AGENCY/PARTNERSHIP
Wednesday, June 11, 2008
12:31 PM
AGENCY
· Agency: fiduciary relationship (Rest. Agency 1.01)
o Principal: manifests assent to have agent act on behalf of
o Agent: manifests assent to act on behalf
· Characterization of relationship not controlling; actual intention is
· Terms:
o Co-agents: two or more agents that have relationship w/ sampe principal
o Types of principals:
· Disclosed: 3rd party has notice that agent acting for principal and notice of principal’s id
· Undisclosed: 3rd party has no notice that agent acting for principal
· Unidentified: 3rd party knows agent acting for principal but doesn’t know id of principal
o Dual agent/joint principals: act on behalf of more than one principal regarding same transaction
o Notice: if person knows, has reason to know, or should know
· Notice of fact agent should know imputed to principal: effective as if given to principal
o Person: individual, organization w/ legal rights/government
· Actual authority
o Agent believes per manifestations of principal that principal wants to act
o Can take action in keeping w/ principal’s objectives, as agent reasonably understands them
· Apparent authority: power to act w/ third parties when 3rd party
o reasonably believes has authority
o Belief accords w/ principal’s manifestations
· Respondeat superior: employer liable for torts committed by employees when acting in scope of employment
· Estoppel to deny existence of agency relationship: person can be held liable as principal even if not otherwise liable where 3rd person made detrimental change in position if
o Person intentionally/carelessly caused such belief
o Knowing that such belief might exist, doesn’t take reasonable steps to notify
· Estoppel of undisclosed principal: may not rely on instructions given agent that would reduce power of the agent from that he would have had if principal had been disclosed
· Termination of actual authority:
o Terminates when either party manifests termination
o Effective when other party has notice of it
o Doesn’t end apparent authority: ends when no longer reasonable for 3rd party to believe agent continues to act for principal
· Independent contractor may or may not be agent
· Fiduciary duty: two most basic
o Duty of care: act in non-negligent manner–must act on informed basis
o Duty of loyalty: self dealing/competition–tranctions that pose confict of interest must mitigate conflicts and protect fiduciary
o Duty of good faith
o Duty of complete candor
PARTNERSHIPS
· Uniform Partnership Act of 1994 governs MN
· 1) two or more persons (including corporations etc.) 2) co-owners of business (including LLP) 3) for a profit. 323A.0101(8)
o Prima facie evidence: profit sharing
o Other factors considered
· Sharing losses
· Right to control
· Intent (express/implied)
· Contribution
o May become partner only w/ consent of all partners 323A.0401(i)
· Why a partnership? Generally not good idea unless LLP because of liability
o Pass thru taxation
o Certain businesses must be (e.g., law firms)
o Inadvertence/poor legal advice
· Written agreement not required (unless per SOF: real estate or term of more than 1 year) 323A.0101(9).
o Nonwaivable provisions 323A.0103
o But is preferred because:
· Avoids future disagreements
· Provable in court
· Focuses attention on difficult areas before commencing business
· Sharing of profits/losses
o Profits: default: equal sharing among partners (323A.0401) but can agree to alternative arrangements
o Losses: share of losses in proportion to share of profits
· RICHERT: in absence of agreement, party that gives labor only still must pay share of losses in money 323A.0402(h)
o Assets applied to discharge obligation; profits/losses from liquidation credited/charged to each partner’s account.
· If partner fails to make payment, other partners must make up different (jointly liable), but can seek compensation from partner who didn’t pay (severally liable) 323A.306
·
right (Collins) 323A.0602
· Wrongful if:
§ Breach of agreement
§ Before term/completion of undertaking if venture
§ Expulsion by judicial determination
§ Bankrupt
· If wrongful, owes damages caused in addition to other partnership obligations
o Effect of dissociation 323A.0603:
· Right to participate in conduct of business terminates
· Duty of loyalty
§ Can begin competing
§ Still can’t act adverse/hide profits of actions taken before dissociation
o Dissolution doesn’t end partnership of itself
· If continues: see 323A.0701
§ Partnership will cause buyout of partner’s share: price amount that would have been distributable on date of association if assets sold at 1) greater of liquidation value or 2) value of business
§ Acts of partner continue to bind for 2 years
· if 3rd party:
· Reasonably believed was then partner
· Didn’t have notice of disassociation AND
· Not deemed to have knowledge
· If acts of former partner bind, liable to partnership
§ Dissociated partner liable for obligations occurred while partner, but not after unless
· third party:
· Reasonably believed was then partner
· Didn’t have notice of disassociation AND
· Not deemed to have knowledge
· Partnership creditor w/o partner’s consent agrees to material alteration in nature/time of payment
· If wound up: see 323A.0801
§ Must be wound up if:
· Partnership at will notice from partner NOT dissociated of intent to leave
· Enterprise/time dependent if:
· w/in 90 days of death or wrongful dissociating, express will of at least half remaining partners to dissolve
