Test 1

Question 1

How is a principal – agent relationship created?

Answer 1

-Employment – employee = agent; employer = principal

• Power of Attorney
  
  • formal written document given by the P to the Agent to act for him

Question 2

What are the 2(4) types of power of attorney?

Answer 2

• General Power of Attorney – Agent is authorized to do everything P could legally do while P could legally do it himself
• Special P of A – A is authorized to do ONLY specified thing(s) for the P but only whie the principal could legally do it himself
• Durable – can be General or Special – Agent can continue to act for the P even when the P could not legally act for himself

Question 3

What are the duties of the P to A and A to P

Answer 3

**Fiduciary Duty- utmost loyalty, trust and good faith in dealings between P and A

Duties of P to A – follow the rules – example MLB players agreement drug testing/replays – be true to your word

Duties of A to P -LORD

- loyalt
- obedience
- reasonable care
- Duty to account for money
- duty to notify regarding changed circumstances

Question 4

How can a power of attorney be terminated

Answer 4

By Acts of Parties

• completion
• revocation (taken away/new form)
• quit
• time period

By operation of Law

• incapacity (not for durable doe)
• death (ends even if durable)

Question 5

Can A contractually obligate the principal? If so how so?

Answer 5

Yes if Agent had the AUTHORITY to enter into the K

2 types of Authority

• Actual - relationship between P and A, A acts under P’s Authority
  - (actual) Express - clear unequivocal authorization
  - (actual) Implied - everything Reasonably and customarily necessary Ex: company car empty - agent puts gas
• Apparent - relationship between Agent and 3rd parties (others)
  - P is contractually bound if 3rd party could believe Reasonably Agent was authorized to act for P - even if they were not (purchase order for company)

Question 6

What is ratification?

Answer 6

Even if P didn’t authorize A to act, P still bound if P ratifies A’s actions (doesn’t stop it but hears it)

Ex: mgr hears A tell customers there is a false discount, doesn’t do anything about it

Question 7

If A receives a notice is P responsible for notice too?

Answer 7

Yes if A’s receipt of notice is within A’s actual or apparent authority

Question 8

Is A K’ally personally liable to 3rd party?

Answer 8

Disclosed principal - 3rd party should have reasonably known that A is just P’s A.
=no personal liability

Undisclosed - 3rd party reasonably shouldn’t have known that A is P’s A. Then A is liable for broken k.

Question 9

What is not law? (describe them)

Answer 9

Theology - relationship with god

Morality - accepted societal standard of conduct

Ethics - established personal standard of conduct

All these LIFT humanity to higher plan of existence (roof of house)

Question 10

What is Law?

Answer 10

Minimum code of conduct so as to maintain order in the society and separate civilized man from anarchy (no law).

Question 11

What are the 3 Sources of Law?

Answer 11

JAW (real order wja)

Judge made (common law)

Administrative

Written

Question 12

What are the types of Written Law?

Answer 12

written down somewhere

• constitutions - basic contract between the people and their government
• treaties - contracts between two countries
• statutes - laws passed by elected bodies - congress; texas legislature, etc.

Question 13

What are Judge Made Laws?

Answer 13

Common Law = precedent - find prior decision = stare decisis - “let the decision stand”

Question 14

What is administrative Law?

Answer 14

Governmental Agencies - IRS Revenue Rulings - interpretations of IRS code; ex: tax due in mail by april 15th

Question 15

What are the three categories of Law?

Answer 15

Criminal

Public

Civil

Question 16

What is criminal law?

Answer 16

government (state) vs one (individual)

punishment = fine, jail time, etc

Question 17

What is public law?

Answer 17

Government and all the people
- good for everyone
-public good
Ex: constitutions and treaties

Question 18

What is civil law?

Answer 18

Individual vs company OR vs Individual

-about money

contracts - legally enforceable promises

property - land or personal property

**torts - personal injuries And OR property damages

Question 19

When is the Employer (P) liable for torts committed by an employee (A)?

Answer 19

If the tort was within the scope of the employee’s employment

Question 20

What is Vicarious Liability (respondent superior) ?

Answer 20

P is not liable for what P did but because P’s A did something for which P is held responsible

Question 21

What are ethics?

Answer 21

Principles of conduct governing an individual or a group - study of human character

Question 22

What is egoism?

Answer 22

Promotion of individual pleasure via material things or career success

epicureanism - eat drink and be merry for tomorrow you die; don’t care about anyone else

what do you want to come after your comma

Question 23

What is Utilitarianism?

Answer 23

option that best maximizes pleasure and minimizes pain for the majority of the people

majority wins

good for the greatest number; WWII; fair play

Question 24

What is deontological reasoning?

Answer 24

all questions about nature and mankind can be answered scientifically

-science good at explaining “how”

philosophy/spirituality - good at explaining “why”

Question 25

Situational Ethic

Answer 25

no principle or value is right or or wrong - everything is Relative only fitting or not fitting - no right or wrong hiding under the table and telling Nazis they were under the table; Nazis didn't look

Question 26

What is Alternative Ethic System?

Answer 26

Integrity - AICPA code of conduct = sacrifice of personal advantage respect - reciprocal rights and duties of those living in certain communities - negative injunctions (thou shalt not) - affirmative duties (do good for those who deserve it Selfless Service - Anything worthwhile will cost you something; - empathy - feelings for another - empathy with legs 3 legged stool - multiple viewpoints

Question 27

Why we need ethics in the market place?

Answer 27

Our lives depend on ethics of strangers and most of us are always strangers to other people

Question 28

Legal Test for test of employee or ind k?

Answer 28

- Amount and kind of CONTROL exercised - employee - if boss "P" controls both METHOD (how) and END RESULT (what) Independent - if boss controls END RESULT but NOT METHOD of performance (how)

Question 29

Query 1?

Answer 29

Employer-employee or independent K

Question 30

Query 2-What is the scope of employment?

Answer 30

Work EXPRESSLY directed to be performed (take this to the bank) Work reasonably incidental to work expressly directed (getting gas on the way to the bank) Deviations - use of company car and accident - Was there a deviation at all? - What was the degree of the deviation (how far away did you drive to go get donuts) - Was it reasonably foreseeable by boss (did he except you to go get donuts too) - Boss must prove not within scope

Question 31

Are you within the scope while commuting?

Answer 31

Texas - GR: person is NOT wi scope while commuting to and from work other facts that can change outcome(expand scope): - cell phone usage - biz =w/i scope - texting - checking emails

Question 32

Employee Test - 20 characteristcs (first half)

Answer 32

Instructions - required to comply with other person's instructions about when where and how or she is to work = employee Training - requiring worker to attend meetings and training = employee Integration -Set Hours of Work - establishment of set hours of work by the person for whom the services are performed indicates CONTROL = employee Full Time Required=substantial full time - employee Doing Work on Employer's Premises (or client) - done off premises = freedom of control = individual Order sequence set - must perform services in order set by employer

Question 33

Employee Test - 20 characteristics (continued)

Answer 33

Oral or Written Reports - worker must submit regular written reports to employer = employee Payment by the hour,week or month = employee; payment made by the job or straight commission = individual contractor Payment of Busness and Travel Expenses = employee Furnish of Tools and Materials = person for whom the services are performed furnish significant tools and materials for worker= employee Signifcant Investment - worker invests in facilities that are used by the worker - independent Realization of Profit or Loss - worker than can realize a profit or suffer a loss as a result of the worker's services = independent Working for more than one firm = multiple unrelated projects - independent Making Service Available to General public on a consistent basis = independent contractor Right to Dischare - employer exercises control through the threat of dismal and the worker must obey the employer's instructions = employee (independent cannot be fired as long as he produces the result that meets the contract specifications) Right to Terminate - if worker has the right to end his or her relationship WITHOUT INCURRING LIABILITY = employee

Question 34

Partnership Definition (6 words)

Answer 34

``` Voluntary Association Two or more persons(companies) Engaged in 1 or more businesses As co-owners For a profit ``` VATEAF

Question 35

Difference between Joint Venture and Pr

Answer 35

JV - only do 1 Business - Kingwood

Question 36

What is a Pr Agreement? What is included

Answer 36

Written document creating Pr Inside - Name - Term - Financial Arrangements - Management - Dissolution - Exit Strategy

Question 37

Tenants in a PR - privileges

Answer 37

each pr owns an undivided % interest in Pr which gives them privileges such as: Mgmt rights - right to participate in mgmt decisions UNLESS Mg pr chosen to handle daily operations Profits, losses, and other distributions - right to share equally in Pr's profits UNLESS Pr Agreement states the contrary and losses in the same % of profits - right to share in Pr property upon dissolution

Question 38

Duties of prs

Answer 38

FIDUCIARY DUTE = loyalty - and can't compete against Pr

Question 39

A:P :: pr:Pr

Answer 39

Agency rules apply

Question 40

Pr creditors

Answer 40

Look first to Pr assets and then individuals (UNLIMITED LIABILITY) Can creditor become a new pr? -not unless permitted in K

Question 41

Assignability

Answer 41

Unless Pr Agreement states otherwise - pr can assign his rights to receive profits and property from Pr to 3rd part but NOT right to make Pr decisions CRITICAL IMPORTANCE OF 1) Pr Agreement 2) tenants in Pr 3) Pr as voluntary association

Question 42

2 step process of Prship Termination

Answer 42

Dissolution - "snap shot" - point in time when Pr states to discontinue "pivot point" Winding up - "moving picture" - on-going process of ending the PR

Question 43

Causes of dissolution (Pivot, snap shot)

Answer 43

1) Acts of the pr's - Agreement - Withdrawl - New pr = new entity now 2)Operation of Law -Death -Bankruptcy (pr or Pr) Illegality (not a lawyer anymore) 3) Court Dissolution - Incapcity(brain dead) - Business impracticability - Misconduct (pr won't resign) - Deadlock (always 50/50 on decisions - can't make one)

Question 44

What is the winding up procedure?

Answer 44

Moving Picture - ongoing process of ending Pr 1) selection of liquidating pr 2) collect money owed to Pr by others 3) liquidation (turning Pr property into $) 4) pay outstanding bills 5) distribute remaining asset's to prs (just like profits - same % UNLESS Pr Agreement states otherwise)

Question 45

Partnership Liabilities

Answer 45

Pr primarily responsible for Pr liabilities BUT pr's have individual secondary liability UNLIMITED = biggest problem with regular Prships

Question 46

Ways to avoid Pr dissolution = Continuation

Answer 46

1) Buy-Sell Agreement or in Pr Agreement itself - Pr can continue after dissolution event (death etc) by purchasing deceased pr's interest if mandatory or optional buy-sell 2) Value "negotiated in good faith" OR whatever Pr Agreement definties it as "book value" - usually buy life insurance for pr's for this

Question 47

What is a Limited Pr?

Answer 47

1 or more general pr(s) = Unlimited Liability | 1 or more limited pr(s) = limited liability

Question 48

Advantages/disadvantages over regular Pr?

Answer 48

1) limited liability for limited pr's 2) flexibility of financing 3) no double taxation - not a corporation disadvatnages 1) lack of direct control by ltd prs 2) sale of limited Prship interests are SECURITIES so compliance with federal securities laws necessary

Question 49

What is a general partner?

Answer 49

Management duties -General Mgmt pr - Unlimited liability UNLESS Gen pr = corporation or LLC - ordinary matters = handled by mgmt gen pr BUT extraordinary matters(dissolution etc) require vote of ALL general and limited partners