The Law of Unincorporated Business Enterprises

-4 common concerns of co-ownership:

1. right to manage or at least share in the management of the business
2. the option to avoid personal liability for the debts of the business
3. enjoyment of favorable tax treatment
4. right to exit the business and cash out one’s holdings in a reasonably
prompt way.

1. The sole proprietorship – one person going into business without making any plans for
an entity to carry on the business. (one of the two “default” ways of doing business.
-General Partnership: more than one owner.

2. The business trust –“common law business – mass” unincorporated business

association; for asset securitization entures in which income-generating assets such as
mortgages are pooled in a trust with participations interests in the trust sold to investors.
-concern is liability: liability of beneficial owners if they exercise control over the
trustees.

Agents: all employees are agents by definitions

3. The Partnership: created when two or more persons carry on as co-owners as a

business for profit; a “default” form of doing business.

4. The Limited Liability Partnership (LLP) – new; makes available limited liability for all
partners of a general partnership if filing is made; shields partners from vicarious liability
for the acts of others.

5. The Limited Partnership – creature of statute; has general and limited partners.

6. The Limited Liability Limited Partnership (LLLP) – entity authorized by statute and
has only recently arrived on the scene. If properly filed, limited liability is extended to the
general partners of a limited partnership in the same manner asi t is ito partners in an
LLP.

Agency: 3 elements
1. Acting on behalf of: acting party must be acting on behalf of the principal in
order to create the special powers and liabilities that accompany the agency relationship.
2. consent: consent of both parties; mutual agreement – can be implied and extree
3. control:

Carrier: focuses on acting on behalf of –

Sears: deals with implied consent

The Electronic Agent: computer program, etc.

Proof of Agency: One of fact; burden of proof is on the party asserting the agency
relationship.

The restatement of agency: Restatement second is narrower than restatement third which
is broad. Courts use second more.
-Restatement Second: principal possesses the right to control the agent’s conduct

A. Agency or Sale

Hunter Mining Laboratories v. Management Assistance: focuses on two elements

of agency; control and “on behalf of.” Did MAI assert control of Hubco, yes but did not
find Hubco to be the agent of MAI.
Issue: Relationship was one of agency or of seller and buyer?

Held: Seller and buyer.

Agency OR sale? – depends if essence of sale or essence of agency is to sell is the

delivery of the goods to a person who is to sell them, not as his own property but as the
property of the principal, who remains the owner of the goods and who has right to
control ther sale, fix the prices, etc.

United States v. General Electric Co.

Factor: agent employed to sell goods entrusted to his possession and control by
consignment

Broker: an agent paid by commission who acts as an intermediary between buyer and
seller and does not have control or possession of the property.

B. Agency or Debtor-Creditor Relationship

A. Gay Jenson Farms Co. v. Cargill, Inc.

C. Agency or Bailment

Jones v. Taylor: Jones seeks to recover damages to his automobile against Taylor.

G. The Ambigious Principle

Thayer v. Pacific Electric Railway:

Dual Agency rule: Agent cannot act on behalf of the adverse party to a transaction
connected with the agency without the permiossion of the principal.

Kilbourn v. Henderson:

Norby v. Bankers Life Co.:

H. Subagency: agents acting for other agents

I. The History of Agency and other matters