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Based on vicarious liability, means the principal is liable because of his contract with the negligent agent |
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When an agent runs personal errands while on the business of the principal Agents are liable for tortious conduct while on substantial frolic and detour, principal if minor |
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Principals are not liable for injuries caused by agents and employees while on their way to or from work |
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when the agent performs for the principal while on her own personal business both agent and principal are liable |
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Motivation Test (intentional torts) |
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The agent is liable for intentional torts committed within her scope of employment IF her motivation is personal If her motivation is to promote the principal's business, the principal is liable |
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Work-related test (intentional torts) |
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If the agent commits an intentional tort within a work-related time or space, the principal is liable regardless of the agent's motivation |
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Term
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Was the act requested or authorized by the principal? Was it the kind of act the agent was employed to do? Did act occur within time period of employment? Did act occur at place of employment? Was agent advancing the principal's purpose? Did act occur at place of employment? |
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Principal is liable for both intentional and innocent misrepresentation on the part of the agent |
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Principal is liable for contracts formed with a third party by the agent, if the principal authorized the contract 3rd party may rescind or affirm and recover damages |
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Term
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Definition
Easy Cheap One person (owner) makes all decisions Owner gets profits Ownership easily sold Capital: personal funds and loans Owner legally responsible |
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Personal Liability of Sole Proprietors |
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Definition
Owner loses all personal capital invested in the business Unlimited personal liability: creditors may recover claims against the business |
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Taxation of Sole Proprietorship |
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No taxes at business level Profits(losses) reported on personal income of owner |
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Definition
Partners are liable for the debts and obligations of the partnership |
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Requirements of a general partnership |
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2+ people carrying on a business as co-owners (determined by sharing management responsibility and profits, losses) for profit |
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Written agreement, required if partnership longer than 1 year, or authorized to deal in real estate |
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Through individual partner's personal income tax returns this is called "flow-through" taxation |
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Rights of General Partners |
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Right to participate in management share in profits do not receive salary unless agreed to entitled to indemnification for travel, etc expenses if incurred in the ordinary and proper conduct of the business if making a loan to the partnership, partners may receive interest payments and repayment/recover capital, subordinate to non-partner creditors |
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Right to Information (partnerships) |
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Definition
Partners have a right to demand and receive info about all things affecting the partnership Books must be kept at principal place of business |
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general partners invest capital, manage the business, and are liable for partnership debts |
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DEGREE OF CONTROL: if the principal asserts little control, the person is an independent contractor. |
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Factors determining Independent Contractors |
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who controls the manner and means of accomplishing the desired results distinct occupation vs independently established business length of time and amount of time agent works for principal paid by the hour or by the job degree of skill necessary |
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Agent's authority to act on the principal's behalf is expressly stated in the agency agreement. May be oral or written unless required to be written by Statute of Frauds |
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The agency is implied from the conduct of the parties |
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Incidental Authority (types of agency) |
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Express agents have incidental authority in emergency situations to take reasonably necessary actions to protect the principal's property and rights |
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Term
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Definition
agency that arises when the principal creates the appearance of an agency that does not actually exist principal is then estopped from denying the agency relationship |
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How to terminate an agency |
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Definition
Mutual agreement Lapse of time Purpose achieved Occurrence of a specified event ----- by law: -death -insanity -bankruptcy -changed circumstances (an unusual change that would lead the agent to believe the original instructions should not longer be valid) -war +termination by impossibility |
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revocation vs renunciation of authority |
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Definition
revocation of authority is when a principal terminates an agency contract renunciation of authority is when an agent terminates an agency |
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Term
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Definition
Duty to compensate agreed upon or reasonable/customary amount Duty to reimburse and indemnify for any expenses and losses the agent incurs while within the scope of the agency Duty to cooperate |
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Term
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Definition
duty to perform in the contracted duties and meet the standards of reasonable care, skill and diligence Duty to notify of info found that is important to the principal Duty to account - keep records of all money and property received and expended in the course of the agency |
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Fully disclosed principals |
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Definition
when the third party knows the agent is acting on behalf of and principal and knows the identity of the principal Principal is liable, agent is not |
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Term
Partially disclosed agency |
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Definition
If the third party knows the agent represents the principal but does not know who the principal is Agent and principal are liable but agent may sue the principal for indemnification |
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Definition
Third party does not know the agent is not acting on his behalf but on the behalf of the principal |
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Term
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Definition
Requires a limited partnership to have at least one general partner and one limited partner. A person can be both a general and limited partner A corporation may be the sole general partner |
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Limited Partnership Requirements |
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Definition
Certificate of limited partnership must include: -name -general character -address of the principal place of business -name+address of every partner -latest date on which the partnership is to dissolve -amount of capital contributed by each partner |
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