Termination - Next Generation Bar Exam

1. How may a principal unilaterally terminate an agent's actual authority?

   By revoking it through a manifestation to the agent. Revocation is effective when the agent has notice of it.

2. Under RUPA (1997), in what order are partnership assets distributed on winding up?

   To creditors, including partners who are creditors, first, and then to partners according to their account balances. A partner's account reflects contributions plus its share of profits, minus distributions and losses.

3. Under the MBCA, on what grounds may a shareholder petition a court to dissolve a corporation?

   Deadlock causing irreparable injury, illegal, oppressive, or fraudulent control, waste, or failure to elect directors. In a non-public corporation, the corporation or other shareholders may elect to buy out the petitioner instead.

4. Under RUPA (1997), what authority do partners have after dissolution?

   Authority to act only as appropriate to wind up the partnership's business. The partnership continues after dissolution only for the purpose of winding up.

5. What kind of power given to an agent is not terminated by the principal's revocation or death?

   A power given as security, coupled with an interest. Such a power protects the agent's own interest, such as a lender's right to sell collateral.

6. Under RUPA (1997), what does a partner's notice of express will to withdraw from an at-will partnership cause?

   Dissolution of the partnership. The partnership must then be wound up unless all partners agree to continue.

7. Under RUPA (1997), what must a partner with a negative account balance do on winding up?

   Contribute the amount of the deficit to the partnership. Contributions may be needed to pay creditors or settle accounts among the partners.

8. Under RUPA (1997), what happens to a term partnership when a partner wrongfully dissociates before the term ends?

   The partnership generally continues, and the dissociated partner is bought out less damages for the wrongful dissociation. The buyout may be deferred until the end of the term unless a court finds earlier payment will not cause undue hardship.

9. Under the Restatement (Third), when does a principal's death terminate an agent's actual authority?

   When the agent has notice of the death. The rule protects agents and third parties who act without knowing of the death.

10. Under ULLCA (2013), on what ground may a court dissolve an LLC at a member's request?

    That it is not reasonably practicable to carry on the company's activities in conformity with the operating agreement. A court may also dissolve when those in control have acted illegally or fraudulently or are oppressing the petitioner.

11. Under the MBCA, what is required for a corporation's voluntary dissolution?

    A board proposal followed by shareholder approval. The corporation then files articles of dissolution and winds up its affairs.

12. What is the effect of a principal's revocation of an agent's authority in breach of a contract to keep the agency in place for a term?

    The authority ends, but the principal is liable for damages for breach of contract. A principal has the power to terminate actual authority even when it lacks the right to do so.

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