Business Associations NextGen Bar Exam Study Guide

About Business Associations

Agency, partnerships, corporations and LLCs, fiduciary duties, and veil-piercing. NCBE flags 4 of its topics at memorize level; the rest lean on provided materials and reasoning.

From chapter 1, Agency & Authority

Almost nothing in business law happens in person. A corporation cannot sign a lease — a human signs for it. A partnership cannot negotiate a loan — a partner does. Agency is the body of law that answers one deceptively simple question: when one person acts, who is legally bound? Get agency right and every other business-associations topic falls into place, because partners, officers, directors, and managers are all just specialized agents. Picture a triangle. At the corners sit the principal (the person on whose behalf action is taken), the agent (the person who acts), and the third party (the outsider who deals with the agent). Agency law governs all three sides: whether the principal is bound to the third party, what the agent owes the principal, and when the agent is personally on the hook. One caution on scope: this topic is about consensual authority — binding the principal to contracts — and the agent's duties. Whether a principal is liable for an agent's torts (respondeat superior and vicarious liability) is a separate topic. This topic is starred, meaning you must recall these rules cold, without any provided statute. Modern agency law lives in the Restatement (Third) of Agency (2006), and we will use it throughout.