Agency Law & Business Organizations Flashcards

Law
Terms Definitions
Basic business organizational structures
1) sole proprietorship
2) partnerships
3) corporations

hybrids
1) limited liability partnerships
2) "s" corporations
3) limited liability companies
4. limited partnerships
Agency is based on _________ and is therefore called __________
Agency is based on the consent of the parties and is therefore called a consensual relationship
Agency law involves
1)
2)
3)
1) principal
2) agent
3) third party
Agent
person or firm who is authorized by the principal or by operation of law to make contracts with third persons on behalf of the principal
Principal
person or firm who employs an agent
Agency can be based on either ________ or _______ agreement
Agency can be based on either an express or implied agreement
Respondeat superior
anytime an employee is liable for a tortious act in the scope of his employment, the employer is also liable
Duties
To avoid personal liability, an agent must comply with
1)
2)
3)
4)
1) duty of loyalty
2) duty to keep principal informed
3) duty to obey instructions
4) duty to account for all monies handled
Employees
generally not hired to represent employer in making contracts with third parties
possible
however it is possible for an employee to be an agent as well
Independent contractor
bound by a contract to produce a certain result
agent or employee differs from an independent contract in that ______
agent or employee differs from an independent contract in that the contractor controls the performance of the work
an employer or principal can control the employee or agent, however they cannot control an independent contractor
By law, an independent contractor is liable for _________ not _________
By law, an independent contractor is liable for their work and their employees, not the person who hires the independent contractor
Special agent
an agent authorized to transact a specific act
General agent
an agent authorized to conduct all affairs of a principal in a certain category of business
Universal agent
authorized to do all acts permissible by law on behalf of the principal
Levels of authority
actual authority
expressed authority
implied authority
apparent authority
Apparent authority
actions that may cause a person to believe that a party is acting as an agent for a principal.
if this is the case, the principal will be esstoped from denying an agency relationship
The burden of proof that an agency exists rests on _______
The burden of proof that an agency exists rests on the party that will benefit from the proof
An agent is under duty to obey and carry out all lawful instructions of the principal
and may be held liable for any harm or loss suffered by the principal if he does not follow his instructions
If an agent makes a contract on behalf of a disclosed principal, with proper authority to do so and the contract is executed correctly
the agent has not personal liability
Agent
Unauthorized action
if a person makes a contract as agent for another but lacks authority to do so, the contract will not bind the principal
may be personal liability
If the person purports to act as agent for a principal, an _____ arises that this person has authority to do so
If the agent lacks authority there is a ______ and the agent may be liable to the third party for any damages or losses incurred
If the person purports to act as agent for a principal, an implied warranty arises that this person has authority to do so
If the agent lacks authority there is a breach of warranty and the agent may be liable to the third party for any damages or losses incurred
Disclosed principal
when an agent makes known the identity of the principal and the fact that the agent is acting on behalf of the principal
Agent
Contract
Disclosed principal
agent is not a party to nor bound by any contract that is executed
Partially disclosed principal
when an agent makes known the existence of a principal but not his or her identity
Agent
Contract
Partially disclosed principal
agent is a party to the contract and is bound
Undisclosed principal
when the third party is not told or does not know the existence of a principal
Agent
Contract
Undisclosed principal
agent is a party to the contract and is bound
Sole proprietorship
most common business organization in the country
easiest to form
continuity is tied directly to the proprietor
liability is solely with the proprietor
taxed as an individual
Partnership
easy to form (partnership agreement)
dissolved upon death or exit of a partner
control defined in partnership agreement
all partners are jointly liable for the partnership's obligations
Corporations
artificial intangible entity created under state law
more complicated to form (requires filing articles of incorporation)
continues until dissolved (deaths of shareholders does not affect)
managed by officers and directors as elected by shareholders
public vs. closely held
Limited partnerships
same attributes of a partnership except one or more of the partners can be designated as limited
limited partners have limited liability (may not be held liable for other partners' actions)
"S" corporations
require filing articles of incorporation (start as "C" corporations)
continuity until dissolved
controlled by officers and directors, elected by shareholders
Limited liability company
require filing articles of organization continuity until dissolved
control is vested in its members and managers
members not personally liable
Types of stock
common
preferred
cumulative preferred
participating preferred
convertible preferred
redeemable preferred
/ 35
Term:
Definition:
Definition:

Leave a Comment ({[ getComments().length ]})

Comments ({[ getComments().length ]})

{[comment.username]}

{[ comment.comment ]}

View All {[ getComments().length ]} Comments
Ask a homework question - tutors are online