CA Bar Exam Agency & Partnership

CA Bar Exam Agency & Partnership Independent Contractor vs. Employee ️️To determine if someone is an independent contractor or an employee, courts look at whether the principal controls the method and manner of the agent's work. (also consider the factors) Factors that establish whether principal controls manner and method of performance ️️(1) The skills required for the work (i.e. doctor is highly skilled); (2) whose tools or facilities are used; (3) basis of compensation (i.e. based on time or job completion); (4) duration of employment; (5) what the understanding of the parties is (what the K says/ what was agreed to is not determinative, but it helps); and (6) whether the person was hired to further the principal's business (i.e. non-business purpose like mowing the lawn likely indicates I.C. status) Actual Authority (for Principal-Agent) ️️authority an agent reasonably believes she has based on dealings with the principal. Actual Authority (for Partners) ️️Authority a partner reasonably believes she has based on dealings with the partnership, can be based on partnership agreement or consent of the partners. Revocation of Actual Express Authority ️️Revoked by: (1) A unilateral act of either Principal or Agent; or (2) Principal's death or incapacity. Actual Implied Authority ️️Authority which O gives A through custom or circumstance. (1) Necessity = all tasks which are necessary to accomplish an expressly authorized task; (2) Custom = all tasks which are customarily performed by persons w/ A's title or position; and (3) Prior Dealings (btwn P and A) = all tasks which agent believes is authorized based on P's prior acquiesce. Ratification ️️Authority granted AFTER K has been entered into. Occurs when agent purports to enter into a K on P's behalf (but w/o authorization) and subsequently P validates the act and becomes bound. Requires: (1) P knows all material facts; (2) acceptance of entire transaction; and (3) capacity (legal age and competency) Principal's K Liability to Third Parties ️️*For principal to be held liable for Ks an agent entered into with a third party, P has to authorize (actual or apparent) or ratify the K.* Principal's liability to 3rd Parties for Independent Contractor's Intentional torts ️️Generally, principals are not liable for an independent contractor's torts EXCEPTIONS: (1) ultra hazardous activities; and (2) estoppel. Principal Liability for Independent Contractor engaged in Ultra Hazardous Activities ️️If Indep. C is engaged in ultra-hazardous activities, principal can be held liable for tort to 3rd party. Estoppel Doctrine ️️Under the estoppel doctrine, if the principal creates the appearance of an employer-employee relationship and the third-party relies on that relationship, the principal will be estopped from denying relationship and will be liable under the doctrine of respondeat superior. Principal is Liable for Torts committed by an Agent If ️️(1) Principal-Agent relationship exists; and - Assent (an informal agreement btwn principal (w/ capacity) and agent. -Benefit (agent's conduct must be for Principal's benefit) -Control (P must have power to supervise the manner of A's performance) (2) act occurs within scope of agency. Principal's liability for intentional torts of: Sub-Agents ️️Principal is liable if there is: (1) assent; (2) benefit; and (3) control between the principal and sub-agent. Principal's liability for intentional torts of: Borrowed Agents ️️P is liable if: (1) assent; (2) benefit; and (3) control between borrowing principal and borrowed agent. Torts within Scope of Employment ️️Balancing Test: (1) of the kind = conduct within job description; (2) on the job = detour (minor deviation) is within the scope, and frolic (major deviation) is outside scope; (3) intent to benefit the principal = enough where A intended to benefit P (even in part) --Intentional Torts are generally outside the scope of agency!! EXCEPTIONS: (a) Authorized by P; (b) Natural from nature of employment (i.e. bouncer); OR (c) motivated by desire to serve P. General Partnership ️️Is comprised of two or more persons carrying on as co-owners of a business for profit. No requirement that the parties intend to form a GP partnership, only that they intend to run a business as co-owners. Courts look to the intent of the persons, to determine whether a GP exists. -No formalities are required (don't need to send anything to the State) Liability of General Partners ️️All GP partners are jointly and severally liable for all partnership obligations (K and Tort). - GP Partners are also liable for any torts committed by a partner or employee of the partnership in the ordinary course of partnership business or with partnership authority. --Incoming partners are generally not liable for prior debts; but money paid by incoming partner can be used by the partnership to pay prior debts. Dissolution of GP ️️in absence of agreement, GP dissolves upon notice of the express will of one GP to dissociate. (1) Winding up = period of time between dissolution and termination (when remaining partners liquidate GP assets to satisfy GP creditors) GP liability for Old and New Businesses ️️Old businesses: GPs retain liability on all transactions entered into to wind up old business and satisfy existing creditors. - New Biz: partners retain liability during winding up, until actual notice of dissolution is given to creditors, or until 90 days after filing Statement of Dissolution w/ the State. Limited Partnership ️️Is comprised of one or more limited partners and one or more general partners. *To form a valid LP, a certificate of a LP must be filed with the Secretary of State.* Liability of Limited Partners ️️The general partners are personally liable for the partnership obligations, but the limited partners are only liable to make their agreed-upon contributions. Dissolution--Order of Payment for General Partnerships ️️In a GP, all partners are jointly and severally liable for the partnership obligations (in K and tort). When a partnership is dissolved and its assets reduced to cash, cash must be used to pay the partnership's liability in this order: (1) creditors (including partners who are creditors); and