Agency & Partnership — Annotated Model Essay

AGENCY & PARTNERSHIP — ANNOTATED MODEL ESSAY

This essay models an MEE that opens with an agency authority and respondeat-superior problem, then turns to RUPA formation, partner liability, and dissociation/wind-up. Read the black text as your timed answer and the gold boxes for why each move scores.

Model Answer — with annotations

Black text is the answer you could realistically write under timed conditions. The gold boxes explain why each move earns points.

I. Existence of a Partnership

The threshold issue is whether Greta and Hassan formed a partnership, because their liability flows from that status. Under RUPA, a partnership is the association of two or more persons to carry on as co-owners a business for profit, whether or not the persons intend to form a partnership. No writing or state filing is required. The single most important factor is that a person who receives a share of the profits of a business is presumed to be a partner, unless the profits were received as payment of a debt, wages, rent, or the like.

Here, Greta and Hassan associated to carry on landscaping (a business for profit) as co-owners: they shared profits 50/50, kept a joint account, and jointly decided which jobs to take, showing shared control. The profit split triggers the presumption of partnership, and none of the exceptions (debt, wages, rent) applies. The absence of a written agreement or filing is irrelevant. GreenScape is a general partnership, and Greta and Hassan are partners.

II. Partner Liability to Pia (Respondeat Superior and RUPA Liability)

Because GreenScape is a partnership, the partnership is liable for the wrongful acts of an agent acting in the ordinary course of partnership business or with partnership authority. Marcus is an employee-agent; under respondeat superior, his employer is vicariously liable for torts committed within the scope of employment. An act is within scope if it is of the kind the employee was hired to perform, occurs substantially within authorized time and space limits, and is at least in part to serve the employer.

Marcus was hired to drive and make deliveries; he negligently ran a red light while making a scheduled delivery on a route Greta assigned. The negligence occurred within the time and space of his job and served GreenScape's delivery business, so it falls within the scope of employment. A negligent traffic act on the job is a classic scope-of-employment tort, not a frolic. The partnership is therefore liable to Pia. Under RUPA, partners are jointly and severally liable for all partnership obligations, including torts, so Greta and Hassan are each personally liable to Pia (subject to the rule that a plaintiff must generally first exhaust partnership assets before reaching individual partner assets).

III. Liability on the First $30,000 Mulch Order (Partner Authority)

The issue is whether Greta bound the partnership on the mulch contract despite Hassan's objection. Under RUPA, every partner is an agent of the partnership for the purpose of its business, and a partner's act for apparently carrying on in the ordinary course the partnership business binds the partnership, unless the partner had no authority to act and the third party knew or had notice of the lack of authority. This is actual or apparent authority.

Buying mulch on credit is squarely within the ordinary course of a landscaping business, so Greta had apparent authority. Greta also acted with apparent (and arguably actual) authority because she identified herself as "buying for GreenScape," and the supplier had dealt with GreenScape before, always billing the business. The supplier neither knew nor had notice that Greta lacked authority; Hassan's private refusal to authorize the purchase was never communicated to the supplier. Because the act apparently carried on the partnership business and the third party lacked notice of any limitation, the partnership is bound on the $30,000 order. Hassan's internal objection does not protect the partnership against a good-faith third party; it gives Hassan only a claim against Greta for any breach of their internal agreement.

IV. Hassan's Liability After Dissociation for the Later $10,000 Order

The final issue is the effect of Hassan's written notice "I'm out as of today" on his liability for the $10,000 order placed two days later. Hassan's express will to withdraw is a dissociation under RUPA. Dissociation ends his right to participate in management and his authority to bind the partnership going forward, but it does not automatically end his liability to third parties.

A dissociated partner remains liable for partnership obligations incurred after dissociation if the third party reasonably believed the dissociated partner was still a partner and did not have notice of the dissociation. Under RUPA, a dissociated partner can be bound on post-dissociation transactions for up to two years where the other party reasonably believed he was still a partner, and the partnership can limit this exposure by notifying creditors or filing a statement of dissociation (which operates as constructive notice 90 days after filing).

Here, the supplier was a pre-existing creditor that had dealt with GreenScape and was never notified of Hassan's departure when it extended the later $10,000 of credit just two days afterward. The supplier reasonably believed Hassan was still a partner and had no notice of his dissociation. Because the partnership took no step to notify the supplier or file a statement of dissociation, Hassan remains liable on the $10,000 order to this unnotified existing creditor. His remedy is indemnification from the partnership or from Greta. (Note: had this been a new creditor who never knew Hassan, the reasonable-belief element would be far weaker.)

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