sam's discretion. If so, Sam could for instance prove that his lack of a gun cost him the opportunity to retrieve the statue, Sam could recover the $15k bonus from Sidney.

1. Over the next three months, Rachael places several orders with Samuel Equipment Company, each properly requested by a Roller-skating VP and each costing between $10k to $24k. In due course Samuel Equipment delivers the equipment and bills Roller-skating. The bills come to the Roller-skating Comptroller, whom the CEO has made responsible for reviewing and approving for payment all invoices Ove r$1,000. The comptroller reviews the invoices, noted that each order as properly authorized and has been fulfilled, okays the payment and signs, and sends to Samuel Equipment a payment for the invoiced amount. Subsequently Rachael is promoted out of the purchasing department and is replaced by Herman. Rachael's last responsibility as purchasing agent is to brief Herman on his new responsibilities. Rachael does so, directing Herman's attention to the CEO's memo on internal approvals. Herman reads the memo but promptly fo

a. After having read the CEO's memo. Herman lacked actual authority to place the order. He could not reasonably have believed that himself authorized. He did, however, have apparent authority. Roller-skating is there for bound. The apparent authority arises from manifestations attributable to Roller-skating, Herman's principal. Those manifestations were: (1) Herman's position as Roller-skating's Purchasing agent, and (2) Rollerskating'sconduct on past orders placed with Samuel Equipment by a Roller-skating purchasing agent. On each prior occasion Roller-skating's comptroller approved and sent payments. The comptroller was acting within her actual authority, so her actions are attributable it Is roller-skating. The sequence of events- order from a purchasing agent followed by payment without protest- presumably led Samuel Equipment to believe that Roller-skating purchasing agents have authority to place such orders. In light of the past events, that was certainly reasonable. Herman may also have had inherent agency power. He was a general agent acting in his principal's interest. Ordering the Model 5400 could be seen as an act usual or necessary to serving Herman's authorized purpose.

1. Victoria commissions Albert to get a Contracts casebook for her at the used bookstore. She specifically instructs him that she wants him to buy a book that was previously used, underlined, and annotated by someone who received at least an A- in the contracts course. She promises to pay Albert a $5 fee if he succeeds in purchasing for her a book that meets her specifications. Albert goes to the bookstore and initially attempts to perform his task. However, the bookstore clerk tells Albert that the bookstore has no way of knowing how well the former owner of any particular book did on any particular exam. Not wanting to lose a sale and always on the lookout for a little personal gain, the clerk suggests a little scam. The clerk will telephone Victoria and tell her that the bookstore does indeed have a book that was owned by someone who received an A in Contracts. The clerk will also tell Victoria that, since the boo

a. Albert must disgorge the $1.50. When an agent profits by breaching the duty of loyalty, the law imposes a constructive trust in favor of the principal. It is irrelevant that Victoria can prove no damages, and it is immaterial that disgorgement will make Victoria "more than whole" financially. It is better that the principal receive windfall than the agent profit from a breach of fiduciary duty.

1. Captain Miles Standish found himself deeply in love with the "damsel Priscilla". Unfortunately, Standish was a shy fellow (except in matters of war) and could not find it within himself the strength to approach priscilla on his own behalf. He turned, instead to his friend john Alden. He asked Alden to visit Priscilla and express to her Standish's feelings. Alden also loved Priscilla but did not mention that fact to Standish, "friendship prevailed over love", and Alden agreed to act on Standish's behalf. Alden went to Priscilla's house and explained his mission. Priscilla responded with the immortal words, "Why don't you speak for yourself, John?" Consistent with the principles of agency law, could he? If not, what could he have done to free himself to speak?

a. Alden may not speak for himself right away. He has consented to act on Standish's behalf. He is there for Standish's agent and has a duty of loyalty that bars selfish conduct. That he is acting gratuitously affect neither his status as agent nor his duty of selflessness. While he remains Standish's agent, Alden cannot advance his own cause adverse to his principal's interests. If Alden wishes to respond to priscilla's invitation he must first "get out clean" from his agency. To do so, he must notify Standish that he (Alden) can no longer represent Standish's interests in Priscilla. Although Alden probably has no duty to disclose that he intends to compete for Priscilla attention, he probably does have a duty to report to Standish what Priscilla has said. That info came to Alden during his agency, and he has reason to know that his principal would consider the info important. He therefore must communicate that info to his principal. Once he has done so, he may terminate the agency. Then her may indeed speak for himself.

Pickwick owns an antique store called Pickwick's that occupies the first three floors of a four story brownstone. Pickwick lives on the fourth floor, has security cameras throughout the first three floors, and has a rather lackadaisical attitude toward maintaining personal surveillance over the store premises. He customarily leaves the store door unlocked even when he is upstairs having lunch or taking a nap. A large sign just inside the store entrance advises: "For assistance pull cord to ring bell". One day, two newlyweds enter the store and are promptly approached by a respectable looking lady who identifies herself as "Mrs. Pickwick". With Mrs. Pickwick's assistance, the newlyweds examine several large antiques and decide to purchase two of them. The newlyweds give Mrs. Pickwick $200 in cash as a down payment and arrange for a delivery day. Mrs. Pickwick takes from a roll-top desk a sheet of letterhea

a. Although the imposter lacked actual and apparent authority, Mr. Pickwick is probably liable via estoppel at least for the $200. The newlyweds "changed their position because of their belief that the transaction was entered into .... For "Mr. Pitwick, and Mr. Pitwick ' carelessly caused such belief " through his lackadaisical attitude toward security. At minimum, the newlyweds are entitled top their reliance damages and perhaps to their expectation interest as well.

1. The owner of a car dealership appoints Rachel to manage the used care department. The owner promises that Rachael can have a "free hand" running the department. Rachael decides to open the department on Sundays. Although Sunday openings are not against the law. The owner considers them inappropriate. The owner instructs Rachael to stay closed on Sunday. Must Rachael comply?

a. Although this instruction breaches the agreement between the owner and Rachael, Rachael has the duty to obey or resign. If Rachael can prove damages, she may recover for breach of contract.

1. For several years, a local band has played mostly for free at various local venues, seeking thereby to gain the experience and exposure and "breakthrough" to paying opportunities. For the past two years the band has relied on Oliver its unpaid manager, to arrange its bookings. Over the past several months due to the bands increasing popularity, Oliver has been able to arrange modest fees for each performance. As its customary in the locality, payment is made immediately after each performance. Last week, success created problems. As Oliver insisted on a percentage of future fees, the band told him no, he objected, and at 10 pm the band "fired" him. The next morning, at 10 a.m., Oliver went to a bar at which the band had previously played several times for free, as arranged by Oliver. On this occasion, Oliver (1) purported still to be the bands manager, (2) persuaded the bar to pay a performance fee of $500

a. As a matter of agency law and lingering apparent authority, the band probably is bound to the contract made by Oliver purportedly on its behalf. If so, (1) contract law determines the bars remedy if the band breaches its obligation and (2) at minimum, the bar will have a claim for restitution of the $100 advance payment. If the band is not obligated to perform, the band is not liable for the $100. Obviously, Oliver's actual authority ended when the band fired him, However, his apparent authority lingered as to the bar, which had previously dealt with the through Oliver. By performing in the past as arranged by Oliver, the band manifested to the bar that Oliver was authorized to act on its behalf. Because the bar neither knew nor had reason to know of the split between Oliver and the band, that manifestation supports a claim of lingering apparent authority. Oliver's pocketing of the money is irrelevant to the claim; apparent authority applies to faithless or even fraudulent apparent agent. However, the band might argue that both the fee and the requirement of an advance payment triggered a duty of inquiry. The first of those arguments is make-weight. Except in unusual circumstances, the authority to arrange for free performances certainly suggests the authority to arrange for compensated performances. The advance payment requires a more complex assessment. Although advance payments are not customary, the bar evidently considered it reasonable in these circumstances to make an advance payment. Why, then, would it be unreasonable for the bar to believe that that band had authorized its manager to collect an advance payment? If Oliver had lingering apparent authority, the band is obligated on the contract. However, if Oliver lacked apparent authority the band is neither bound to the contract nor obligated for the $1

1. A shopping mall employs its own staff of private security guards. These guards receive regular wages, wear uniforms supplied by the mall, report to the mall's director of security, and work shifts assigned by the director. The ma: through the director, has forbidden the security guards to carry guns. One day a guard disobeys that policy and brings an unlicensed gun to work. While at work, the guard has a scuffle with an unruly patron, and the gun inadvertently discharges and wounds a patron in the leg. The patron sues the mall, alleging respondent superior. What result?

a. Assuming that the patron can establish the guards underlying tort, vicarious liability will probably exist. Dealing with unruly patron is central to the guard's responsibilities, and as shown in Problem 20, a forbidden act can be within the scope of employment. The servant's illegal act - carrying an unlicensed weapon- will undercut the patron's claim only if that act is considered "seriously criminal" and even then, only if the act is considered unforeseeable.

1. Athos buys new vinyl tile for his kitchen floor from Porthos Floor Covering Unlimited, a discount retailer of carpet, linoleum, tile, and other floor coverings. Porthos does not have any installers on staff but tells Athos that it will arrange to have the tile installed by one of the "licensed, bonded contractors who this sort of work for us." Porthos arranges for Michael Planchet to install Athos's tile. Planet runs his own small contractor business and does jobs for various retailers and directly for homeowners. Porthos does not guarantee him any regular work and pays him a flat fee per square yard on each installation. (The fee does vary depending on the floor covering being installed.) In due course, Planchet arrives at Athos's kitchen with the tile and the installment materials. Those materials include an effective but highly volatile adhesive for securing the tiles to the subfloor. Unfortunately, Pla

a. Athos will lose. Planchet is an independent contractor, not Athos's employee. Virtually all the factors listed in R. 3d. §7.07 comment f indicate. Planchet's independence. Porthos, the alleged master, has no control "over the details of the work." Planchet, the alleged servant is skilled, "is engaged in a distinct occupation or business and supplies his own tools. The employment is episodic not sustained, and payment is by the job. Moreover, Porthos and Planchet do not consider themselves employer and employee/. (Footnote: Athos may have a successful contract claim, however, if he can establish that his contract with Porthos included installation.)

1. After graduating from law school, Beth goes to work for a law firm. Several months later, an uncle contacts Beth and asks her to handle a closing on the sale of some land. Beth says, "I'd be delighted. When would you like to come to the office?" The uncle doesn't want to pay downtown lawyers' fees and asks her to come to his house that night. Bethe explains that she is really obligated to work through her firm, but her uncle is insistent. Finally, Beth finds a solution.: listen uncle your family. Let me do this closing as family, no charge. We'll call it an introductory offer. Her uncle agrees. Beth spends about 6 hours prepping for and attending the closing, and all goes well. Two weeks later, she receives at home a silver necklace and a note from her uncle thanking her. The necklace is worth $1,200. What should Beth do?

a. Beth is obliged to do her legal work through her firm. Her duty of loyalty precludes her acting in competition with her principal or from secretly benefiting from doing irregularly the type of work she is regularly employed to do. No matter how earnest her efforts to avoid a problem and how pure her motives, she cannot retain benefits made through such activity unless she has her principals informed consent. That analysis dictates Beth's next steps. She must either return the necklace to her uncle or disclose the situation to the firm and seek the firm's permission to retain the necklace.

1. May works as an agent for broker inc, a company that, for a commission, helps US firms sell goods to foreign governments. May's responsibilities include traveling around the US to try and persuade US companies to use Brokers services. During one trip, may decides to into business for herself. Aware (because Broker has told) that the government of Argentina is seeking bids for major construction projects, may contacts a number of US companies. She gets "in the door" as a representative of broker but once she's in she tells the companies that she will soon be providing the same services as Broker- and for a lower commission, she does not, however, close any deals for herself. At the end of the trip, may returns to Broker's home office and resigns. She explains her resignation by saying that her brother-in- law has offered her a job in the family upholstery business. May then promptly sets up her own firm p

a. Broker has a claim of disgorgement of May's profits. In two or perhaps 3 ways, May has breached her duty of loyalty. First, by promoting her own services in contrast to brokers, she began to compete while still an agent. Second, she lied to her principal about the reasons for her leaving. Third, her pursuits of contracts related to the Argentine project may have been a misuse of Broker's confidential info. Broker's info about the project certainly was of economic importance to broker, but Broker would have to show in addition that: 1. The existence of the project was not generally known, 2 Broker has expended effort or expense to obtain the info, and 3 Broker used reasonable means to protect the info.

1. Sam obtains from a video game distributor the right to place its video games in bars, restaurants, and video parlors throughout the tri-state area. The right id quite valuable, because this manufacturer has several very popular games and rations the number of games allowed in any one geographic area. Sam retains Eli to represent him in locating the best possible locations for the games and to negotiate with the owners and managers of those locations. Eli makes a number of recommendations which Sam follows. Per their agreement Sam pays Eli a fee of $500 per location selected. The games do not produce the revenue Sam expected, and after about 6 months he looks more carefully at the locations Eli recommended. Sam discovers that : 1. Half of the locations are owned by Interactive Display Outlets LLC (IDO), 2. During the time that Eli was advising Sam, Eli was also on retainer to IDO as a management consultant, 3. Many

a. By acting for IDO, a potentially adverse party, without having Sam's consent, Eli has breached his agent's duty of loyalty. He is liable to Sam for damages, that is, the present value of the additional revenues that would have been produced by the easily arranged, superior, non -IDO placements. Eli may also have to disgorge the compensation he received from IDO for having gotten Sam's video games into IDO locations.

Henry comes to town one day looking for some land to purchase. He learns that Eleanor has a parcel of lakefront property that she wishes to sell. Henry meets Eleanor, explains that he is "in town acting for a group of investors who are looking for lakefront in this area," and goes with Eleanor to inspect the property. Henry appears impressed, but says to Eleanor "I'm just the gofer. I'll have to check with the folks in charge." The next day Henry comes back and tells Eleanor that he is authorized to pay her $70,000 for the Property. Eleanor thinks the price is a fair one and together they go to a local stationery store and buy a legal form titled "Contract for the Sale of Land." They fill on all the blanks, Eleanor signs as seller and Henry signs as "Agent for the Aquitaine LLC, Buyer". As completed and signed, the contract indicates that, on behalf of Aquitaine Corporation, Henry has put $100 dow

a. Eleanor will lose. She will be unable to attribute Henry's actions to Aquitaine. Since Aquitaine never made an Manifestation to Henry regarding Eleanor's parcel, actual authority did not exist. Since Henry's role with Aquitaine never involved any "continuity of service," he was never a general agent. Consequently he had no inherent agency power to enter into contracts on Aquitanes behalf. The doctrine of apparent authority and estoppel are Eleanor's only hope and that hope is forlorn. The problem with apparent authority is one of timing. The apparent principal's manifestation came too late. To establish apparent authority, Eleanor must show some conduct attributable to Aquitaine that as of the moment of contract formation caused her to reasonably believe that Henry had authority. Until just prior to the execution of the form contract, Eleanor du not even know who the supposed principal was. Even when Henry disclosed Aquitaine's Identity, Eleanor's inference that Henry has authority was based solely on Henry's remarks, not any conduct of Aquitaaine. In some circumstances, an apparent principals silence in the face if an apparent's agent's known conduct will suffice as a manifestation. However, in this case there is no indication whatsoever, that at the time of contract formation Aquitaine was aware of Henry's claim oof agency status. The conversation between Eleanor and Richard cannot salvage the situation for Eleanor. Even if Eleanor reasonably interpreted Richard's comments to mean that Henry had authority, there remains the problem of timing. Even under the Restatement view, the claimant must link the manifestation to a reasonable belief that existed as of the moment of the moment of the relevant act. A post hoc manifestation cannot justify an ante hoc belief. Bu the time Eleanor spoke

1. A large school district serving tens of thousands of students and with thousands of employees, assigns a custodian to work at a high school. Subsequently, the custodian sexually assaults a student at the high school. The student sues the school district, asserting respondent superior. What result?

a. If the jurisdiction uses the purpose test, the student will inevitably lose. By no stretch of the imagination can a sexual assault be said to serve the school district's interests. Even if the jurisdiction uses some form of the incidental/foreseeable test, the student's chances are slim. Abstractly, it may be foreseeable that an organization that has a large enough number of employees will inevitably employ some "bad apples". However, for an intentional tort to be foreseeable in the sense of respondent superior, there must be something about the nature of the employee's job or the employer's enterprise that facilitates or specially occasions the harm. Unlike the psychologist-patient relationship discussed previously, a custodian's role does not make the victim especially vulnerable to sexual assault. Sexual assault is not incidental to custodial work.

1. For the past several years, Ventura Company has been acting as a buying agent for Ilan Enterprises in the US soybean market. Ventura has had authority to make purchases up to $250k without prior approval from Ilan. Recently Ilan has discovered improprieties in Ventura's conduct. Ilan wishes to terminate the relationship immediately and wants to know how to do so. Ilan is also concerned about its responsibility if Ventura continues to trade on Ilan's account even after Ilan terminates the relationship. Advise Ilan on how to proceed.

a. Ilan can terminate the agency simply by giving notice to Ventura. A principal always has the power to terminate an agency. In this instance Ilan also had the right to do so, since the facts reveal no express or implied agreement as to term. Ilan should make the notice in writing and use some means of transmission that allows proof of delivery. (Agency law does not require written notice. The writing and delivery precautions are to simplify proof) As for the possibility that Ventura will bind Ilan though post termination trading, the termination notice will end Ventura's actual authority and inherent agency power/ Ilan should be concerned, however, with Ventura's lingering apparent authority. If Ilan has a list of traders and other parties with whom Ventura has dealt, Ilan should send each a brief notice stating in effect "Effect (date), Ventura Company is no longer authorized to sell. Buy, make trades, or conduct any other business for Ilan enterprises." This notice will prevent the recipients from reasonably believing that Ventura still works for them and with thereby stop them from claiming apparent authority. Ilan must also consider the rest of the marketplace. It is possible that Venture possesses apparent authority in the soybean market generally, even with parties who have never dealt with Ventura. Ventura may previously and accurately describe itself as having authority and that description is attributable to Ventura's principle. Moreover, the Ventura-Ilan relationship may be generally known, with that knowledge traceable to the fact that Ilan has followed through on deals made by Ventura. Because this aspect of the problem relates to a possible public perception, public preventative measures are necessary. Ilan should identify some trade publication or other medium of communication that reaches tho

1. Eli is a reginal sales agent for Maurice Ball bearing inc. Eli and Maurice have a written agreement the 1. Grants Eli an exclusive territory in which to promote and solicit orders fir Maurice products, 2. Provides the Eli has no authority to accept any order on behalf of Maurice and that all sales will made by Maurice directly to customers; 3 establishes a commission schedule, 4. Requires Eli to follow lawful and ethical business practices but otherwise allows him complete discretion in how he conducts his operations, and 5 allows either party to terminate the relationship without cause on 7 days' notice. Under the commission schedule, Eli qualifies for a $25k bonus in any calendar year in which he books orders aggregating more than $3 million. It is October so far Eli has booked $2.8 million, and he will certainly reach the bonus level by the end of the year. However, Maurice has divided to use its own reasons

a. Maurice has the power to terminate its agent at any time and appears to have the right to do so simply on 7 days' notice. However, with Eli so close to the bonus qualification, a precipitous termination could raise suspicions of bad faith. A principal has no right to terminate an agency merely to deprive the agent of the benefits that the agent is on the verge of earning. Even if Maurice succeeds in demonstrating a good faith reason for terminating Eli, Eli might still make trouble by claiming a breach of an implied agreement. He could argue that the agreement which offers a large bonus based on a calendar years effort, impliedly prohibits Maurice from terminating at years end any agent who is about to earn the bonus, unless the agent has engaged in misconduct. If Maurice believes it essential to terminate the agency before year's end in the long run, Maurice may find it less expensive a d it less stressful to send with the termination notice and offer to pay the 25k bonus.

1. Same facts as in Problem 23 except: (1) the employee is a teacher and coach of the high school debate team; (2) the sexual activity develops in the context of one-on-one coaching but the teacher of the victim, initially at the school but eventually at the teacher's apartment and (4) the victim initially gives actual (but of course legally ineffective) consent to the relationship. Is the school district liable per respondeat superior?

a. Most likely not. When coaching morphs into predatory sexual behavior, the employee has embarked on "an independent course of conduct not intended by the employee to serve any purpose of the employer." Moreover, the teacher's conduct is "seriously criminal" and there is zero "similarity in quality of the act done the act authorized." The plaintiff would have more room to argue under the incidental/foreseeable test. If the jurisdiction mis equate foreseeability with the notion of a "well-known hazard," the plaintiff might survive a summary judgement motion simply by submitting press clipping about noxious teacher student sex scandals.

1. Traveling across country by car after the death of her husband, Alice stops at a roadside diner for lunch. The diner is in chaos. The one waitress has just quit and Mel, the owner and cook, has a room full of increasingly irate customers. Sensing a job opportunity, Alice says to Mel," Hey I can wait some tables. Want some help?" Mel responds "Minimum wage. You're hired. Your shift ends at 7 pm." Alice works hard and extremely well. By the end of the day, she has collected $150 in tips. She is shocked when Mel says. "The tips belong to me. I didn't say nothing about you keeping tips." Is Alice obliged to surrender the tips?

a. No although an agent must have the principals' consent to profit from the agency, custom may imply the necessary consent. It is customary for waitresses and waiters to retain their tips unless to restaurant specifies otherwise.

1. Jeffrey males the unauthorized purchase described in problem 9, but in doing so tells the vendor that the purchase is being made on behalf of Amalgamated. Jeffery then calls Amalgamated and reports his "great find". Amalgamated shocks Jeffrey by saying "Nothing doing. No order with us, no deal from us." Jeffrey Immediately contacts the vendor, seeking a brief delay on delivery. "I bought this for a customer, and I didn't exactly have their ok in advance. They're balking a bit. I've got to make nice with them." Jeffrey then calls Amalgamated again, apologizes profusely, and extols the benefits of this bargain. After 45-minute conversation Amalgamated relents and says, "All right. We'll take it." Jeffrey immediately calls the vendor back and says, "No problem We're fine." The vendor responds, "I'm fine anyhow. As soon as I learned that you were a go between and had no authority. I w

a. No. Amalgamated did eventually affirm Jeffrey's unauthorized act, and ordinarily that affirmance would bind both the vendor and Amalgamated to the contract. In this instance, however, the vendor can avoid the ratification. In reliance on Jeffrey's lack of authority, the vendor changed its position and bound itself to another buyer. The fact that Amalgamated ratified before that change in position took place is irrelevant. What matters is that the vendor changed positions before learning of the ratifications.

1. In an attempt to get better bookings for his client, Dave (Alvins road manager) threatens a booking agent with imminent bodily harm. The booking agent sues Dave for assault and intention infliction of emotional distress. IS Alvin obliged to indemnify David?

a. No. The suit arises from a tort knowingly committed by an agent. The principal has no duty to indemnify.

1. Seller owned 5 acres of land on which he had bult stables, corrals, fences, and other improvements useful for raising horses. He retained Broker to sell the land on his behalf. Seller walked the property with Broker, showing the various improvements and the property lines. Together, they found most of the boundary markers, but could not find some. On the east side of the property, they found the northeast marker but not the southeast one. A line of trees seemed to confirm the Seller's description of the east boundary, Moreover, seller assured broker "I know where my land is and where I built. All my improvements are on my property." Broker did not independently verify the boundary lines. When broker showed the land to the eventual Buyers, Broker represented that all the improvements were within the property. After closing, the buyers discovered that a corral on the east side of the property encroached severa

a. No. an agent is not liable for an innocent misrepresentation. The third party must show either intentional or negligent misrepresentation. There is no case here for intentional misrepresentation. Broker actually believed its own statements about the boundaries. Nor do the facts support a finding of negligent misrepresentation. Broker had no reason to doubt the Seller's assurances, especially when the lands natural features (the trees) and what markers could be found seemed to support those assurances.

1. Your adult son, though employed, is mentally handicapped. Ordinarily, you drive him to and from work, but over the next several weeks you will be out of town for a number of days. You devise to have a particular taxicab company fill in for you and make the necessary arrangements through a telephone call to the company's dispatcher. You believe the cab company employs cab drivers as well as dispatchers, and your belief comes from the company's trade name, trade dress, advertisements, signage, and published telephone numbers. This appearance plays a role in your decision to have this particular company dispatch drivers to transport your son. In due course, you leave town, and the cab company dispatches cabs to transport your son. Unfortunately, one of these cabs is involved in an accident, the driver is at fault, and your son is injured. When you seek compensation on behalf of your son from the taxicab company,

a. No. under the stated facts, the drivers are the apparent servants of the taxicab company. Through its "trade name, dress, advertisements, etc." the taxicab represented that another was his servant, and that representation justifiably caused you to rely upon the care or skill of such apparent agent. According to R. 2d. §267, therefore the taxicab company Is subject to liability for ham caused by ack of care or skill of the one appearing to be a servant as if he were such.

1. Ziegler Limo leasing and Sales, Inc. sells and leases limos and also provides limo service on an hourly, daily, and weekly basis. Newly wealthy, Irv is considering buying a limo from Ziegler. Selma, Ziegler's owner, says "Tell you what, I'll let use a limo and a driver for a week for free. It's kinda slow for us right now, and you'll get a feel for what it's like to have a limo at your beck and call. Then you can decide. Just one thing though, if business heats up, I'll have to take the limo back." Irv happily agrees to the arrangement, and Selma assigns Jeffrey, one of her best drivers, to drive a stretch limo for Irv. Selma tells Jeffrey. "Listen Show him our best red-carpet service. That way if he decides not to buy, he'll know we're the only place to rent from. But also - you know how new millionaires sometimes get aggressive. Remember our safe driving policy. Two days later Jeffrey is

a. Probably not. At the time of the accident, Jeffrey was probably not Irv's borrowed servant. Although Jeffrey's general employer (Ziegler) had assigned Jeffrey to work for Irv, Ziegler retained considerable control over Jeffrey's conduct. Selma had reminded Jeffrey of Ziegler's safe driving rules that still applied. Moreover, Ziegler had retained right to reassigned Jeffrey at any time. When Irv successfully urged Jeffrey to speed up, Irv was merely persuading Jeff to violate the rules. Irv was not establishing the type of total, temp control that establishes a special employer.

1. Jeffrey is a buyer's broker in the recycled newspaper business. On behalf of various newsprint manufacturers, he locates and purchases recycled newspapers. Each time Jeffrey makes a purchase, he is acting on behalf of a particular customer. He nonetheless makes each purchase in his own name. For the past 5 years, one of the Jeffrey's customers has been Amalgamed Newsprint. During that time Jeffrey has made about 4 purchases per year for Amalgamated. On each occasion Jeffrey and Amalgamated have followed the same procedure: Amalgamted places an order with Jeffery, stating a quantity and a maximum price, When Jeffrey finds the necessary newspaper, he purchases them in his own name and informs Amalgamated of the delivery date and price. Amalgamated then wires funds to Jeffrey, and Jeffrey pays the vendor. A commission structure rewards Jeffrey for bringing in an order below the maximum allowed price. Jefferey und

a. Probably not. Since Jeffrey lacked the right to purchase for Amalgamated without first having an order and since Amalgamated was an undisclosed principal, neither actual nor apparent authority apply. Also since there is no evidence that Amalgamated knew of Jeffrey's conduct in this instance or was careless, there can be no estoppel. The vendors only hope is inherent agency power. The vendor must (1) label Jeffrey as Amalgamates general agent, (2) delineate Jeffrey's agency function as acquiring newspaper for Amalgamated on an ongoing basis, and (3) characterize the purchase contract as "usual or necessary" to Jeffrey's authorized activities. The vendor will likely fail in all 3 respects, because it will fall in the first. Jeffrey is not a general agent. He is not authorized to conduct a series pf transactions involving a continuity of service. To the contrary, he receives and needs separate authorization for each individual transaction. As a result, Jeffrey has no "ongoing" authorized responsibilities, and the unauthorized purchase was not "usual or necessary" to any authorized activity.

1. Morgan Hospital has an in-patient psychiatric ward that is run under the direction of Dr. Stanley, a board-certified psychiatrist who is a full-time employee of the hospital. Dr. Stanley has become increasingly frustrated with Medical Indemnity Company, and insurance company that provides health insurance coverage to many people in Morgans vicinity. Medical Indemnity has been disallowing a large number of claims made by patients treated in Morgan's in-patient psychiatric war. Dr. Stanley believes that most of these disallowances are unjustified, and he faults two psychologists who review patient claims for the insurance. Dr. Stanley's job has never involved public relations, but he decides enough is enough. In a fit of frustration and without discussing the matter with any of Morgan's higher-up's, he fires off a letter to the to the local medical association, the local association of clinical psychologists

a. Probably. An agent's defamatory statement is attributable to the principal if the agent had actual or apparent authority to make the statement. Dr. Stanley probably lacked actual authority. Nothing in his job implied the authority to speak for Morgan Hospital on matters of public concern, and Dr. Stanley did not receive any specific authorization before sending the letter. To those who received the letter, however, Dr, Stanley likely appeared to be speaking on Morgan Hospital's Behalf. Morgan arguably manifested as much when it clothed Dr. Stanley with an impressive title. Certainly, Dr. Stanley's use of the title and the Morgan's letterhead added weight to the comments and power to the defamation.

1. Sandy agrees to go to an auction for Ralph and bid for a particular picture. Ralph authorizes Sandy to bid up to $20k. Both Sandy and Ralph expect the auction to end by 6 pm. The auction runs late, and Sandy must leave to pick up a child from day care. The day care center closes at 6:30 pm After Sandy leaves, the picture Ralph wanted sold for $18k. Ralph later buys the picture from the purchaser for $20k. He learns that the purchaser would have stopped the bidding at auction when the price hit $19k. Ralph then sues Sandy for 1k. What is Ralph's theory of recovery? What will sandy argue? What will ralph respond>

a. Ralph will argue that 1. Sandy was his agent, 2. Sandy owed Ralph a duty of loyalty, which Sandy breached by leaving the auction before the bidding finished, and 3. Sandy is liable for 1k of damages [proximately caused by Sandy's breach of a fiduciary duty. Sandy will make 2 arguments. First Sandy will argue that, by at least tacit agreement of the parties the agency terminated at 6 pm (along with the fiduciary duty) when the principal and agent expected the auction to be over. Second Sandy will argue that even assuming the agency continued passed 6 pm, the agent's duty of loyalty yields when necessary to protect important interests of others. Preventing a child from being abandoned at a day care center should qualify such an interest. Protecting children is certainly a legitimate social value and should outweigh some relatively minor financial harm to the principal. Ralph will respond that Sandy had available at least two alternatives for protecting the child interest without sacrificing the principals. First, by anticipating the problem and disclosing it in advance to Ralph, Sandy would have allowed Ralph to make other arrangements for covering the auction. Second, when the auction appeared to be running long, Sandy could have used her cell phone to call the day care center to try to arrange for a late pickup.

1. Sandpit Gravel Company is excavating a deposit of gravel from a large open pit. Among the sandpit employees working in the pit is a group of dump truck drivers. There are two ways to drive out the pit: one safe but very time consuming, the other quick and quite dangerous. Sandpit has repeatedly instructed the drivers to take the safe route and has repeatedly forbidden them to use dangerous one. The drivers are generally happy to comply because the company pays them by the hour. At closing time, however, the drivers have a different attitude. When the closing whistle blows, the drivers are "off the clock" and want to get themselves home as soon as possible. Nonetheless, they obey the rules and take the slow way out, until one day, when a driver in a big rush tried the fast route. The truck slides off and rolls over, crushing the leg of an OSHA inspector. The OSHA inspector sues Sandpit, alleging respondent supe

a. Sandpit is liable. An employee's act can come within the scope of employment even though forbidden by the employer. In this case, the driver was conducting the employer's business, with an "instrumentality furnished by the master"; the act was quite similar "in quality... to the act authorized"; "the departure from the normal method of accomplishing an authorized result" was moderate; and "the matter[had] reason expect that such an act [would] be done.

1. Mr. and Ms. Yup, high power corporate lawyers, mesh their schedule and arrange a week's vacation hiking in the mountains. To babysit Little Yup and to housesit their house, the Yu's provide the babysitter, among other information, the name, office phone number, and office address of Little Yup's pediatrician. They also leave a health insurance card that indicates a health insurance account number for Little Yup. Unfortunately, while the Yups are away, Little Yup becomes seriously ill. The babysitter takes Little Yup to the hospital, where expensive medical procedures enable Little Yup to recover. In order to have the hospital provide the services, Babysitter shows the health insurance card and signs a contract with the hospital. Queried about the parents, Babysitter responds, "They're backpack in the mountains. I am babysitting for their child this week." Babysitter signs the hospital contract: I M Bab

a. The Yups are bound, certainly on actual authority and perhaps on apparent authority. Merely by entrusting the child to babysitter for a week and leaving the country, the Yups are manifested consent to have Babysitter arrange for necessary medical care and Babysitter certainly believed herself authorized to do so. By providing Babysitter the name of the pediatrician and the health insurance card, the Yups made an additional manifestation and buttresses the reasonableness of Babysitter's belief. The Yups did not specifically mention hospitalization and did not specifically authorize Babysitter to sign hospital contracts on their behalf, but Babysitter certainly has implied actual authority to arrange hospitalization in an emergency and to sign all reasonably necessary documents for that purpose. The argument for apparent authority is also strong. The hospital must be able to point to some manifestation oof the Yups that, reasonably interpreted, led the hospital to believe that Babysitter was authorized to bind the Yups. The hospital can identify three manifestations: the Yups entrusting of their child to Babysitter; the Babysitters possession of insurance card, and the Babysitter's statement of her responsibilities. The first manifestation arguably establishes apparent authority by position. Although babysitters do not customarily commit parents to large hospital bills. The possession of the insurance card made it more reasonable for the hospital to believe that the parents had given Babysitter authority to arrange for medical services. It is the third manifestation that is the strongest. Had the statement been made directly by the Yups, there would have been no question of Babysitters apparent authority. When Babysitter accurately described her authority, she was acting within her actual authority. As a consequen

1. Roseanne gets a job at a posh new restaurant in an upscale mall where the wait staff all wear uniforms. Each uniform costs $85 dollars, and the restaurant requires Roseanne to buy four before starting work. Three days after Roseanne starts work, the restaurant manager decides that the staff is too large for the current volume of business. He fires the newest employee- Roseanne. Does Roseanne have any recourse?

a. The answer will probably depend on how strongly the relevant jurisdiction adheres to the employment-at-will doctrine. Roseanne will argue that, by requiring her to buy so many uniforms, the restaurant impliedly agreed not to terminate her without cause at least until she had worked long enough to make the uniform purchase an economically rational act. As a fallback she will argue that the restaurant must buy the uniforms back from her.

1. An attorney contacts an art collector, seeking to buy a famous Picasso print on behalf of a client but declines to identify the client. The attorney has actual authority to offer up to $450k for the print and she persuades the collector to sell for $415k. It is late Friday afternoon, and the attorney can have a cashier's check for the contract price by 10 am Monday morning. The attorney wishes, however, to sign a binding sale agreement with the art collector, so that the collector cannot change his mind over the weekend. The attorney has $5,000 of her own money immediately available that she is willing to use as an earnest deposit. The attorney does not however, wish to be liable on the contract itself. What should she do.

a. The attorney's issue comes from a rule of agency law. When an agent makes a contract for an identified principal the agent is liable to this party as a guarantor of the principal's performance- unless the agent and the third party have agreed otherwise. This rule dictates the attorney's strategy. The sale agreement must let her off the hook. From the attorney's perspective, the ideal solution would be to include in the sale agreement an express statement that the attorney is not liable. It seems possible, however, that the collector would balk at such a term. After all, he would be committing to take the print off the market in return for a promise to pay from a party whose creditworthiness he is unable to assess. The attorney could respond to this concern by limiting the duration of the collectors' risk. The agreement could require payment by cashier's check by Monday at noon and provide that any delay in payment would entitle the collector to rescind the agreement. If the collector required further inducement, the agreement could provide for a nonrefundable "earnest" money payment of $5k or could offer to recast the contract as involving $5k payment for an option contract, with the payment to be credited to the purchase price if the unidentified principal timely exercises the option.

1. A manufacturing company employs a staff of full-time research scientists. Each scientist receives a salary, a well-equipped laboratory, and necessary materials. Each scientist reports to the company's director of research, who assigns research projects and keeps tabs on research progress. According to company policy, however, all scientists are to spend at least 20% of their time on projects they have conceived. The company believes that this "bootleg research" will spur creativity and innovation. The director of research does not review the bootleg projects in any detail, but instead merely inquires on occasion as to their subject matter. One afternoon, a company research scientist leaves the lab and goes to a city park. As part of a bootleg project, the scientist wishes to test a new waterproofing substance in the brook that runs through the park (It's also a nice day for a walk.) Although the scientist

a. The city will prevail. The scientist is the company's employee and was acting within the scope of employment. Employee status is evident. The only possible contrary factor is the great degree of "skill required in the particular occupation." That skill does not, however, undercut either the employer's right or ability to control. The director of research, who acts for the master, has ample expertise to supervise the scientist. The scope of employment issue is almost as clear. Although the scientist was away for, the authorized workplace, the work was within the authorized time "of the kind [the scientist was] employed to perform," and "actuated at least in part by a purpose to serve the master." The bootleg nature of the project is immaterial. Although the master did not exert active control over the project, the master certainly retained the right to do so. Nothing prevented the company from changing or eliminating the bootleg policy. Moreover, in determining the scope of employment, what matters is the zone of the employee's endeavors, not the zone of active control.

1. A hotel franchisor is concerned about apparent servant liability, but still wants its franchisees to make abundant use of the franchise name, logo, and trademarks. Consistent with that business purpose, how can the franchisor reduce his exposure to apparent servant liability?

a. The core of apparent servant liability is the appearance of servant status. Therefore, the simplest solution, at least in concept, would be to eliminate the appearance at its source. The legal problem would disappear if the franchisees were to remove all insignia that make their hotels appear to belong to the franchisor and that make their employees appear to be the franchisor's servants. This would be legally perfect treatment- after which the patient (i.e., the business) would unfortunately die. A less pure but more practical solution would be to leave the insignia in place but act affirmatively to avoid misapprehension. For example, the franchisor could require all its franchisees to prominently indicate that their hotel, although part of the national chain, is independently owned and operated. The proclamation might appear on all significant signage, the hotel's stationary, and all check and checkout documents.

1. A small real estate company is planning to rent office space to an entrepreneur who needs "a place to hang my hat, pick up my mail, and get telephone calls," The real estate company premises are small and its phone system is very basic. The entrepreneur's calls will come though the main switchboard without a dedicated line, and her desk will be located in the same open space used by employees of the company. How can the real estate company minimize the chances that is will be held responsible for its tenants dealings with third parties.

a. The most important safeguard is to expend time and effort necessary to check into the bona fides of the would be tenant. Problems will arise only if the entrepreneur cheats her customers or suppliers. As for the agency law analysis apparent authority is the key concept. Under that concept, the main risks would come from (1) ambiguous manifestations by the real-estate company and (2) reasonable misinterpretations by third parties. Due to the limitations of the phone system and the office setup, certain manifestations are inherent in the proposed arrangement. The key, therefore, is to preclude reasonable confusion. The safest approach is to make sure that an appropriate clarification accompanies each potentially confusing manifestation. For example, when the receptionist receives a call for the entrepreneur, the receptionist should use a greeting that indicates that the real estate company dies not employ the entrepreneur. As for the office setup, a sign on the office entrance should indicate the entrepreneur independent, unassociated status.

1. Rachael retains Jan, an experienced attorney, to represent her in a commercial dispute. Driving to a settlement conference, Jan negligently hits a pedestrian. The pedestrian sues Rachael, asserting respondent superior. What result?

a. The pedestrians claim will fail. For respondent superior to apply, the tortfeasor must be a servant. For servant status to exist, the principal must have the right to exercise detailed control of the agent's manner of performance. A lawyer's client does not have that right. The client sets the goal and may make major strategy decisions. Tactics, however, are lawyer's domain.

When a business contracts out work, for quality control and safety reasons, the nosiness may wish to closely supervise the contracted work. If an accident occurs, however, the injured party will point to the close supervision and seek to invoke repondeat superior. 1. By acting on its concern for quality and safety, the delegating party will have risked vicarious liability. Propose a solution to for this issue.

a. The problem cannot be totally resolved because a tension will always exist between the amount of control and the amount of risk. The key is to find ways to influence performance that stop short of actionable control. The first step, whenever possible, is to reduce the risk by avoiding mishaps. The delegating party should therefore find contractors that have good safety records and justified reputations foe quality work. Second, the delegating party should limit its review of the work to inspection and suggestion. This step will, perhaps, prevent the delegating party from being deemed the master of the contractor. Third the delegating party should avoid any direct instruction to the contractors' employees. This step will perhaps, prevent those employees from being deemed servants of the delegating party.

1. A major league pitcher is having a bad day on the mound. Not only are the opposing batters doing well, but there is also a heckler in the stands who is increasingly obnoxious. Finally, distracted beyond endurance, the pitcher whirls and fires the ball straight at the heckler. The pitcher is right on target hitting the heckler on the head. The heckler sues the pitcher's employer, the ball club, asserting respondent superior liability. What result?

a. This intentional tort may be one instance in which the incidental/foreseeable test is worse for the plaintiff than the more traditional purpose test. Beaning a spectator is hardly incidental to pitching a ball game, and there is nothing in the nature of a pitcher's task that makes the assault foreseeable. It might be established, however, that the pitcher's purpose was in part to serve the master. The heckling was distracting the pitcher and interfering with his ability to perform well for his employer. To silence the heckler therefore was to advance a master's interests. The result will thus depend on whether the court uses the purpose test and if so, how malleable the court considers that test to be. (Footnote: in any event, the heckler may have a direct claim against the owner of the ballpark for failing to provide reasonably safe premises to a customer and can certainly sue the pitcher for battery)

1. In his first meeting with Friar Truck, Robin Hood compels Tuck to carry him across a stream. Hood uses his sword as an instrument of coercion. Tuck undertakes the task, but midway across he purposely drops Hood into the stream. Has Tuck breach his duty of loyalty? Would it matter if Tuck's conduct were grossly negligent rather than intentional?

a. Tuck has not breached his duty of loyalty, because none exists, for an agency relationship to exist, inter Alia the agent must manifest CONSENT to act on the principal's behalf. Tuck made no such manifestation, but merely yielded temporarily to coercion. (Even assuming consent Tuck is at most an independent contract and not an agent).

1. Jerry, the owner of Jerry's Gas, Service, and Repair Station, instructs Leah, one of his employees, to pick up the blue chevy station wagon parked in the driveway of 1326 Lincoln Ave. The customer called and said it won't start and we should get it and fix it. Leah takes the stations tow truck and does as instruct. On the way back from the driveway, a semi-trailer crosses a median strip and smashes into the station wagon. Fortunately, no one was hurt, but the station wagon was totaled. Moreover, it later develops that Jerry made a mistake on the address. The address where the customer was is 1436 Lincoln Ave. Is Leah Liable to the owner of the station wagon?

a. Yes, Leah is liable to for conversion, a strict liability tort. That she acted on her principal's instructions and without negligence is irrelevant b=to the question of her liability. Leah certainly has a right to be indemnified by her principal, and her principal is doubtlessly liable to the wagons owned. Nonetheless she remains responsible for the tort she committed.

1. Sylvia decides to enter the silk importing business. The trade is notoriously biased against women, and she fears that her company will suffer if her interest in it is known. She therefore hires Phil as her general manager but sets up the company so that Phil appears to the outside world as the owner. It od's common in this trade for silk importers to sell to large customers on credit, but Sylvia instructs Phil never to extend more than $50k of credit to any customer without Sylvia's approval. One day, in order to close an important deal, Phil extends, $150k of credit to one customer without consulting Sylvia. The customer only makes $20k of payments and the defaults. Assuming that Phil's judgement about the customer creditworthiness was reasonable does sylvia have any claim against Phil?

a. Yes, Phil owes $130k. He breached his duty to act within his authority, and he is liable to his principal for the resulting harm. The reasonableness of Phil's judgment about the customer's creditworthiness is irrelevant. Sylvia is not claiming breach of agent's duty of care.

1. Ester seeks to sell her business and enlists Harry to locate and help evaluate prospective buyers. With Harry's advice, Esther decided on price of $1.5 million. She is willing to finance the sale but only with a down payment of at least 10%. Both Esther and Harry believe that buyers are more likely to succeed if they have some of their own money at risk. Initially, Harry has difficulty locating qualified buyers, but after 3 months he presents an offer from JoDot enterprises. JoDot offers to pay $1.5 million with$150k down. Esther accepts the offer, and the sale goes through. Unfortunately, JoDot cannot operate the business at a profit and defaults on its obligations to Esther. Esther learns that: 1. JoDot did not actually have the $150k and had to borrow $75k from a third party and 2. Harry was aware of the fact when he presented JoDot's offer to Esther. Does Esther have any recourse against Harry?

a. Yes. Harry breached his duty to provide info to Esther, his principal. Harry understood both the importance of the down payment and Esther's view of the subject. He therefore knew or should have known that Esther would want to know that the prospective buyers lacked a true down payment. Esther can compel Harry to disgorge any commission he earned on the deal. If she can prove causation, she can also claim damages.

1. The board of directors of Roller-skating, Inc. adopts a resolution authorizing the CEO "to appoint such officers managers and employees of the corporation as the CEO deems appropriate, and to prescribe their respective duties, subject only to the numerical limits established by the board of directors from time to time. "Aware of the resolution, Roller-skating's CEO appoints Rachael to be its purchasing agent. The CEO provides Rachael with a four-page memo outlining the internal approvals necessary before Rachael may place an order. For instance, orders costing less than $50,000 can be approved by CEO; orders costing less than $25,000 may be approved by VP; orders costing less than $5,000 may be approved by any department manager. Rachael receives a request from a vice president to order a Model 5400 Widget from Samuel Equipment Corporation at a price of $15,000, and she places the order. Does the Order bind

a. Yes. In placing the order, she is acting with the reasonable belief that she is authorized to do so. Her belief is based in Manifestations from a superior agent (her appointment to the position of purchasing: the memo of internal procedures). Those manifestations are within the superior agent's actual authority and are therefore attributable to the principal. In short, Rachael has actual authority.

1. An air conditioning manufacturer is about to ship a valuable load of equipment to a developer that is constructing a new office building. The manufacturer, however, is concerned about the developer's ability to pay for the equipment. The developer assures the manufacturer, "No problem, we've got a loan commitment from First National Bank that will cover the entire cost of construction. Why don't you call the bank's vice president for commercial loans and get that confirmed?" The manufacturer takes the suggestion and calls the vice president. The vice president confirms that the bank has committed to a loan up to $10 million and that current cost projects total only $8.5 million. Satisfied the manufacturer ships the equipment. Unfortunately for the manufacturer, the bank has made no loan commitment. The VP lied in return for a $5,000 bribe from the developer. The office building project eventually folds

a. Yes. The bank's agent, its VP for commercial loans, committed the tort of intentional misrepresentation. That tort will be attributed to the bank if the agent if the agent had actual, apparent, or inherent agency power to make the statement in question. The VP had apparent authority by position. It is customary for bank officers to provide the type of information the vice president provided, so it was reasonable for the manufacturer to believe the VP was speaking for the bank. The VP's ulterior motive is immaterial. Apparent authority can exist even though the apparent agent does not intend to serve the interests of the apparent principal.

1. A city hires an electrical contractor to remove above-ground electrical lines that had once served a trolley system. The contract gives the contractor total control and responsibility for the work, provided only that the contractor minimizes interreference with traffic. However, the city's manager of public works worries incessantly about safety on the job. The manager repeatedly makes surprise visits to the worksites and often speaks directly to the contractors' employees. The employees report these contacts to the contractor. The contractor is fearful of losing the contract by offending the public works manager and instructs the employees to take the manager's suggestions "unless they're, dangerous, expensive, or off the wall." Midway through the project, a live line falls on a passing car, fortunately no one was harmed, but the car is severely damaged. Assuming that the conduct of the public works m

a. Yes. The city's interreference in the performance of the work demonstrates a right to control the employees of the contractors. Those employees are therefore servants of the city and respondeat superior applies.

1. Rose's Marine rents berths to various boat owners and also does boat and engine repair. The marina does not ordinarily sell boats. Phil rents a berth at the Marina for his cabin cruiser. He happens to mention to Rose that he is thinking about selling his boat. Phil then leaves town on a two-week vacation. 3 days later Rose meets Irv who is interested in buying a cabin cruiser just like Phil's. Rose show's Phil's cruiser to Irv and Irv immediately offers to pay $25k for the boat. Overcome by her enthusiastic desire to help Phil, Rose says "Okay. He'll take it. Give me $500 earnest money." Irv does so, receiving in return a receipt from Rose "Received from Irv, nonrefundable down payment on Phil's boat. By rose acting for phil." When Phil returns to town, he refuses to go through with the sale. Assuming that Phil is not bound does Irv have any recourse against rose?

a. Yes. When Rose purported an act on Phil's behalf in selling the boat, she impliedly warranted her authority to bind Phil. In fact, she was not Phil's agent and lacked any power to bind him. She has breached her warranty of authority and is liable to Irv for both reliance and expectation damages.

1. A tenant rents her apartment on a month-to-month tenancy, with each term beginning on the first of the month. Under local law, the tenant can terminate the tenancy by giving a full calendar months' notice. For example, for the tenancy to end on March 31st, the tenant must give notice before March 1st. A resident manager, whom the landlord has authorized to receive notices from tenants, manages the building. On December 28, the tenant gives proper notice to resident manager, stating that the tenant will vacate by January 31. Unfortunately, the resident manager fails to pass the notice on the landlord until January 3. Will the tenancy end on January 31?

a. Yes. When an agent has actual authority to receive a notice, receipt of that notice is attributable ti the principal. The agent's failure to communicate the information to the principal may be a breach of the agent's duty to the principal but has no effect on the attribution rule.

Oscar is a partner in a partnership governed by UPA 2013 and formed, in the words of the partnership agreement, "for the purpose of investing in real estate." The agreement contains no other limitation on the scope of the partnerships business. In the 5 years since its formation, the partnership has invested exclusively in residential real estate located either in Minnesota or Iowa. While on vacation in Hawaii, Oscar comes across an attractive investment opportunity in an office building located there. Without informing his partners or obtain n their consent, Oscar uses his own money and buys the building. 2 years later while the partnership is still in existence, Oscar sells the building and makes a profit of $300k. When the other partners hear of the transaction, they insist that Oscar share the profits. Must he?

probably, the profits come from investing in real estate, so arguable involve the appropriation of a partnership opportunity. UPA (2013) §409(b)(1)(C), Oscars partners will therefore prevail unless Oscar can show that the partnerships practice of investing in solely in residential real estate impliedly limited the scope of the partnership business.

A 30 partner law firm has a partnership agreement that delegates most management decisions to a 5 partner Executive Committee elected annually by all the partners. The partnership agreement states a formula for determining each partner's profit share and allocates to the executive committee exclusive authority to apply the formula and determine the profit shares. the formula allows the EC some discretion but depends very heavily on objective factors like billable hours, payments received from clients and clients brought to the firm. A partner is dissatisfied with the profit share he received this year and wishes to see the partnership records the EC used in determining shares for all the partners. The EC claims that this info "relates to the individual performance of the several partners and is therefore confidential" The EC offers to show the partner only record directly relevant to him. The partner accurately

under 1914, the partner is right. UPA §20 provides that "partners shall render on demand true and full info of all things affecting the partnership to any partner" The partner has made demand, and the records are connected to the fundamental partnership question of profit shares. Given that connection, they certainly contain info of things affecting the partnership. The delegation of management authority to the Executive Committee makes no difference in this issue. A partner right to info can be waived by agreement, but the agreement must be specific to be effective. The partner may also be right under 2013 section408(b) provides categorically that: On reasonable notice a partner may inspect and copy during regular business hours, at a reasonable location specified by the partnership's business, financial condition, and other circumstances, to the extent the info is material to the partners rights and duties under the partnership agreement or this act. However, the result would change if the partnership were to invoke 2013 §408(j): In addition to any restriction or condition stated in its partnership agreement, a partnership, as a matter within the ordinary course of business, may impose reasonable restrictions and conditions on access to information to be furnished under this section.