Agency and Business Relationships: Definitions, Classifications, and Liabilities, Quizzes of Business and Labour Law

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TERM 1 Agency Relationship DEFINITION 1 AGENT represents a PRINCIPAL (the business) and only the principal in dealings with 3rd parties; LEGAL RELATIONSHIP governed by common law; PRINCIPAL guides negotiations TERM 2 Fiduciary Relationship DEFINITION 2 A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal; Agent must act for the benefit of the principal and is in a position of having the principal's trust and confidence for the goals he has been hired TERM 3 Employee as an Agent DEFINITION 3 When an employee deals with 3rd parties, but employment laws and agency laws overlap; EX: cashier at Kroger, salespeople in a dept. store and auto dealerships, in-house attorney who serves as a corporate officer TERM 4 Independent Contractors DEFINITION 4 An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement TERM 5 How to Classify an Independent Contractor DEFINITION 5 how much control the principal has over the worker and the nature of the services provided to the employer- may or may not be an agent; Ex: programmer hired to design a payment system is not an agent because doesn't work with a 3rd party but people hired as sales reps to sell meds but find jobs elsewhere after are agents TERM 6 Agent or IC: Does the employer control the details of the work? DEFINITION 6 If YES: agent, NO: Independent Contractor TERM 7 Agent or IC: Is the task distinct from the business of the employer? DEFINITION 7 If YES: agent, NO: Independent Contractor TERM 8 Agent or IC:Does the employer supervise work? DEFINITION 8 If YES: agent, NO: Independent Contractor TERM 9 Agent or IC: did the employer supply the tools? DEFINITION 9 If YES: agent, NO: Independent Contractor TERM 10 Agent or IC: how long is the worker engaged in the task? DEFINITION 10 Longer time: agent, Shorter time: Independent Contractor TERM 21 Types of Principals: Disclosed DEFINITION 21 If 3rd party knows that John represents Smith; principal is liable for contracts and authorized acts of the agent TERM 22 Types of Principals: Partially Disclosed DEFINITION 22 If 3rd party knows that John is an agent but not who he reps; principal is liable for contracts and authorized acts of the agent; agent may be liable as a party if principal is partiall disclosed TERM 23 Types of Principals: Undisclosed DEFINITION 23 -If 3rd party doesn't know John is an agent or who he reps; principals fully liable as if disclosed for contracts entered into by their agents; agent is also liable TERM 24 Agents Liability vs. Principal DEFINITION 24 AGENT liable for his own torts, unauthorized acts; PRINCIPAL may be responsible under doctrine of respondeat superior and if ratifies the action TERM 25 Sole Proprietorship DEFINITION 25 A sole proprietorship also known as a sole trader, or simply proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. TERM 26 Sole Proprietorship: Advantages DEFINITION 26 Ease of start-up; owner takes all profit; most flexible form; owner makes all decisions; owner pays only personal income taxes TERM 27 Sole Proprietorship: Disadvantages DEFINITION 27 Owner bears all responsibility for obligations of business; business dies with ownder; difficulty raising capital and expanding; if the sums of obligations exceed business worth, you're bankrupt and any personal property is subject to being seized TERM 28 Franchise DEFINITION 28 Contractual agreement between parties for one to use the trademark, trade name, or copyright of another to sell goods or services; entrepreneurs may choose to purchase these; pay for rights to use trademarks; subject to Common law and Uniform Commercial Code (UCC) regulations; Fed and State law may apply to termination of a franchise TERM 29 Types of Franchises: Distributorship DEFINITION 29 License to sell another's producs; EX: Don Wood has an agreement to sell Toyota cars TERM 30 Types of Franchises: Chain- Style DEFINITION 30 A franchise operates under a franchisor's trade name; EX: McDonalds TERM 31 Types of Franchises: Manufacturing DEFINITION 31 Franchise receives components to manufacture a franchisor's product; EX: Coca-cola bottling operations TERM 32 General Partnership DEFINITION 32 A partnership is a type of business entity in which partners (owners) share with each other the profits or losses of the business; similar to ageny relationships; governed by common law principals; TERM 33 Uniform Partnership Act (UPA) DEFINITION 33 A partnership is an entity, but for tax purposes it is an agregate of individuals; automatically applies in the absence of a partnership agreement; entity-if suing, sue all partners TERM 34 Partnership Agreement DEFINITION 34 -Oral, written, or implied by conduct -May contain any terms the partners wish subject to public policy requirements; can't enter a partnership to run an illegal protection TERM 35 Partnership by Estopple DEFINITION 35 People whoa re not partners represent themselves as such; courts may impose liability upon them as a result of that representation TERM 46 Management of Limited Liability Companies DEFINITION 46 If members manage the LLC it functions like a partnership; if managers manage the LLC, a management team is designated to manage the business; each member has the right to inspect books; management countil is the management team and not everyone has a voice TERM 47 Limited Liabilty Companies: Advantages DEFINITION 47 Liability of members is limited (to what they invest); may be tazed as a partnership (each member pays personal income tax/share) or as a corporation (file tax returns IRS) TERM 48 Limied Liability Companies: Disadvantages DEFINITION 48 LLC statutes are non-uniform; lack of case law leads to uncertainty of status TERM 49 Corporations: Creature of the State DEFINITION 49 the State confers special status on corporations; they are given the status of natural persons; sue and be sued in own name in exchange for limited liability that corporations enjoy TERM 50 Corporations governed by... DEFINITION 50 a board of directors which hires corporate officers to run the firm; on behalf of shareholders TERM 51 Corporations owned by... DEFINITION 51 Shareholders; shareholder liability is limited to the extent of one's shares EX: if you own stock in INC and they go broke, you've sold liability TERM 52 Powers of Corporations DEFINITION 52 usually express and implied powers to achieve its purpose TERM 53 Ultra Vires Doctrine DEFINITION 53 Acts of corporations beyond its expressed and implied powers; shareholders of the corporation itself may sute the officers and directors; doing something that violates the corp TERM 54 Corporate Formation DEFINITION 54 Promoters take prelimary steps to form corporation, including raising money; secures the corporate charter TERM 55 Incorporation Procedures DEFINITION 55 State chartering (where to incorporate); file articles of incorporation; need certain info lik how many shares of stock will there be initially TERM 56 Corporate Financing: Bonds DEFINITION 56 Bonds are evidence of funds borrowed from invstors (debt instruments); in debt you ask for people to lend you money in the form of bonds and they mature as time goes on; the owners structure is still retained TERM 57 Corporate Financing: Stocks DEFINITION 57 Stocks are evidence of ownership shares in circulation; common stock pro n control, provides proportionate interest in control, earnings and net assets; ownership interest, you buy and become an owner; equitable interst and entitles you to an interest in control, share in profits, and vote