Subject Guide
Agency and Partnership
Agency and Partnership is the area of law that governs how one person (an agent) can act on behalf of another (a principal), and how two or more people who carry on a business for profit form a partnership and share its duties, profits, and liabilities. It is tested on the bar exam as one subject because partnership liability rests on agency principles.
What Agency and Partnership covers
Agency and Partnership covers two linked bodies of law: the agent-principal relationship and the law of general partnerships. Agency asks when an agent's acts bind the principal, what kinds of authority the agent holds, and when the principal answers for the agent's contracts and torts. Partnership applies those agency rules to a co-owned business, addressing how a partnership forms (often without any writing), the fiduciary duties partners owe each other, and how partners and the firm are liable to outsiders. On the bar exam these doctrines are tested through MEE-style essays and MBE-style questions, frequently overlapping with Contracts, Torts, and Business Associations. Mastery turns on spotting which type of authority is at issue and tracing liability from the acting party back to the principal or the partnership.
Key topics
- Agency Formation
- An agency relationship forms when a principal manifests assent that an agent act on the principal's behalf and subject to the principal's control, and the agent consents to act, with no consideration or writing required.
- Authority
- An agent may bind a principal through actual authority (express or implied from the principal's manifestations to the agent), apparent authority (created by the principal's manifestations to a third party who reasonably relies), or ratification of an unauthorized act.
- Principal Liability
- A principal is bound on contracts made with actual or apparent authority and is vicariously liable under respondeat superior for an employee's torts committed within the scope of employment, but generally not for torts of an independent contractor.
- Partnership Formation
- A general partnership arises when two or more persons associate to carry on a business for profit as co-owners, and the sharing of profits raises a presumption of partnership even without any written agreement or intent to form one.
- Partner Duties
- Partners owe each other and the partnership fiduciary duties of loyalty and care, plus a duty of good faith and fair dealing, including duties to account for profits, avoid conflicts, and refrain from competing with the firm.
- Partnership Liability
- A partnership is liable for the wrongful acts and contracts of partners acting with authority in the ordinary course of business, and partners are jointly and severally liable for partnership obligations, typically after partnership assets are exhausted.
Practice Agency and Partnership with LawCoach
LawCoach helps you master Agency and Partnership by combining targeted practice with detailed feedback. You can drill exam-style MBE multiple-choice questions on authority, vicarious liability, and partner duties, and write MEE-style essays that mirror real testing conditions. Paid essay answers are graded by a five-specialist reviewer panel covering issue-spotting, rule accuracy, application and analysis, structure and exam strategy, and counterargument and calibration, so you see exactly where your IRAC breaks down; free essays receive a three-reviewer panel. The platform tracks which subjects and topics are weakest for you and builds a study plan that prioritizes them, so your time goes where it moves your score most. It is an educational study tool, not legal advice, and AI feedback can contain inaccuracies.
Frequently asked questions
- What is the difference between actual and apparent authority?
- Actual authority comes from the principal's manifestations to the agent, telling the agent it may act; it can be express or implied from the position or the principal's conduct. Apparent authority comes from the principal's manifestations to a third party, where that third party reasonably believes the agent is authorized. The key distinction is the audience: actual authority looks at communications to the agent, while apparent authority looks at the principal's conduct toward the outside world.
- When is a principal vicariously liable for an agent's torts?
- A principal (employer) is vicariously liable under respondeat superior for torts an employee commits within the scope of employment. Conduct is generally within scope if it is the kind of work the employee was hired to do and serves the employer, at least in part. Principals are usually not liable for torts of independent contractors, though exceptions exist for non-delegable duties and inherently dangerous activities.
- How is a general partnership formed?
- A general partnership is formed when two or more persons associate to carry on a business for profit as co-owners, and no written agreement, filing, or even a subjective intent to form a partnership is required. A person's receipt of a share of business profits creates a presumption that the person is a partner. Because partnerships can form by conduct alone, parties can become partners without realizing it.
- What duties do partners owe each other?
- Partners owe each other and the partnership fiduciary duties of loyalty and care. The duty of loyalty requires accounting for profits derived from the partnership, refraining from dealing as an adverse party, and not competing with the firm. The duty of care generally requires partners to refrain from grossly negligent or reckless conduct, and all partners must exercise their rights consistent with good faith and fair dealing.
Practice with feedback that shows you what to fix
Write a practice essay or run a set of multiple-choice questions and get panel-graded feedback that points to your next improvement. Three free practice runs, no credit card required.
Start free