Exam 9: The Organization of a Business

Joan Laxton, a real estate agent, listed a house on behalf of Max Patel, the owner. Joan secretly bought the house through her corporation, HerSelf Co., and resold it at a $20,000 profit. These acts by Joan are a beach of which of the following?

Kevin, a contractor, was advised by several persons in his community that Toby had been representing himself around the town, as being Kevinʹs agent and authorized to make home renovation contracts on his behalf. Kevin had in fact not authorized Toby to make these representations on his behalf but did nothing to address the situation. Two weeks later, Myra a homeowner, advised Kevin that she had made a contract to renovate her home with him through Toby and that if he did not carry out the work, she would take legal action against him. Which of the following statements is TRUE?

Virginia hires John as her agent to buy supplies. Byron contracts to send supplies to Wolf through John, knowing John is an agent. The supplies are sent but not paid for so Byron wants to sue on the contract. Which of the following statements is true?

Barbara Brown has hired Gerry Grey as her agent to purchase used machines for a manufacturing plant with instructions not to pay over $10,000 per machine. Gerry makes it clear that he is acting as agent for Barbara and makes a contract to purchase a machine for $15,000 from Rick Redd. When Barbara learns of it, she wants to cancel the contract. Which of the following statements is TRUE?

The duty imposed on a franchisor when dealing with the franchisee is

If a sole proprietorship breaches a contract

A limited liability partnership involves:

Which of the following statements with respect to the Partnership Act is TRUE?

There are four common ways of protecting personal assets: transfer to spouse, partnership incorporation and insurance.

Maury Slater and Harry Katz operate a clothing store, Maury's Fifth Avenue, as a partnership. They agree that Maury will concentrate on sales and Harry will deal with the wholesalers. Harry tells all his suppliers not to listen to Maury if he should call. While Harry is in Florida for a two week vacation and Maury is minding the store, Joe Feller, the sales representative for Regency Clothes, one of their major suppliers, pays a visit. He leaves with an order for 200 suites, when Harry returns, he tells Joe he won't pay for them. Can Regency sue Fifth Avenue?

In which of the following situations has the duty between partners NOT been breached?

If a franchisor does not meet the material disclosure requirements of provincial franchise laws, the franchisee may be able to have the franchise agreement rescinded and their money refunded.

You are about to form a partnership. You want to make a partnership agreement which will protect your interests in the event that your partner decides to retire. Which of the following is TRUE?

For a principal to be liable for contracts that an agent signs on their behalf there must be a clear written agreement between the principal and the agent.

Which of the following would be most important factor for a court in deciding whether a partnership exists?

Sara Vaughan told her tenants that her son would collect rents while she was in Florida. The son did collect the rents in October, November, and December. At Christmas Sara returned home and told her son that she would collect the January rents. The son went first thing in January, before the tenants knew Sara had returned, and collected the January rents. Will the tenants have to pay twice?

Which of the following is a violation of the fiduciary duty of a partner?

Tom Dimaio and Jerry Gluck decided to become partners in the business of cutting lawns. After a few months, Jerry heard of a job cutting lawns at a warehouse. He took the job and earned $100 a day once a week for the summer. Later, Tom found out and demanded a share of the money. Which of the following is TRUE?

Heinz Klein is a mechanic. Bettina Lopez has some money to invest. They agree that Bettina will lend money to Heinz to buy cars at government sales, fix them up and sell them. They will split the profits. Bettina says that she wants to have nothing to do with the operation of the business. They agree that they will not be partners. Which of the following is TRUE?

Carol Perez was a partner in the accounting firm of Lee, Park and Perez LLP. Carol defrauded a client of $3,000,000. If the client successfully sued for fraud, the client can claim against