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Business Associations/Corporations
University of Kansas School of Law
Hecker, Edwin Webb

Business Association I Review Outline

I. Agency
a. Elements of Agency
i. Mutually Consensual
ii. Fiduciary
iii. Work done of behalf of Principal
iv. Agent is subject to the right of control of Principal
b. Type of relationships from Agent-Principal Relationship
i. Agent-Principal
ii. Agent & 3rd Party
iii. Principal & 3rd Party
c. Vicarious Liability: Principal is responsible for Agent’s actions if:
i. An employer-employee relationship
ii. Employee acting w/I the scope of employment
1. Factors Courts Look at to Determine whether Employee were acting w/I Scope of Employment
a. Whether conduct was similar or incidental to job description?
b. Did activity occur at the place of employment and during hours of employment
c. What was employee thinking? Was employee attempting to advance employer’s business?
d. Direct Liability
i. Non-delegable Duties: ultra-hazardous activity cannot avoid liability by delegating performance, even if it’s a non-agent, independent contractor
ii. Doctrine of Ratification: an agent w/o principal’s authority enters into K w/3rd party and after the fact, the Principal ratifies that K
1. What if during the intervening period there is destruction to the subject-matter of the K? 3rd party does not bear the burden due to him entering into K based on faulty premises.
e. Types of Principals
i. Disclosed Principal
ii. Partially Disclosed Principal
iii. Undisclosed Principal:
f. Actual v. Apparent Authority
g. Termination of Agency
i. Employee at Will: general proposition is that Employee at Will can be terminated at anytime, subject to the following exceptions
1. Retaliatory Discharge – can’t fire an employee for engaging in conduct that there’s a strong public policy reason (i.e. perjury, whistleblowers, workmen’s comp claims) for supporting the conduct; punitive damages allowed.
2. Implied K (or promise) of employment – employer won’t terminate employee unless there is good cause. See Morriss in which the employee manual contained an implied K that employees would be fired only for good cause. The disclaimer in the employee manual “manual not a K” is not enough, standing alone, to prove that there is not an implied K in the employee manual!
3. Terminating K in bad faith – i.e. “ev

. If no actual authority:
1. If estoppel but not actual authority, all three are bound by K. If 3rd party recovers from P, A liable to P for acting beyond actual authority
2. If T recovers from A, P doesn’t indemnify A
3. If no power whatsoever, P & T not bound to K w/each other. A is liable to 3rd party on K.

II. Partnerships
a. Elements of a Partnership
i. 2 or more partners
ii. Associated
iii. Carrying on
iv. A Business
v. As Co-Owners
vi. For Profit
b. Rules for Determining the Existence of a Partnership
i. Partnership by estoppel – when parties who are not actual partners display themselves as partners and 3d party relies, the people will be liable as partners. Otherwise if they do not hold themselves out as partners, they will not be liable as partners. RUPA 308
ii. Mere co-ownership of property is not sufficient to establish partnership by itself. RUPA 202(c)(1)