1.

Agency Contract Liability

a. Is there agency? -> control, consent, on behalf of (use all the facts)
b. Power to bind: Authority? -> actual, apparent, inherent, estoppel, ratification
c. Undisclosed principal? -> agent liable too
d. Right to bind?
e. Imputed knowledge and notice? -> notice imputed if agent had apparent auth, knowledge requires actual
auth and agent must reasonably remember
2. Duties in principal agency relationship
a. P to A
 Duty to indemnify if activity was within scope of authority, non-negligent, and non-tortious
 Duty to compensate, duty of care (must provide safe work environment unless disclaimed)
 Duty to deal fairly and in good faith (cordis)
b. A to P
 Duty of Loyalty, duty to act within authority, duty to obey, duty of care, duty to inform, duty to
indemnify for loss due to bad conduct
3. Agency Tort Liability
a. What are the possible torts?
b. What are the possible relationships of the actors?
 Agency? – Control, consent, on behalf of
c. Direct liability?
 Inherently dangerous activity? Negligent hiring or supervision? Non-delegable duty?
 Non-Delegable duty: professional relationship –trying to shift responsibility away
d. Actual authority?
e. Apparent authority?
f. Ratification?
g. Respondeat Superior?
 Employee?
 Right to Control, distinct occupation, level of skill, right to terminate, supplier of tools, term,
method of pay, part of regular business, subjective beliefs of P&A, P in business?
 Borrowed Servant?
 Spot control, primary loyalty, joint employment (dual liability), captain of the ship?
 General presumption against – must be total surrender of command
 Scope of employment?
 Intentional torts: Motive test, foreseeability test, causal nexus test
 Frolic v. Detour – Reentry test: on the way back to work? But for test: would employee have
been here anyways?
 Primary purpose of travel test? But-for?
 Disobedience doesn’t matter
h. Policy? – enterprise liability, risk avoidance, risk spreading, deep pockets
i. Defenses?
4. Partnership Generally
a. Was there a valid partnership? UPA 6, RUPA 202
 Two or more people carrying on a business for profit even if they didn’t intend to create a p’ship
 What did each bring to the p’ship? Did parties designate it a p’ship?
 Sharing of profits? -> Prima Facie proof of p’ship but can be overcome
 Term, limited purpose, or at-will?
b. Partnership by Estoppel? -> person is liable for p’ship debts if purported to be a partner
c. Partnership property?
 Court usually looks to intention of partners
  UPA § 8 – (1) property brought into partnership stock or purchased on account of the partnership is
partnership property (2) unless the contrary intention appears, property acquired with partnership
funds is partnership property
 RUPA § 203, 204 – two presumptions
 property acquired with partnership funds is partnership property
 property acquired with personal money is personal property
 p’ship property is only to be used for pship business unless given perm from other Ps
d. Transferability?
 Only p’ship interest is transferrable – just rights to profit, not to manage, and not to p’ship property
 RUPA 503 gives assignee right to judicial determination during windup
 RUPA 504 gives partner’s creditor right to seek a charging order for the pship interest
e. Management Rights Generally
 Equal share—each partner has an equal share in management rights. (§18(e), §401(f))
 Majority rule--Disagreements among the partners (over ordinary matters) are resolved by the
majority (§18(h), §401(j)).
 Unanimity—Decisions against the partnership or outside the ordinary course of business must be
decided by all the partners (§18(h), clarified by §401(j)).
 UPA §9(c)—enumerated things for which there must be explicit authority by all the partners.
These are eliminated by RUPA, but, it says, not changed.
 Deadlock—if there is no majority, the party objecting to the change will prevail
f. Authority?
 Actual authority always binds. Apparent auth binds if act is apparently related to pship’s business
and 3rd aprty didn’t know partner lacked actual auth.
 Managing Partner -> Implied actual authority to make decisions normally requiring majority
 Apparent authority -> partners have apparent auth to do anything “in the usual business of the
partnership”
 Estoppel? -> UPA doesn’t require reliance but RUPA does
 Statement of p’ship authority? -> usually for real estate purchasing rights
 Notice and Knowledge? -> imputed if told to partner. If gained b4 partner-> is it still “present to her
mind”? RUPA reasonable diligence test- should the partner have communicated it to other partners?
No imputation if fraud or adverse dealing evident
 Only duty to 3rd Parties is Duty of Good Faith – same as contract law
5. Partner’s duties to Partners
a. Duty of Loyalty (RUPA 404(b))
 Accounting, non-compete w/o permission, use of assets, no self-dealing
b. Duty of Care (RUPA 404(c))
 grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law
 business judgment rule
c. Good Faith and Fair Dealing (RUPA 404(d))
d. Specifically allowed axns: loaning money to p’ship, furthering self interest
e. DUTY to inform -> RUPA has positive duty to give info necessary for ordinary operations without
being asked. (RUPA 403(c)) UPA only requires it if requested
f. Indemnification: Ps are entitled to expenses incurred during normal operations of biz
6. Actions between Partners
a. UPA 22 -> sole remedy is an equitable suit for dissolution and/or an accounting
 Exceptions: partner suing was not acting as partner, not related to p’ship biz, fraud
b. RUPA -> partners CAN sue other partners for legal or equitable relief to enforce:
 P’ship agreement rights, any other right the partner has in the p’ship (RUPA 405)
7. Liability to 3rd Parties
 a. P’ship is liable to 3rd parties for wrongful acts of partners committed within Scope or with authority
(RUPA 305, UPA 13)
b. Partners personally liable for all obligations of the p’ship
 UPA 15 -> jointly liable for Ks and Debts, joint and several for torts
 RUPA 306 -> joint and several for all obligations
 If sued jointly, can force joinder of other partners
c. Malicious Torts and crimes -> each partner must have mens rea
d. Fraud -> only liable if partner was acting within scope of p’ship business
e. Exhaustion rule (RUPA 307) -> judgment against p’ship is not judgment against Partner, can only reach
partner’s personal assets with a separate judgment against him, and only if the partnerships own funds
are exhausted.
f. No personal liability for debts incurred before joining p’ship (RUPA 306, UPA 17)
8. Dissociation and Dissolution
a. UPA approach
 Dissolution is caused by end of term, by express will of P, by mutual assent of P even if term is not
up, by expulsion of a P (good faith if agreement says so, bad if not), by law (illegality, death,
bankruptcy), judicial dissolution (incompetency or incapability of a P, conduct tending to prejudice
the pship or breach of the agreement by a P)
 If good faith dissolution then Ps do not have claims against each other or pship
 If bad faith, the “innocent” Ps have right to damages, right to purchase business, right to wind up.
 Effects of dissolution: termination of actual authority immediately, termination of apparent auth
when creditors receive actual notice and others receive constructive
 Winding Up: settling pship affairs (no new business), wrongful P cannot wind up
 Distribution: outside creditors->partners(P creditors, capital contributions, profits)
 Termination: pship is terminated when all pship affairs have been wound up
b. RUPA approach
 Presumption that pship will continue operating after P leaves so dissociation preferred
 Dissociation terminates P’s rights to participate in the pship and P’s noncompete duty
 Dissociation does not always cause dissolution -> other Ps can continue by buying out the
dissociated partner’s interest
 Events causing dissociation: P’s express will, by agreement, P’s explusion by unanimous vote,
judicial expulsion, P’s bankruptcy or assignment of interest to creditor, death or incapacitation
 Dissociation wrongful only if: breach of agreement or before term is up -> P liable for damages
 Effect of dissociation without wind up: P’s interest must be purchased, indemnification for future
pship obligations, dissociated p’s lingering apparent auth lasts 2 years (unless stmt of dissociation is
filed then 90 days)
 Events causing dissolution: express will of P other than dissociated P, in term pship the will of at
least half Ps to dissolve after the dissociation of another P, by pship agreement unless Ps agree to
continue, unlawful pship (can cure within 90 days), judicial determination that pship in no longer
reasonable or that windup is equitable for a creditor holding assignment
 Wind up: can run the business as a going concern for a reasonable time
 Distribution: all creditors first, then capital accounts