NextGen Bar Exam Business Associations and Secured Transactions Syllabus

Business Associations and Secured Transactions syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Business Associations and Secured Transactions in NextGen Bar Exam, not a summary of it.

1. 1

   Agency Law

   4 topics

   • Formation of Agency Relationships
   • Authority of Agents
     • Actual and apparent authority
     • Ratification and estoppel
   • Principal and Agent Liability
     • Contract liability and disclosed principals
     • Tort liability and respondeat superior
   • Fiduciary Duties of Agents
2. 2

   Partnerships and Unincorporated Entities

   5 topics

   • Formation of General Partnerships
   • Partner Rights and Fiduciary Duties
   • Partnership Liability and Authority
   • Dissociation and Dissolution
   • Limited Partnerships and Limited Liability Companies
3. 3

   Corporations

   5 topics

   • Formation and Corporate Structure
     • Incorporation and ultra vires
     • Promoter liability
   • Piercing the Corporate Veil
   • Management and Fiduciary Duties
     • Duty of care and the business judgment rule
     • Duty of loyalty and conflicts of interest
   • Shareholder Rights and Actions
     • Voting and inspection rights
     • Direct and derivative suits
   • Fundamental Corporate Changes
4. 4

   Secured Transactions under UCC Article 9

   5 topics

   • Scope and Classification of Collateral
   • Attachment of Security Interests
   • Perfection
     • Filing financing statements
     • Perfection by possession and control
   • Priority Rules
     • Purchase-money security interests
     • Competing creditors and buyers
   • Default and Enforcement

Business Associations and Secured Transactions flashcards for NextGen Bar Exam

20 of 60 cards from the Business Associations and Secured Transactions deck — real questions with worked answers.

1. What three elements are required to form an agency relationship?

   (1) Assent (agreement between principal and agent), (2) Benefit (the agent acts for the principal's benefit), and (3) Control (the agent acts subject to the principal's control). No consideration or writing is required.

2. What capacity is required for the principal and the agent to form an agency relationship?

   The principal must have contractual capacity. The agent only needs minimal mental capacity—an agent need not have contractual capacity (even a minor can serve as an agent).

3. What is the difference between an employee (servant) and an independent contractor in agency law?

   An employee's physical conduct is subject to the principal's right of control over the manner and means of performance; an independent contractor controls how the work is done. The distinction matters chiefly for vicarious tort liability (respondeat superior applies to employees, generally not to independent contractors).

4. Define actual express authority and actual implied authority.

   Actual express authority is authority the principal explicitly conveys to the agent through words. Actual implied authority is authority the agent reasonably believes it has based on the principal's conduct, including authority necessary to carry out the express task, from custom, or from prior dealings.

5. What is apparent authority and what is required to create it?

   Apparent authority exists when the principal holds the agent out (through words or conduct) such that a third party reasonably believes the agent is authorized. It is created by the principal's manifestations to the third party, not by the agent's own statements.

6. How can a principal become bound by an agent's wholly unauthorized act after the fact?

   Through ratification—the principal affirms a previously unauthorized act. Requirements: the principal must have knowledge of all material facts, accept the entire transaction, and have had capacity. Ratification relates back to the time of the act.

7. What is the effect of the agent's authority terminating, and what notice protects the principal from lingering apparent authority?

   Actual authority ends by agreement, lapse of time, change in circumstances, death/incapacity, or revocation/renunciation. Apparent authority can linger until third parties receive notice—actual (direct) notice to known third parties and constructive (e.g., publication) notice to others.

8. When is a principal vicariously liable for an agent's torts under respondeat superior?

   When (1) an employer-employee relationship exists and (2) the employee committed the tort within the scope of employment. Conduct is within scope if it is the kind the employee was hired to perform, occurs substantially within authorized time/space limits, and is motivated at least in part to serve the employer.

9. Is an employer liable for intentional torts of an employee under respondeat superior?

   Generally no, intentional torts are usually outside the scope of employment. Exceptions: where force is inherent in the job (e.g., bouncer), the employee acts to further the employer's business, or the employer authorized the conduct.

10. Distinguish a frolic from a detour for respondeat superior purposes.

    A detour is a minor, foreseeable deviation from the employer's business—the employer remains liable. A frolic is a substantial, unauthorized departure for the employee's own purposes—the employer is not liable until the employee returns to the scope of employment.

11. How does an agent's contract liability depend on disclosure of the principal?

    Disclosed principal: principal is liable; agent generally is not. Partially disclosed (unidentified) principal: both principal and agent may be liable. Undisclosed principal: both the principal and the agent are liable, and the third party may elect to hold either.

12. What are the two principal fiduciary duties an agent owes to the principal?

    (1) Duty of loyalty—act solely for the principal's benefit, avoiding self-dealing, usurping opportunities, secret profits, and conflicts of interest; and (2) Duty of care/obedience—act with reasonable care, skill, and diligence and obey the principal's reasonable lawful instructions.

13. What remedies does a principal have for an agent's breach of the duty of loyalty?

    The principal may recover damages, seek an accounting, disgorge the agent's secret profits, rescind transactions, and withhold/recover compensation earned during the period of disloyalty (forfeiture).

14. How is a general partnership formed, and is a written agreement required?

    A general partnership is formed when two or more persons associate to carry on as co-owners a business for profit—regardless of intent to form a partnership. No writing or filing is required; it can arise by conduct.

15. What is the key evidentiary presumption regarding profit-sharing and partnership formation?

    Sharing of profits creates a rebuttable presumption that a partnership exists. The presumption does not apply if profits were received as payment of debt, wages/compensation, rent, an annuity, interest on a loan, or for sale of business goodwill.

16. Under the default rules of the RUPA, how do partners share profits and losses?

    Absent agreement, profits are shared equally among partners (regardless of capital contribution). Losses follow profits—shared in the same proportion as profits (so equally by default).

17. What are a partner's default management rights and compensation rights in a general partnership?

    Each partner has equal rights in management; ordinary business decisions are by majority vote, and matters outside the ordinary course or amending the partnership agreement require unanimous consent. Partners are not entitled to compensation for services except reasonable compensation for winding up.

18. What fiduciary duties do partners owe the partnership and each other under RUPA?

    Duty of loyalty (account for profits, refrain from self-dealing/competing) and duty of care (refrain from grossly negligent/reckless conduct, intentional misconduct, or knowing legal violations). Partners must also discharge duties consistent with the obligation of good faith and fair dealing.

19. What is a partner's interest in partnership property versus the partner's transferable interest?

    A partner is not a co-owner of specific partnership property and has no transferable interest in it; partnership property belongs to the partnership. A partner's only transferable interest is the share of profits, losses, and distributions, which may be assigned without making the assignee a partner.

20. To what extent are general partners liable for partnership obligations?

    General partners are jointly and severally liable for all partnership obligations (contract and tort). A creditor must generally exhaust partnership assets first before reaching a partner's personal assets. An incoming partner is not personally liable for obligations arising before admission (limited to capital contributed).

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