I.

A.
B.

C.

D.

E.

II.
A.
B.

AGENCY
RESPONDEAT SUPERIOR & VICARIOUS LIABILITY (Liability of Principal for torts of
Agent)
Issue: whether P will be vicariously liable for torts committed by A
Two-part test: Pliable for As torts if (1) a P/A relationship exists, and (2) tort committed
within scope of relationship
a. Principal-agent relationship: requires (1) assent, (2) benefit, and (3) control (A+B+C)
i. Assent: an informal agreement btw P (who has capacity) & A
ii. Benefit: As conduct must be for the Ps benefit
iii. Control: P must have right to control A by having the power to supervise the manner
of As performance
b. Sub-agents: NO vicarious liability for a sub-As torts unless P has A+B+C (w/r/t sub-A)
c. Borrowed agents: when P borrows another Ps A (who becomes a tortfeasor). Borrowing
P = liable if A+B+C over borrowed A. (note: you will almost never find a right to control a
borrowed A, thus VL rarely applies)
No vicarious liability for Independent Contractor (I/C) torts (b/c no power to supervise
manner of I/C performance)
a. Exceptions: (1) ultra hazardous activities (2) estoppel (if you hold out I/C w/appearance
of agency, can be VL)
Scope of P/A relationship: 3 part weighing test
a. Was the conduct of the kind A was hired to perform? (i.e. within the job description); if
so, inside scope
b. Did the tort occur on the job? (frolic: independent journey vs. detour: mere departure
from assigned task)
c. Did A intend to benefit P (even in part)? partial benefit to P = enough for conduct to be
inside scope
Intentional Torts (i.e. assault, battery): outside the scope of agency (generally NO VL)
a. Exceptions: if tortious conduct was (1) specifically authorized by P; (2) natural from the
nature of employment (i.e. bouncer in a bar you get paid to assault people); or (3)
motivated by a desire to serve the P
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS
Rule: P liable only for its authorized Ks. Test: P = liable for Ks entered into by A if P
authorized A to enter the K
Four types of authority: actual express, actual implied, apparent, ratification
a. Actual express authority: oral, may be private, and narrowly tailored to actual words
used to express it
i. Equal dignities doctrine (exception): if the K itself must be in writing, then
express authority must also be
ii. Express authority will be revoked by: (1) unilateral act of either party; or (2)
death or incapacity of P
iii. Express authority cannot be revoked if: P gives A durable power of attorney
(written expression of authority to enter transaction, containing conspicuous survival
language, i.e. survives death)
b. Actual implied authority: authority which A reasonable believes P has given because
i. Necessity: implied authority to do all tasks necessary to accomplish an expressly
authorized task
ii. Custom: implied authority to do all tasks customarily performed by persons w/ As
title or position
iii. Prior dealings btw P&A: implied authority to do tasks A believes authorized b/c of
prior acquiescence by P
c. Apparent authority: P = liable for K if (1) P cloaked A w/appearance of authority, and
(2) 3rd party reasonably relied on appearance of authority
i. Imposters: P liable for imposter acts if negligently permits A to be in position
appearing to have agency Lingering authority: actual authority terminated, but A

continues to act on Ps behalf (cloaked w/ LA). P = liable for 3 rd party/customer

reliance on lingering authority until/unless they receive notice of termination.
d. Ratification (of K): occurs when P has (1) knowledge of all material facts regarding K; (2)
accepts its benefits
i. Exception: in CA, ratification cannot alter the terms of the K (P takes in its entirety)
C. Rules of Liability on the Contract
a. Rule: authorized As that enter Ks w/authority = not liable (P is). As only liable for Ks
entered w/o authority
b. Undisclosed principals: results in liability for both Ps & As (3rd party may elect to hold P
or authorized A liable)
III.
DUTIES AGENT OWES TO PRINCIPAL
A. Reasonable care: duty to exercise reasonable care
B. Obedience: duty to obey reasonable instructions (i.e. not lie, break the law)
C. Loyalty: owed by A to P. Agents may never self-deal (i.e. receive benefit to the detriment of
P); usurp Ps opportunity; or acquire secret profits at Ps expense
D. Remedy: P may recover losses caused by the breach and may disgorge profits made by the
breaching A

PARTNERSHIP
I.
PARTNERSHIP FORMATION: governed by Revised Uniform Partnership Act (RUPA)
A. Formalities: none required for a general partnership (no filing, no writing); can be inferred
from conduct alone
B. General partnership: association of two or more persons who are carrying on as co-owners
of a business for profit
C. Sharing of the profits: contribution ($$) or services in return for share of profits
presumption that GP exists
II.
LIABILITIES OF PARTNERS (Ps) TO 3RD PARTIES
A. Agency principles apply: Ps = agents of partnership for carrying on usual partnership
business; partnership = bound by torts committed by Ps in scope of partnership business and
Ks entered into by Ps w/partnership authority
B. **General partners = personally liable for the debts & obligations of their
partnerships (even co-partner torts)
a. Incoming partners: NOT liable for prior debts of partnership (but $$ paid in may be
used to satisfy prior debts)
b. Dissociating partners: RETAIN liability for future debts UNTIL notice of dissociation
given to creditors, OR until 90 days after filing notice of dissociation w/the state
C. General partnership liability by estoppel: representation to 3rd party that GP exists
liability as if GP does exist!
D. Formation & Liability within other Unincorporated Business Associations
a. Limited partnership: partnership w/ at least one GP, and at least one limited partner (2tiered liability structure)
i. Formation requirement: filing of limited partnership certificate that includes names
of all general partners
ii. Liability & control among partners:
1. General partners: personally liable for all LP obligations + right to manage and
control LP
2. Limited partners: not liable for partnerships obligations + generally may not
control/manage LP
b. Registered Limited liability Partnership (RLLP): group of attys, accountants or
architects can become an RLLP by filing certificate of registration
i. Liabilities: NO partners (GPs or LPs) liable for the obligations of the RLLP (but are
liable for own conduct)
c. Limited Liability Companies (LLC): goal = give owners same liability as C Ss +
benefits of partnership tax status
i. Formation: file (1) articles of organization and (2) an operating agreement
ii. Liabilities: owners (called members) = not liable for the debts/obligations of the
LLC
iii. Partnership characteristics: (1) members control (articles may delegate control to
managers); (2) limited liquidity (member interests not freely transferable); (3) limited
life (events of dissolution)
iv. In sum LLCs = limited liability + limited liquidity + limited life + LIMITED TAX
III.
RIGHTS & LIABILITIES BETWEEN PARTNERS
A. General partners = fiduciaries of each other and the partnership. Owe to each other a:
a. Duty of loyalty: partners (like As) may never self-deal, usurp partnership opps, make
secret profits at Ps expense
b. Action for accounting: partnership may recover losses caused by breach and disgorge
profits of breaching P
B. Partners rights in partnership property
a. Specific partnership assets (i.e. land, leases): individual P may not transfer assets w/o
partnership authority
b. Shares of profits & surplus (if any): freely transferable, b/c personal property of
partners

c. Shares in management (asset owned only by the partnership itself): not transferable by
individual Ps
d. Conflict btw specific partnership assets & personal property: if hard to tell which is
which
i. RUPA test: whose $$ was used to buy the property? (if partnership $$ used, it
becomes partnership prop)
C. Default rules for operation of partnerships (start exam answer w/ Absent an
agreement, the default rule is that)
a. Management: absent an agreement, each partner entitled to EQUAL CONTROL (on
partner, one vote)
b. Salary: absent agreement, partners get NO SALARY (except: compensation for helping to
wind up partnership)
c. Profits: absent an agreement, PROFITS SHARED EQUALLY
d. Losses: absent an agreement, LOSSES SHARED LIKE PROFITS
IV.
PARTNERSHIP DISSOLUTION
A. Dissolution: begins the process of ending
a. Partnerships at will (no agreement): occurs automatically upon notice of express will of
any one P to dissociate
b. Partnerships not at will (agreement exists): occurs ONLY upon happening of event
specified in agreement, OR upon the majority vote of the partners to dissolve within 90
days of the dissociation of one partner
B. Termination: the real end of the partnership
C. Winding up: period btw dissolution and termination (when remaining Ps liquidate assets to
satisfy creditors)
D. Compensation & liability for winding up: partners do receive compensation for winding
up (see above)
a. Liability for winding up: (1) old business: GP (and individual GPs) retain liability on ALL
transactions entered into to wind up old business with existing creditors; (2) new
business: GP (and GPs) retain liability UNTIL notice of dissolution is given to creditors OR
until 90 days after filing a statement of dissolution w/the state
E. Priority of distribution: each level of priority must be fully satisfied before beginning the
next level, in this order
a. Creditors: ALL creditors must be fully paid (both outside, non-partner creditors & partner
creditors who loaned $)
b. Capital contributions by partners: must repay amount paid in by way of capital
c. Profits & surplus (if any): if leftover, paid to GPs (will share according to agreement, or
default rule above)
d. RULE: Ps get repaid loans and capital contributions + their share of profits OR minus their
share of losses