I. AGENCY: A. Creation of the Agency Relationship 1. Agency defined 2. Capacity 3. Writing 4. Consideration (none required) B.

Liability of P for Ks entered into by As 1. Actual authority a. Express b. Implied c. Termination of Actual Authority i. After a specified time or event ii. After a reasonable time (if no specified time or event) iii. By a change of circumstances (ex: subject matter of the agency is destroyed) iv. By a breach of the As fiduciary duty v. By a unilateral act of either the P or the A; or vi. By death or incapacity 2. Apparent Authority a. Power of Position b. Unilateral Agent Representations c. Lingering Apparent Authority 3. Ratification a. Methods i. Express ii. Implied b. Requirements i. P must have knowledge of all material facts regarding the K ii. P must accept the entire transaction; P cannot merely ratify a portion of the K iii. Ratification cannot be used to alter the rights of intervening parties 4. The Rules of Liability on the K: If actual authority/apparent authority/or ratification is present, P is liable on the K and the A is not a. Exception: undisclosed/partially disclosed P C. Duties of the Agent and the P to Each Other 1. As duties to P a. Fiduciary Duties i. Duty of Care: ii. Duty of Loyalty: iii. Duty of Obedience 2. Ps duties to A a. Indemnify b. Compensate D. Liability of P for Torts of A (Respondeat Superior or Vicarious Liability) 1. Vocabulary a. Master b. Servant c. Independent Contractor 2. Tests 3. Servant or IC (6 factors) 4. Scope of Employment a. Frolic (no VL)v. Detour (VL) 5. Intentional Torts 6. Borrowed Servant 7. Direct Liability

II. PARTNERSHIP: A. Formation of a General Partnership 1. Definition 2. Factors 3. Writing 4. Partnership by Estoppel 5. Partnership Agreement 6. Entity Status B. Management & Operation of a GP 1. Voting 2. No Right to Salary or Other Compensation C. Financial Rights & Obligations 1. Sharing Profits & Losses 2. Liability to Third Parties a. Liability of the Partnership i. Liability in Tort ii. Liability in Contract (1) Actual Authority (2) Apparent Authority b. Liability of the Partners i. Limiting Liability to Third Parties ii. Liabilities of Admitted Partners D. Fiduciary Duties 1. Duty of Loyalty 2. Duty of Care 3. Statutory Duty of Disclosure E. Property Issues 1. Rules for Determining Partnership Property a. Partnership property b. Presumed partnership property c. Presumed partner property 2. Rights in Partnership Property a. The partnership b. A partner 3. The Partners Ownership Interest in the Partnership a. Management rights/financial rights b. Unilateral transfer: transferee partner c. Unilateral transfer: transferee = right to receive profit distributions F. Dissociation and Dissolution of a Partnership 1. Dissociation a. Events of dissociation b. Wrongful dissociation i. At will partnership 2. Term partnership c. Consequences of Dissociation i. Dissolving of partnership ii. Partnership continues/buyout of dissociating partners interest d. Dissolution e. Buyout & Continuation of the Business f. Liability of Dissociated Partner i. Pre dissociation ii. Post dissociation g. Apparent Authority of Dissociated Partner 2. Dissolution a. Priority of Distribution i. Creditors ii. Capital Contributions iii. Profits/losses if any b. Right to Wind Up c. Apparent Authority

III. OTHER INCD BUSINESS FORMS: A. LP 1. Definition 2. Formation a. Name 3. Partnership Agreement 4. Management & Operation 5. Financial Rights 6. Liability a. General Partners b. Limited Partners 7. Fiduciary Duties a. General Partners b. Limited Partners B. LLPs/RLLPs 1. Definition 2. Formation a. Name 3. Liability C. LLC 1. Definition 2. Formation a. Name 3. Operating Agreement 4, Management & Operation 5. Financial Rights 6. Fiduciary Duties 7. Transferability of Ownership Interests 8. Taxation

I. AGENCY: A. Formation of the Agency Relationship 1. Agency: the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act a. Agent = person acting for another; principal = person for whom the agent is acting b. CONSENT = consent of both the P and the A is necessary to for an agency relationship; established expressly (written oral statements) or implication (parties conduct) c. ON BEHALF OF: A must be acting primarily for the benefit of the P, rather than for the benefit of the A or some other party d. CONTROL: A must act subject to Ps control, but the degree of control exercised by P does not have to be significant. P simply specifying the task for A to perform is sufficient even if P has not prescribed the details of how the task should be accomplished 2. Capacity a. P must have contractual capacity (b/c K is b/w P and TP), but the A does not (b/c A is just an intermediary) 3. Writing: Agency doesnt require writing; SOF may (equal dignities) = if A enters into Ks that must be in writing, agency agreement must also be in writing 4. Consideration: none required B. Liability of P for Ks entered into by As 1. Actual Authority: authority that A reasonably thinks she possesses based on Ps dealings w/her; if the Ps words or conduct would lead a reasonable person in the As position to believe that the A has authority to act on Ps behalf, the A has actual authority to bind the P. Authority may be implied or express. (Based on Ps manifestations and how they affect the reasonable A) a. Express Actual Authority: authority conveyed by the P in words (oral or written) b. Implied Actual Authority: authority the A reasonably believes she has as a result of the Ps actions (e.g. inferred from Ps words/conduct, from custom, or from acquiescence by the P) c. Termination of Actual Authority: actual authority must exist when the A enters into a K. It will be terminated/revoked: i. After a specified time or event ii. After a reasonable time (if no specified time or event) iii. By a change of circumstances (ex: subject matter of the agency is destroyed) iv. By a breach of the As fiduciary duty v. By a unilateral act of either the P or the A; or vi. By death or incapacity 2. Apparent Authority: exists when the P holds out another as possessing authority and a third party is reasonably led to believe that authority exists. If Ps words/conduct would lead a reasonable person in the 3 rd partys position to believe that the A has authority to act on the Ps behalf, the agent has apparent authority to bind the P. (Based on Ps manifestations and how they affect the reasonable third party) a. Power of Position: apparent authority may be established through an As title or position b. Unilateral Agent Representations: apparent authority is based on Ps manifestations to a 3 rd party; thus, apparent authority cannot be created by the mere representations of an A or other actor c. Lingering Apparent Authority: Apparent authority can linger after actual authority ends i. P can destroy this apparent authority by giving third parties actual or constructive notice of the termination ii. Death or incompetency = terminates all authority 3. Ratification: A has no authority at the time of entering into the K, P will still be bound by the As actions if P ratifies the K. Ratifications serves as a substitute for before the transaction authority. a. Methods of ratifying: i. Express (oral or written affirmation of the K) ii. Implied (P accepts the benefits of the K) b. Requirements i. P must have knowledge of all material facts regarding the K ii. P must accept the entire transaction; P cannot merely ratify a portion of the K iii. Ratification cannot be used to alter the rights of intervening parties 4. The Rules of Liability on the K: If actual authority/apparent authority/or ratification is present, P is liable on the K and the A is not a. EXCEPTION: if the P is undisclosed (at the time of the As transaction, the third party has no notice that the A is acting for the P) or a partially disclosed P (at the time of the As transaction, the third party has notice that the A is acting for a P, but has no notice of the Ps identity), the A is also liable on the K (P is still liable) C. Duties of the Agent and the P to Each Other 1. As duties to P a. Fiduciary Duties: An A (even an unpaid one) is a fiduciary of its P and owes corresponding fiduciary duties to its P i. Duty of Care: an agent owes a duty to her P to carry out her agency with reasonable care ii. Duty of Loyalty: the A owes a duty of undivided loyalty to the P. This includes the following obligations: (1) An A must account to the P for any profits made while carrying out the Ps instructions

(2) An A must act solely for the benefit of the P and NOT to benefit himself or a third party (3) An A must refrain from dealing w/his P as an adverse party or from acting on behalf of an adverse party (4) An A may not compete w/his P concerning the subject matter of the agency; and (5) An agent may not use the Ps property (including confidential information) for the As own purposes or a third partys purposes (6) REMEDIES: disgorgement of profits or whatever court wants to do to do justice in the situation iii. Duty of Obedience: An A must obey all reasonable directions of his P. While the P may well be liable for the A's acts in violation of directions (apparent authority), the A will be liable to the P for any loss that the P suffers 2. Ps duties to A a. A Ps duties to an agent are not fiduciary in nature as fiduciary responsibilities run only from the A to the P b. A P has several obligations to the A i. A incurs expenses or suffers other losses in carrying out Ps instructions, the P has a duty to indemnify the A ii. Unless the circumstances indicate otherwise, it will be inferred that the P agreed to compensate the A for his services D. Liability of P for Torts of A (Respondeat Superior or Vicarious Liability) 1. Vocabulary a. Master: (an employer) is a 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 the performance of the service b. Servant: (an employee) is an A so employed by a master c. Independent Contractor: A person who contracts w/another to do something for him but who is not controlled nor subject to the others right to control w/respect to his physical conduct in the performance of the undertaking 2. Tests: how much control does the master have over the details of the task? More control = agent/less control = not agent a. A master is liable for torts committed by a servant w/in the scope of employment of the servants employment i. Master and servant are jointly and severally liable b. P NOT liable for torts committed by an independent contractor in connection w/his work 3. Servant or Independent Contractor: If a person is subject to the control of another as to the means used to achieve a particular result, he is a servant; if a person is subject to the control of another as to his results only (but not over how to achieve those results) he is an independent contractor a. Did the P have the right to control the manner/method by which the person performs his tasks? Factors: i. Skill required: great skill = IC ii. Tools and facilities: P supplies tools/facilities = employee iii. Period of employment: indefinite/long = employee iv. Basis of compensation: basis of time = employee; basis of the job = IC v. Business purpose: act performed in furtherance of Ps business = employee vi. Distinct business: person having own business/occupation = IC 4. Scope of Employment: master not automatically liable for servants torts/ A master is only liable if the servant was acting w/in the scope of his employment: factors: a. Conduct the kind A was hired to perform? b. Did tort occur on the job (ex: in the time/space limits of the employment)? i. Detour: minor deviation from the employers directs = scope of employment , liability for P ii. Frolic: substantial deviation = outside the scope of employment, no liability for P c. Conduct actuated at least in part to benefit P? 5. Intentional Torts a. GR is that the employer is NOT liable for the intentional torts of an employee. Intentional torts are usually viewed as outside the scope of employment. b. EXCEPTIONS: ITs will be viewed as w/in the scope of employment if the conduct is: i. Natural from the nature of the job ii. Motivated to serve the employer; or iii. Specifically authorized or ratified 6. Borrowed Servant: An employer may lend the services of an employee to another. If the employee commits a tort in the loaned role, who is liable? Issue is: who has the primary right of control over the employee (loaning or borrowing P?) a. Depends on who had the right to control when the accident occurred = that P is liable 7. Direct Liability: everyone is liable for his or her own torts. P is liable for his own negligence if he fails to properly train or supervise employees or fails to check an employees criminal record or job history ***MINI REVIEW*** A. K Liability: is P liable to a 3rd party on a K entered into by an A? 1. Did the A have actual or apparent authority at the time of the K or did the P ratify the K later? 2. If so, P is liable on the K (but usually the A is not) B. Tort Liability: is an employer liable for a tort committed by an employee? 1. Was the tort committed by a servant in the scope of employment? 2. If so, the master and the servant are jointly and severally liable to the 3rd party

II. Partnership: A. Formation of a General Partnership 1. Definition: 2 persons associate to carry on as CO-OWNERS a BUSINESS FOR PROFITS; no subjective intent/state filing req. i. Courts look to intent of parties to see if the above definition is met (NOT subjective intent to form part) 2. Factors: person sharing of profits presumed to be partner unless profits were received in payment of: i. A debt ii. As wages or other compensation iii. As rent; or iv. As interest on a loan 3. Rebutting presumption of partnership: evidence suggesting no right to control/no sharing of losses 4. Writing: none required; SOF may require (ex: partnership for 2 years) 5. Partnership by estoppel: no partnership in fact but parties still liable to protect 3rd parties 6. Partnership Agreement: non required to form; but may have to contract around default provisions (written/oral/implied) 7. Entity Status: once formed, partnership = legal entity distinct from partners B. Management and Operation of a General Partnership 1. Voting: unless otherwise agreed, partners have equal voting rights in the management of the business; matters w/in ordinary course of partnership business requires majority vote of all partners; matters outside = consent of all partners 2. No right to salary or other compensation (unless otherwise agreed); only right to reasonable compensation for services rendered in winding up the partnership business) C. Financial Rights and Obligations 1. Sharing profits and losses: Unless otherwise agreed, profits shared equally among partners; losses shared in same manner as profits. 2. Liability to 3rd Parties a. Liability of the Partnership i. Liability in Tort: partnership liable for loss/injury caused to a person as a result of the tortious conduct of a partner (or employee) acting in the ordinary course of business of the partnership or w/authority of the partnership ii. Liability in K: partnership liable for Ks entered into on its behalf by partners with actual or apparent authority (1) Actual: by partnership agreement or by requisite vote of the partners (2) Apparent: partner is an A of the partnership and that partner has apparent authority to bind the partnership to transactions w/in the ordinary course of the partnerships business (unless TP is aware partner lacks actual authority) b. Liability of the Partners i. Each partner is jointly and severally liable for all the obligations of the partn ership (tort and K); must exhaust partnership resources before seeking to collect from an individual partners assets; Partner who pays more than their fair share of an obligation can seek contribution; partner who pays the whole obligation is entitled to indemnification ii. Limiting Liability to TPs: partners cannot limit TPs rights w/o TPs consent iii. Liabilities of Admitted Partners: requires unanimous vote, unless otherwise agreed; newly admitted partner not liable for debts of partnership before his admission iv. Liabilities of Outgoing (dissociated Partners): remains liable for obligations arising while he was a partner unless there has been payment/release/novation; and sometimes acts done after dissociation

D. Fiduciary Duties: partners owe fiduciary duties of care and loyalty to each other and the partnership. Also a statutory duty of disclosure 1. Duty of Loyalty: requires each partner: a. To account to the partnership for any benefit derived by the partner in conducting the partnership business, using partnerships property or appropriating a partnership opportunity b. To refrain from dealing w/the partnership in the conduct of its business as (or on behalf of) a party having an interest adverse to the partnership c. Refrain from competing w/partnership in the conduct of its business 2. Duty of Care: partners must refrain from engaging in grossly negligent/reckless conduct, intentional misconduct or a knowing violation of the law 3. Duty of Disclosure: Statutory (not fiduciary); Each partner and the partnership shall furnish to a partner: a. W/o demand, any info concerning the partnerships business and affairs reasonably required for the proper exercise of the partners rights/duties b. On demand, any other info concerning the partnerships business and affairs (unless info demanded unreasonable/otherwise improper under the circumstances) 4. Duty of Care/Loyalty = cannot be eliminated by partnership agreement; statutory duty = can be eliminated E. Property Issues: which property belongs to the partnership and which belongs to an individual partner? 1. Rules for Determining Partnership Property:

a. Partnership prop if acquired in the partnerships name or in a partners name where it is apparent from the doc that she is acting for a partnership b. Presumed partnership prop: if partnership funds are used c. Presumed partners prop: if acquired in her name w/o partnership funds and there is no sign that she is acting for a partnership 2. Rights in Partnership Property a. Partnership: rights are totally unrestricted (partnership OWNS the prop); creditors can seize; can be collateral for a loan b. Partner: partner is NOT a co-owner of partnership property and has no interest in partnership property which can be transferred; partnership can simply use partnership property for partnership purposes 3. Partners Ownership Interest in the Partnership: partnership interest = personal prop of partner a. Partnership interest is comprised of: i. Management rights (participation in management/obtain info about partnership) ii. Financial Rights (right to receive share of profit distributions) b. Unless otherwise agreed, partner cannot transfer interest unilaterally and make transferee a partner; admission of a new partner needs unanimous vote of existing partners c. Unless otherwise agreed, a partner can unilaterally transfer his financial rights; transferee has right to receive profit distributions that would have otherwise gone to the transferor partner; transferor still a partner but transferee is not i. PI can be devised/creditor can attach F. Disassociation and Dissolution of a Partnership 1. Dissociation: a withdrawal by a partner; does not necessarily cause a dissolution and winding up of the partnership business. a. Events of Dissociation: i. Partner gives notice to the partnership of his desire to withdraw (express will) ii. A partners death/incapacity to perform iii. Partners expulsion iv. Partners bankruptcy v. An agreed upon event vi. Appointment of a receiver for a partner vii. Termination of a business entity that is a partner b. Wrongful Dissociation: i. A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express term in the partnership agreement ii. A dissociation is wrongful in a term partnership if the partner withdraws/is expelled/or becomes bankrupt before the end of the term iii. A partner who wrongfully dissociates is liable to the partnership for any damages caused by dissociation iv. At will partnership: the partners have not agreed to remain partners until the expiration of a definite term or the competition of a particular undertaking (DEFAULT form of partnership) v. Term partnership: partners have agreed explicitly or implicitly, to remain partners for a definite term or until the completion of a particular undertaking c. Consequences of Dissociation: one of two avenues is implicated: nature/event of dissociation dictates i. Partnership is dissolved and its business must be wound up (partnership business will be liquidated [sold off]) ii. Partnership continues in existence w/the dissociated partner becoming entitled to a buyout of his partnership interest d. Dissolution: i. Arises when: event in agreement requiring winding up; business becomes illegal; issuance of a judicial decree; unanimous consent of the partners in a term partnership; expiration of a term partnership ii. At will partnership: any partner who dissociates by express will may compel dissolution and winding up ii. Term partnership: one partner dissociates wrongfully/dissociation occurs b/c of a partners death or bankruptcy dissolution and winding up of the partnership are required only if w/in 90 days after dissociation, of the remaining partners agree to wind up the partnership e. Buyout and Continuation of the Business: i. Partners dissociation does not result in dissolution/winding up partner is entitled to receive a buyout of his partnership interest; remaining partners may continue the business (1) Dissociation wrongful any damages will be offset against the buyout price f. Liability of Dissociated Partner i. Generally, dissociated partner remains liable for pre-dissociation partnership obligations ii. Post dissociation partnership liabilities incurred w/in 2 years after the dissociation (1) Dissociating partner can defend by (1) notifying creditors directly of his dissociation (effective immediately) or (2) filing public statement of dissociation (effective 90 days after filing); g. Apparent Authority of Dissociated Partner i. Dissociated partner has apparent authority to bind partnership for a period of time not exceeding 2 years after dissociation (assuming no dissolution)

ii. Partnership can defend by (1) notifying creditors directly of the dissociation or (2) filing a public statement of dissociation (effective 90 days after filing) 2. Dissolution: partnership assets must be applied to the discharge of partnership liabilities. If assets are insufficient individual partners are required to contribute (pay in) accordance w/their loss shares. If excess assets, they are distributable to the partners in case in accordance with their shares a. Priority of Distribution: each level of priority must be fully satisfied before beginning the next level: i. FIRST partnership must pay all creditors: outside (lenders/suppliers) & inside (partners who loaned money) ii. SECOND partnership must repay all capital contributions paid into the partnership by partners iii. THIRD profits or losses, if any. b. Right to Wind Up: partners who have not wrongfully dissociated may participate in the winding up of the partnerships business c. Apparent Authority: Partners retain apparent authority to bind the partnership to a TP on new business even after an event requiring winding up i. Partnership can protect itself by notifying creditors directly of the dissolution (effective immediately) ii. Any partner who has not wrongfully dissociated may file a public statement of dissolution (effective 90 days after filing) iii. Partners jointly/severally liable for partnership obligations; TP must exhaust P resources 1st III. OTHER UNINCORPORATED BUSINESS FORMS: A. Limited Partnerships (LP) 1. Definition: partnership w/at lease 1 GP and at least one LP; GP principles apply unless displaced by LP specific provisions 2. Formation: file a certificate of limited partnership w/secretary of state: a. Requires info such as: i. Name of the LP ii. Name/address of the agent for service of process; and iii. Name/addresses of each GP b. Failure to file = GP; LP is statutory creation; intent to created is insufficient, must file w/state c. Name: name of LP must contain limited partnership/L.P./or LP 3. Partnership Agreement: can be written/oral/implied; can displaces almost all statutory provisions 4. Management & Operation: a. Managed by the GPs b. Each GP has equal rights in the management and conduct of the LPs activities c. Vote of ALL GPs is necessary for ordinary business activities d. LPs usually have no management rights unless the partnership agreement grants them rights e. Unless otherwise agreed, vote of ALL partners (GP + LP) necessary for certain extraordinary activities: i. Amendment of the partnership agreement ii. Admission of a new GP or LP iii. Sale of all or substantially all of the LPs property (if such sale is outside ordinary course of business) 5. Financial Rights: Unless otherwise agreed, distributions from a LP are made on the bases of partne rs contributions (proportional to the value of each partners contribution) 6. Liability a. GP: personally liable for the obligations of the LP, just as they are in a GP b. LP: LP is not personally liable for an obligation of the LP solely by reason of b eing an LP; LPs have limited liability meaning, they can only lose the value of their investments c. LP/GP: always liable for their own torts 7. Fiduciary Duties: a. GP owes the LP and the other partners the same fiduciary duties of loyalty and care that GPs owe in a GP b. A limited partner does NOT have any fiduciary duty to the LP or to any other partner solely by reason of being an limited partner; a limited partner can compete w/and have interests adverse to the LP, unless otherwise agreed 8. Limited partner has no right to dissociate before the termination of an LP; General partners right to dissociate similar to GP B. Limited Liability Partnerships (LLP/RLLP) 1. Definition: typically a GP where ALL of the partners have limited liability (not personally liable for LLPs obligations) a. Apply the partnership rules to LLPs with the exception of the material below b. LLLP = GPs and the LPs have limited liability for the obligations of the business. Apply partnership rules w/exceptions below 2. Formation: must file a Statement of Qualification w/the secretary of state: a. Required material: i. Name/address of the partnership ii. Statement that the partnership elects to be an LLP iii. A deferred effective date, if any b. Partnership becomes LLP at time of filing statement or on date specified in the statement c. NO LLP unless statement is filed

i. Name: must end w/words Registered Limited Liability Partnership/Limited Liability Partnership/L.L.P./ LLP/R.L.L.P/RLLP 3. Liability a. LLP Partner = not personally liable (directly/indirectly/contribution) for the obligations of the LLP whether arising in (1) tort (2) contract or (3) otherwise b. Partner remains personally liable for his own wrongful acts C. Limited Liability Company 1. Definition: Hybrid b/w a corporation and partnership in which the owners ( members) have limited liability as well as the benefits of partnership tax treatment; NOT a corporation or partnership; its its own business form 2. Formation: must file articles of organization w/secretary of state a. Required minimal info: i. Name of the LLC ii. Address of the LLCs registered office iii. Name of its registered agent b. Name must include limited liability company/LLC/L.L.C. 3. Operating Agreement: detail on the operation and governance of an LLC 4. Management and operation: a. Management of the LLC is presumed to be by ALL of the members b. Other management agreements can be made (only management by some of the members/by outside members), but must be specified in the article c. If management by the members: i. Majority vote is required to approve most decisions; and ii. Each member is an agent of the LLC (LLC might be bound by acts of any member) 5. Financial Rights: unless otherwise agreed, profits/losses are allocated on the basis of contributions 6. Liability: Members generally are not personally liable for LLCs obligations a. Members have limited liability and can only lose the amount of their investments b. Members liable for their own torts 7. Fiduciary Duties: owed by member (if member managed) or a manager (if manager managed) to the LLC and to its members a. Duty of Care b. Duty of Loyalty 8. Transferability of Ownership Interests: (like partnership) a. Financial rights = transferable; management rights = not transferable b. One can become a member (management rights can be transferred) ONLY w/the consent of ALL of the members 9. Taxation a. Partnerships/LLCs are taxed on a pass through (less taxes paid) basis: i. No entity level tax (LLC itself not taxed) ii. Business income is passed through to the owners and reported on the owners individual tax returns (regardless of whether that business income is actually distributed to the partners) b. A corporation is subject to double taxation: corporation pays taxes on its income + SHs pay taxes on that income again when and if it is distributed to them 10. LLPs/LLCs = best vehicles for closely held business a. Protect ALL owners from liability/obligations of the business b. Allow owners to contract around almost all of the statutory provisions (can be run as owners desire) c. Allow all the owners to participate in the management of the business; and d. Provide pass through income tax treatment