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agency

a relationship between two parties in which one party (the agent) agrees to represent or act for the
other party (the principal)

fiduciary

as a noun, a person having a duty created by his or her undertaking to act primarily for another's benefit
in matters connected with the undertaking, As an adjective, a relationship founded on trust and
confidence

independent contractor

one who works for, and receives payment from, an employer but whose working conditions and
methods are not controlled by the employer. This person is not an employee but may be an agent.

ratification

the act of accepting and giving legal force to an obligation that previously was not enforceable

equal dignity rule

in most states, a rule stating that express authority given to an agent must be in writing if the contract
to be made on behalf of the principal is required to be in writing

power of attorney

a written document, which is usually notarized, authorizing another to act as one's agent; can be special
(permitting the agent acts only) or general (permitting the agent to transact all businesses for the
principal)

notary public

a public official authorized to attest to the authenticity of signatures

apparent authority

authority that is only apparent, not real. In agency law, a person may be deemed to have had the power
to act as an agent for another party if the other party's manifestations to a third party led the third party
to beleive that an agency existed when, in fact, it did not

disclosed principal

a principal whose identity is known to a third party at the time the agent makes a contract with the third
party

partially disclosed principal

a principal whose identity is unknown by a third party, but the third party knows that the agent is or
may be acting for a principal at the time the agent and the third party form a contract

undisclosed principal

a principal whose identity is unknown by a third person, and the third person has no knowledge that the
agent is acting for a principal at the time the agent and the third person form a contract

E-agent

a computer program that by electronic or other automated means can independently initiate an action
or respond to electronic messages or data without review by an individual

Respondeat Superior

Latin for "let the master respond". A doctrine under which a principal or an employer is held liable for
the wrongful acts committed by agents or employees while acting within the course and scope of their
agency or employment

Vicarious Liability
legal responsibility placed on one person for the acts of another; indirect liability imposed on a
supervisory party (such as an employer) for the actions of a subordinate (such as an employee) because
of the relationship between the two parties

entrepreneur

one who initiates and assumes the financial risk of a new business enterprise and undertakes to provide
or control its management

sole proprietorship

the simplest form of business organization, in which the owner is the business. The owner reports
business income on his or her personal income tax return and is legally responsible for all debts and
obligations incurred by the business

partnership

an agreement by two or more persons to carry on, as co-owners, a business for profit

pass through entity

a business entity that has no tax liability. The entity's income is passed through to the owners, and the
owners pay taxes on the income

information return

a tax return submitted by a partnership that only reports the income and losses earned by the business.
The partnership as an entity does not pay taxes on the income received by the partnership.

articles of partnership

a written agreement that sets forth each partner's rights and obligations with respect to the partnership

confession of judgement
the act or agreement of a debtor permitting a judgement to be entered against him or her by a creditor,
for an agreed sum, without the institution of legal proceedings.

charging order

in partnership law, an order granted by a court to a judgement creditor that entitles the creditor to
attach profits or assets of a partner on the dissolution of the partnership

joint liability

Shared liability. In partnership law, partners incur this for partnership obligations and debts. For
example, if a third party sues a partner on a partnership debt, the partner has the right to insist the
other partners be sued with him or her

joint and several liability

In partnership law, a doctrine under which a plaintiff may sue, and collect judgement from, all of the
partners together (jointly) or one or more of the partners separately (severally or individually). this is
true even if one of the partners sued did not participate in, ratify, or know about whatever it was that
gave rise to the cause of action.

dissociation

the severance of the relationship between a partner and a partnership when the partner ceases to be
associated with the carrying on of the partnership business.

buyout price

the amount payable to a partner on his or her dissociation from a partnership, based on the amount
distributable to that partner if the firm were wound up on that date, and offset by any damages for
wrongful dissociation.

dissolution

the formal disbanding of a partnership or a corporation. It can take place by


1. acts of the partners or, in a corporation, acts of the shareholders and board of directors
2. The subsequent illegality of the firm's business
3. The expiration of a time period stated in a partnership agreement or a certificate of incorporation
4. Judicial decree

winding up

the second of two stages in the termination of a partnership or corporation. Once the firm is dissolved,
it continues to exist legally until the process of winding up all business affairs (collecting and distributing
the firm's assets) is complete

limited liability partnership (LLP)

a hybrid form of business organization that is used mainly by professionals who normally do business in
a partnership. This is a pass-through entity for tax purposes, but the personal liability of the partners is
limited.

Family Limited Liability Partnership

a type of liability partnership owned by family members or fiduciaries of family members

Limited Partnership (LP)

a partnership consisting of one or more general partners (who manage the business and are liable to the
full extent of their personal assets for debts of the partnership) and one or more limited partners (who
contribute only assets and are liable only up to the extent of their contributions)

general partner

in a limited partnership, a partner who assumes responsibility for the management of the partnership
and liability for all partnership debts

limited partner

in a limited partnership, a partner who contributes capital to the partnership but has no right to
participate in the management and operation of the business. This partner assumes no liability for
partnership debts beyond the capital contributed

certificate of limited partnership

the basic document filed with a designated state official by which a limited partnership is formed

limited liability limited partnership

a type of limited partnership in which the liability of all of the partners, includes general partners, is
limited to the amount of their investments.

limited liability company (LLC)

a hybrid form of business enterprise that offers the limited liability of a corporation and the tax
advantages of a partnership

member

a person who has an ownership interest in a limited liability company

articles of organization

the document filed with a designated state official by which a limited liability company is formed

operating agreement

in a limited liability company, an agreement in which the members set forth the details of how the
business will be managed and operated. State statues typically give the members wide latitude in
deciding for themselves the rules that will govern their organizations

joint venture

a joint undertaking of a specific commercial enterprise by an association of persons. A joint venture


normally is not a legal entity and is treated like a partnership for federal income tax purposes

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