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35 Cards in this Set
- Front
- Back
Basic business organizational structures
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1) sole proprietorship
2) partnerships 3) corporations hybrids 1) limited liability partnerships 2) "s" corporations 3) limited liability companies 4. limited partnerships |
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Agency is based on _________ and is therefore called __________
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Agency is based on the consent of the parties and is therefore called a consensual relationship
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Agency law involves
1) 2) 3) |
1) principal
2) agent 3) third party |
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Agent
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person or firm who is authorized by the principal or by operation of law to make contracts with third persons on behalf of the principal
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Principal
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person or firm who employs an agent
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Agency can be based on either ________ or _______ agreement
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Agency can be based on either an express or implied agreement
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Respondeat superior
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anytime an employee is liable for a tortious act in the scope of his employment, the employer is also liable
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Duties
To avoid personal liability, an agent must comply with 1) 2) 3) 4) |
1) duty of loyalty
2) duty to keep principal informed 3) duty to obey instructions 4) duty to account for all monies handled |
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Employees
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generally not hired to represent employer in making contracts with third parties
possible however it is possible for an employee to be an agent as well |
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Independent contractor
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bound by a contract to produce a certain result
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agent or employee differs from an independent contract in that ______
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agent or employee differs from an independent contract in that the contractor controls the performance of the work
an employer or principal can control the employee or agent, however they cannot control an independent contractor |
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By law, an independent contractor is liable for _________ not _________
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By law, an independent contractor is liable for their work and their employees, not the person who hires the independent contractor
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Special agent
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an agent authorized to transact a specific act
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General agent
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an agent authorized to conduct all affairs of a principal in a certain category of business
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Universal agent
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authorized to do all acts permissible by law on behalf of the principal
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Levels of authority
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actual authority
expressed authority implied authority apparent authority |
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Apparent authority
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actions that may cause a person to believe that a party is acting as an agent for a principal.
if this is the case, the principal will be esstoped from denying an agency relationship |
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The burden of proof that an agency exists rests on _______
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The burden of proof that an agency exists rests on the party that will benefit from the proof
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An agent is under duty to obey and carry out all lawful instructions of the principal
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and may be held liable for any harm or loss suffered by the principal if he does not follow his instructions
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If an agent makes a contract on behalf of a disclosed principal, with proper authority to do so and the contract is executed correctly
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the agent has not personal liability
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Agent
Unauthorized action |
if a person makes a contract as agent for another but lacks authority to do so, the contract will not bind the principal
may be personal liability |
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If the person purports to act as agent for a principal, an _____ arises that this person has authority to do so
If the agent lacks authority there is a ______ and the agent may be liable to the third party for any damages or losses incurred |
If the person purports to act as agent for a principal, an implied warranty arises that this person has authority to do so
If the agent lacks authority there is a breach of warranty and the agent may be liable to the third party for any damages or losses incurred |
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Disclosed principal
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when an agent makes known the identity of the principal and the fact that the agent is acting on behalf of the principal
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Agent
Contract Disclosed principal |
agent is not a party to nor bound by any contract that is executed
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Partially disclosed principal
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when an agent makes known the existence of a principal but not his or her identity
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Agent
Contract Partially disclosed principal |
agent is a party to the contract and is bound
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Undisclosed principal
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when the third party is not told or does not know the existence of a principal
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Agent
Contract Undisclosed principal |
agent is a party to the contract and is bound
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Sole proprietorship
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most common business organization in the country
easiest to form continuity is tied directly to the proprietor liability is solely with the proprietor taxed as an individual |
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Partnership
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easy to form (partnership agreement)
dissolved upon death or exit of a partner control defined in partnership agreement all partners are jointly liable for the partnership's obligations |
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Corporations
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artificial intangible entity created under state law
more complicated to form (requires filing articles of incorporation) continues until dissolved (deaths of shareholders does not affect) managed by officers and directors as elected by shareholders public vs. closely held |
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Limited partnerships
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same attributes of a partnership except one or more of the partners can be designated as limited
limited partners have limited liability (may not be held liable for other partners' actions) |
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"S" corporations
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require filing articles of incorporation (start as "C" corporations)
continuity until dissolved controlled by officers and directors, elected by shareholders |
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Limited liability company
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require filing articles of organization continuity until dissolved
control is vested in its members and managers members not personally liable |
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Types of stock
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common
preferred cumulative preferred participating preferred convertible preferred redeemable preferred |