BBA

• 1. Mutual consent
• 2. Agent acting on behalf of principal
• 3. Subject to the principal's control

The fiduciary relationship which results from the manifestation of consent by one person that the other shall act on his behalf and subject to his control, and consent by the other so to act

Ownership alone, regardless of the presence or absence of the owner in the car at the accident, establishes a prima facia case against the owner for the reason that the presumption arises that the driver is the agent of the owner

At the time of the transaction, the third party has notice that the agent is acting for the principal and of the prinicipal's identity

• Liability under inherent authoirty when: (a) actions accompany or are incident to transactions which the agent is authorized to conduct; (b) Agent is acting on behalf of principal absent actual authority; (c) Induces T to make detrimental change in position (reasonable belief and no notice of A's authorization); (d) P had no notice of A's conduct; (e) P failed to take reasonable steps to notify others
• cannot get liability under apparent authority and estoppel (No liability under apparent authority or estoppel)

• T not bound by contract as made or as would have been made under proper authority
• If different is amt or inclusive or exclusive of separate part, P liable as authorized if T manifests willingness to accept

• Can exist even if not called agency
• not limited to business
• no need for written contract
• cannot contract around control
• no need for compensation

P who employs an A to perform service in his affairs and who controls or has the right to control the physical conduct of the other in performance of the service

Acts on P's behalf and subject to P's control in the manner in which the task is performed

Acts on behalf but relies but relies on his own expertise to determine the manner by which the task gets accomplished

simply an arm's length contractual relationship and neither acts on P's behalf or subject to his control

• Performs acts authorized by the A, who was authorized by the P
• Is also an A of the P and effects relations between P and T
• Fiduciary relation to P - subject to all liabilities of A to P except any dependant on contract between them

• Look at ability to initiate transaction (but note Cargill were de facto control was required)
• Look at the norm in similar business settings
• Exercising veto power over the business acts is NOT enough to make a Principal

• Factors that he is a seller and not an agent:
• He is to receive a fixed price for the property, irrespective of the price paid by him
• He acts in his own name and rcvs title for the property which he will transfer
• Has has an ind. business in buying and selling similar products
• (An A sells goods on behalf of P; a seller sells on his own behalf)

• Authorized to conduct a series of transactions involving a continuity of service. Manifestation may be made:
• Directly to third person
• To the community by signs or advertising
• By authorizing the agt to state that he is authorized
• By continuously employing the agt

When P manifests consent to its A to act on his belief on a particular matter (manifestation of consent is an issue of fact)

actual authority circumstantially proven which the P actually intended A to possess and includes such powers that are practically necessary to carry out the duties actually delegated

• To do what is necessary, usual, and proper to accomplish or perform an agent's express responsibilities OR
• Act in a manner in whict A believes P wishses A to act based on A's reaonsable interpretation of P's manifestation in light of P's objectives and other facts known to A

• If P's manifestation to A expresses P's wish that something be done, it is natural to assume that P wishes, as an incidental matter, that A proceed in the usual and ordinary way unless P directs otherwise
• MUST show - A's reasonable belief, based on past or present conduct of P that P wishes him to act in a certain way

• reasonableness of A's belief
• Nature of the task
• Prior similar experience

• Communications/manifestations coming from P to T (may be from A if A is so authorized; Or by custom)
• Reasonableness of belief that A had authority

• Abandoned by R3 - covered under expanded AA and estoppel
• Must show: (a) A/P relationship; (b) usual and customary power of agency

• Transaction done on behalf of P
• reliance based on creation or knowledge of a false belief
• Change in position

• Promise
• Reliance
• Injury caused by reliance
• Injustice if the promise is not enforced

Person can be liable when a person changes his position because of someone purportedly acting for him if: (a) He intentionally or carelessly caused the belief; (b) Knowing of the belief and that others might change their position, he did not take reasonable steps to notify them of the fact

• Original transaction done on behalf of P
• P knows or has reason to know of material facts (or knowledge is imputed)
• Where it is unfair to T, T gets to choose
• (Ratification is generally all or nothing?

• Express affirmation by P
• Implied affirmation by accepting benefits when it is possible to decline
• Implied affirmation by silence or inaction
• Implied affirmation by bringing lawsuit to enforce action

Expanded to allow the contract to be enforced by undisclosed P's - R2 required the act to be done on P's behalf and R3 eliminates that

When entering into a contract under an undisclosed P - It is A's responsibility to give the knowledge of who T is dealing with or he can be liable

Master is liable for the torts of his servants while acting within the scope of their employment

Control (usually of day-to-day operations)

• Day to Day operations (most important)
• Contract - even if there is waiver in contract, it is not dispositive unless other evidence to the contrary
• Can look to allocation of finance risk - ppl who bear the most risk will make sure they have control

P is not liable for physical harm caused by the negligent physical conduct of non-servant A during the performance of P's business if he neither intended nor authorized the result or manner of performance unless he was under a duty to have the act performed with due care

One who represents that another is his servant or other agent and thereby causes a T to justifiably rely upon the car or skill of such apparent A is subject to liability to T for harm caused by the lack of care or skill of the one appearing to be a servant or other A

• Manifestations from P that party was A
• Reliance by A

Test in WI - the one liable is the one who controlled the instrumentality that caused the injury

A master is liable for the torts of his servants committed while acting in the scope of their employment

• it is the kind employee is employed to perform
• It occurs substantially within the authorized time and space limits
• It is actuated at least in part by a purpose to serve the master
• If force is intentionally used by the servant against another, the use of force is not unexpectable by the master

• If the act is commonly done by such servants
• The time, place, and purpose of the act
• Previous relations between master and servant
• Extent to which the business of the master is apportioned between different servants
• Whether or not the act is outside the enterprise of the master, or if within the enterprise, has not been entrusted to other servants
• If the master has reason to suspect the act will be done
• The similarly of the act done to the act authorized
• If the master furnished the instrumentality that caused the harm
• Extent of departure from the normal method of accomplishing an authorized result
• If the act is seriously criminal

Majority test - A act is within the scope of employment if its purpose is to serve the master

Minority test - (Rejected by R3) - Tort is a foreseeable consequence of the enterprise undertaken by the employee

(defense) - conduct by the servant which does not create risks different from those attendant on the activities of the community in general will not give rise to liability

Detour - master may still be liable; Frolic - master probably not liable

May be liable if the intent was to serve the master (motive test)

Master is not liable if it is foreseeable and no intervening personal cause

Where a person engages a contractor, who conducts an ind. business by means of his own employees, he is not liable for the neglegent acts of the contractor in performance of the contract

• Landowner retains control of the manner and means of doing the work that is subject of the contract
• Incompetent contractor
• The activity is negligence per se - ie ultrahazardous
• The activity is inherently dangerous
• Non-delegable duty

The choice of the party to bear the loss falls between the developer and the victim. Where the developer is a substantial entrepreneur and a member of an industry that carries large liability insurance as a matter of course, developer is in the best position to bear the loss

• necessarily involves a serious risk of harm to the person, land, chattels of others which cannot be eliminated by the exercise of utmost care
• is not a matter of common usage

an activity which can be carried on safely only by the exercise of special skill and care, and which involves grave risk of danger to persons and property if negligently done

when the responsibility is so importat to the comunity that the employer should not be permitted to transfer it to another

Unless otherwise agreed, an A is subject to his P to act solely for the benefit of the P in all matters connected with his agency

• In violation of duty of honesty and good faith
• takes advantage of his service to make a profit for himself
• *Key* His position plays a predominant part in him getting the money (assets of which he has control; facilities which he enjoys; position which he occupies)

• P can consent to conduct which would normally be a breach
• An agreement that releases A from fiduciary duty with broad language is likely to be unenforceable

• Unless A bargains for the ability to side deal it will not be allowed
• A has duty to exercise good faith in disclosing to P all facts regarding a side deal and leave it to P's discretion whether to accept or refuse

• Lease space, buy furniture, enter into real estate contracts
• Talk about leaving with a peer - more iffy with a subordinate

• Mislead principal
• encourage fellow employees to break contract
• Solicit clients prior to termination
• Take the guts or talent of the organization

• Not permitted to use their position of trust and confidence to further their private interests
• Must refrain from doing anything that would work injury to the corporation, or to deprive it of profit or advantage which his skill or ability might bring to it

• trade secrets
• Written list of names
• other confidential matters
• Not even what is in your memory
• Likely any information you got while being A

Information, including a formula, pattern, compilation, program, device, mehtod, technique, or process that: (a) derives ind. economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

• Narrow approach - focus on whether or not document was a trade secret
• How much time and energy was put into compiling the list
• How much time and energy is put into confidentiality

Same person shows up everyday - the employer helped create this relationship so there is loyalty to the employer

constantly changing - not getting the clear personal relationship

• If it came to you in scope of employment
• Material to employer
• Must tell if asked - duty of loyalty includes not lying about material things

Association of two or more persons to carry on as co-owners of a business for a profit

• Voluntariness
• right to share in profits
• loss sharing
• co-ownership
• co-management
• intent of parties

• wages of an employee
• debt service
• rent
• annuity

Master's control over the servant must be the touchstone for determining when a given individual should be considered an employee

Will be a lender if the lender does not share the risk of loss

• Representation by non-partner that he is partner
• Actual reliance by T on manifestation
• Reasonable reliance

• Partnership did, or fail to do, something to make it appear there is a partnership with non-partner
• T reasonably believes non-partner had authority to act on behalf of partnership

• Duty of loyalty
• Duty of care

• Duty to hold in trust
• To refrain from dealing w/ partnership as or on behalf of a party with an adverse interest
• To refrain from competing before dissolution

to accout for the partnership and hold as trustee any property, profit, or benefit derived by the partner in the conduct or winding up of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity

refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law

Agreement may not eliminate the duty of loyalty but (a) all or a specified percentage or partners may authorize or ratify, after full disclosure of material facts, an act or transaction that otherwise violates; (b) May ID specific activities that do not violate if not manifestly unreasonable

• saying you can't be sued for anything
• Making the provision too broad or covering too much

any info concerning the partnership's business and affairs reasonably required for the proper exercise of the partner's rights and duties and the partnership agreement

any info concerning the partnership business except unreasonable or improper

• May talk to partners - grey area with associates
• Need to give notice
• cannot take the heart of the operation

• Communicate with clients before giving notice to the firm of leaving
• Taking client files - May be okay with good faith belief
• Lying
• Not letting clients know they have a choice to stay or leave

• Mail notice to each client who whom the lawyer had an atty-client relationship
• The notice should not encourage client to sever relations with the firm
• The notice should be brief, dignified, and not disparage the former firm

• Pursuant to partnership agreement
• By unanimous vote if : (a) unlawful to carry on business with that partner (b) transfer of all or substantially all of interest (c) entity ending its existence
• By judicial determination if : (a) wrongful conduct that is materially adverse to and affects business (b) material breach of duty or agreement (c) Not practicable to carry on business

• Agreement may make it easier or harder to expel
• Must be consistent with good faith and fair dealing
• Expulsion according to agreement must be good, not bad, faith

• Rights in specific partnership property
• Interest in the property (share of profits and surplus)
• Right to participate in management

No right to any assets

• voluntary contribution
• Pro Rata Dilution - reduce interest if not contributing additional funds
• Promoter Guarantee
• Penalty Dilution - new points offered for new funds
• Mandatory loans
• Get additional partners

• Equal rights to mgmnt and conduct of business
• any different as to ordinary business is decided by majority of partners
• Different outside of ordinary business needs consent of all partners
• No one can contravene agreement without consent of all partners
• When there is no majority to resolve the agreement, there can be no restriction on a partner's acting within the scope of the partnership business

• If added as part of the agreement AND
• Third party is on notice

Partners are jointly and severally liable for the partnership

• Acting in the ordinary course of business of the partnership (note: is it possible to act within the ordinary course of business and in another capacity) OR
• With authority of the partnership

• a deliberate misstatement of fact
• Made with the intent to deceive another person
• reasonably relied on by the deceived person
• which reliance proximately and directly reults in damage to that person

• Partner's notice to withdraw
• Happening of an event the agreements states as a cause of dissociation
• Partner's expulsion pursuant to agreement
• Partner's expulsion by unanimous vote of partners
• Judicial determination of partner's expulsion
• Partner's bankruptcy
• Death or incapacity of partner

• Liable for damages
• may not participate in winding up of business
• must offset buyout price with damages

• A breach of express provision of agreement
• Partnership is for a term or undertaking: and partner withdraws (unless 90 days after another partner dissociates wrongfully, by death, or 601(6)-(10)); is expelled by judicial determination; or becomes bankrupt

• For at-will, unless partners otherwise agree, partner's express will to withdraw
• For term or undertaking: (a) within 90 days after a partner's death, bankruptcy, or wrongful dissocation, the express will of at least half of the remaining partners to wind up; (b) The express will of all partners to wind up; (c) the expiration of the term or accomplishment of the undertaking
• Occurrence of event that agreement says will cause dissolution unless partners otherwise agree
• Occurrence of event that makes it unlawful to continue
• Judicial determination: (a) economic purpose is frustrate; (b) partner engage in conduct that makes it not reasonably practicable to carry on business with him; (c) not practicable to carry on business in conformity with the agreement
• Judicial determination after transfer of interest that winding up is equitable

• Unlawful to carry on business
• Judicial determination

Partnership dissolved every time a partner leaves

Bad faith is wrongful under common law, but not under RUPA - a bad faith dissolver might be liable for breach of fiduciary duty or good faith and fair dealing

• Liquidate assets
• Pay creditors
• Settle balances

• RUPA's entity approach allows for continuation of partnership
• Parties can buy out dissociating partners
• Property may be worth more to current owners than otusiders
• Pay as close to fair market value as possible

Fiduciary duties extend to persons who have dissolved the partnership and have not completely wound up or settled partnership affairs

• Partnership agreement controls
• Default rule for profits: Equal
• Default rule for losses: Proportional to partners share of profits

• Partners are bound to the contracts they make regarding their buyout prices. Can be:
• Book value
• Appraisal
• Formula
• Set price each year
• Relation to duration

For on-going business during winding up, the money goes to the partnership

• Unconscionability
• The partnership agreement
• fiduciary duty

• No equal right to management
• Profits are shared according to capital contribution instead of equity
• No agency powers
• Harder to dissolve

• GP has fiduciary duties to the LP's - LP's typically do not have fiduciary duties
• GP has the rights and powers and is subject to the restrictions and liabilities of a partner in a partnership without LP's
• GP manages the business
• GP may tailor fiduciary duties to allow them to engage in conduct and take benefits that the law may otherwise not allow
• Must pay fair market value for interests and not conceal any information which bears upon the question of fair market value

• There is at least one other GP and the agreement permits the business to be continued by that person
• All partners - GP and LP - unanimously agree in writing to continue the business and appoint one or more additional GP's within 90 days after withdrawal

Can be liable to third parties if he exerts control that is reasonably relied upon - no control solely by being an officer, director, or shareholder of a GP that is a corporation - Changed in Re-RULPA - LP only liable for his own wrongful conduct

• Spectrum
• Jerman - no waiver
• Sonnet and DE law - waiver okay
• Middle ground - ULPA 110 - may not eliminate duty of loyalty but may: ID activities that do not violate duty of loyalty if not manifestly unreasonable; allow a specified number or percentage of partners to ratify or authorize conduct

When it is clear from what was expressly agreed upon that the parties who negotiated the express terms of the contract would have agreed to proscribe the act later complained of as a breach of a covenant of good faith had they thought to negotiate with respect to the matter

Liability if third party is not on notice that he is acting on behalf of an LLC - will be on constructive notice if third party knows the name

• Look here first - only to default rules if agreement is silent
• Invalid only when inconsistent with mandatory provisions - usually to protect third parties
• Do not have to enter into OA - does not have to be in writing
• Does not need signed as long as it is executed by the members in the carrying out of business

• Eliminate the duty of the loyalty - but may: ID or specify to ratify
• Unreasonably reduce the duty of care
• Eliminate duty of good faith and fair dealing - but may determine standards, if not manifestly unreasonable, by which duty can be measured

• Can bring a claim that the corporation is not bringing but: you have to show that you made a demand to bring the claim and it was refuted or
• it would be futile to even demand

• Shareholder uses LLC as mere instrumentality or alter ego as demonstrated by presence of facts.
• Look at: (a) co-mingling of funds; (b) Undercaptitalization; (c) Lack of adherence to corporation formalities - not really with LLCs
• Focus on fraud or misrepresentation

• Members can bind and owe fiduciary duties
• Functionally similar to partnership
• Member who is not a manager owes no duty - inactive like LP
• Not all jurisdictions make fiduciary duties mandatory - DE says you can contract around them

• Needs to be unanimity
• Note: agreement can modify default rule

• Presumption in favor of action taken by directors - decision made by loyal and informed board will not be overturned by courts unless it cannot be attributed to any rational business purpose
• Shareholder burden to rebut - show that in reaching the decision, the director breached fiduciary duty
• Burden shifts back to director to show entire fairness of transaction

• Subject to OA
• Breach of an express provision of the agreement
• Before expiration of a specified term: if (a) member withdraws by express will; (b) Member is expelled by judicial determination; (c) dissociated by becoming debtor in banruptcy; (d) entity dissolved or terminated its existence

• event specified in OA
• consent of # or % of members specified in OA
• Unlawful for company to continue
• Judicial decree that: (a) economic purpose frustrated; (b) member engage in conduct that not reasonably practicable to carry on business with him; (c) unreasonably practicable to carry on business in conformity with articles of organization and OA; (d) co. failed to purchase interest; (e) managers or members acting in illegal, fradulent, prejudical manner
• On app to transfer interest, judicial determination that it is equitable to wind up

• May file articles of termination
• Distribute assets - pay creditors; surplus to members
• Dispose of know claims
• Publish notice of claims
• * may be personally liable if not wound up properly

Dissociating members can participate in winding up of dissolving business as long as they are not fully wound up when the business dissolves

• List of specific instruments (stocks, notes, bonds)
• List of general catch-all phrases (evidence of indebtedness, investment contracts, any instrument commonly known as a security)
• Escape hatch ("unless the context otherwise requires") - may look like a security, but may not be because the nature of the transaction

• A person invests him money in
• a common enterpise and is led to
• Expect profits from solely from the effots of a promoter or third party

• Not met if investment retains substantial control
• Does not literally mean solely
• Profits produced in essential part through the efforts of others
• Whether the efforts of others is relied on depends on the original transaction - it may have been given to them even if they do not in fact exercise it

• The right to receive dividends contingent on an apportionment of profits
• Negotiability
• The ability to be pledged or hypothecated
• Voting rights in proportion to the number of shares owned
• The ability to appreciate in value

Buying 100% of the stock in a corporation is not a transaction involving a security

• Agreement leaves little power in the hands of the partner
• Lacks the experience or knowledge to use the power (split over expertise in that business or business in general)
• Dependant on the manager such that he cannot be replaced

• Alleged improper actions
• the fialure of LLC to observe the formalities or requirements relating to the mgmnt of its business and affairs when coupled with some other wrongful conduct