Business Law Exam 3 Questions with Complete Answers, A+

Business Trust - an unincorporated association run by trustees for the benefit of investors (this are called "beneficiaries") Grand Trust- will benefit myself and my children and is subject to lower taxes Irrevocable trust- you can put money into it, but you cannot get money out of it -you can put stuff into the trust by putting your title on your house or car that is owned by "the Jason Malone" trust - the taxes in the trusts are higher if they are put into a trust... but there are different tax options Trustee- they owe a fiduciary duty to the benefiters (this is not an agency relationship) Creating an agency relationship - agent agrees to perform a task under the control of the principal Steps to create an agency - - an agent and a principal who mutually consent that the agent will act on behalf of the principal - the agent is subject to the principal's control which sometimes creates a fiduciary relationship Not required when creating an agency relationship - -written agreement: oral understanding is valid, except in one circumstance - The Equal Dignities Rile (if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written!) - formal consent (the principal and agent do not agree formally that they have an agency relationship) - consideration (it does not have to meet all standards of contract law) Fiduciary relationship - interests of another above their own; highly regarded within the law **Every ___________has an agency relationship, but NOT every agency relationship has a __________ Defining a principal - -Employer -- employee -this relationship is defined by a lengthy commitment between the employer and the employee *Actions on the agent are not defined by the ____________ Independent Contractor - the employer leaver the details (methods and manner in which the agent performs the job) *Has little control Employee - the employer has the right to control the conduct of the agent *Has a lot of control Employee relationship - -Employer is liable for physical harm caused by the negligence of the agent that are committed within the scope of their employment -Subject to taxes and other requirements associated with having employees (ex. workers compensation, social security, unemployment OSHA, maybe stock options etc.) Independent Contractor Relationship - Principal is liable ONLY for negligence in hiring or supervising the Independent Contractor, NOT the Employee Principals Liability for Contracts - -the agent has authority -the principal, for reasons of fairness, is estopped from denying that the agent had authority, or A principal may not claim that it was not his agent if he knew that others thought the agent was acting on the principal's behalf but failed to correct their belief. -the principal ratifies the acts of the agent. Principal accepts the benefit of the unauthorized transaction or fails to repudiate it **Principal is responsible as if he had performed those acts himself Authority - the principal is bound by the acts of an agent if the agent has _______ *also is bound by acts of subagents--those hired by his agents Express Authority - the principal asks the agent to do something and the agent does it Implied Authority - the principal does not have to micro manage the agent (based on job description) Apparent Authority - principal can be liable for the acts of an agent who is not in fact, acting with authority if the principals conduct causes a 3rd party reasonably to believe (the court is going to come in and stop and say that the agent did not have this) Ex: Family friend negotiating endorsement deals Ratification - If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it.