Question 1

Explain the meaning of the requirement for the existence of a partnership that the people carrying on the business have a "view to a profit."

Accepted Answer

"View to a profit" means that the allege

Question 2

Ella is a partner in a law firm operating as a general partnership.One of the firm's clients deposited $1 million in the firm account to be used by Ella to complete a real estate purchase.Ella negligently bungled the transaction with the result that the client lost the $1 million.Which of the following is TRUE?

Accepted Answer

A) Liability for Ella's negligence falls upon the partnership and upon each of the partners individually. 
B) The partnership is not liable for Ella's negligence because it did not authorize Ella to commit negligence. 
C) The partnership would not be liable for Ella's negligence if it was a limited partnership. 
D) The partnership is not liable for Ella's negligence because Ella breached her fiduciary duty to act in the best interests of the partnership. 
E) The partnership is not liable for Ella's negligence because negligence may be a criminal act as well as a tort. 
A) Liability for Ella's negligence falls upon the partnership and upon each of the partners individually. 
B) The partnership is not liable for Ella's negligence because it did not authorize Ella to commit negligence. 
C) The partnership would not be liable for Ella's negligence if it was a limited partnership. 
D) The partnership is not liable for Ella's negligence because Ella breached her fiduciary duty to act in the best interests of the partnership. 
E) The partnership is not liable for Ella's negligence because negligence may be a criminal act as well as a tort.

Question 3

Incorporation is a process that only lawyers may carry out.

Accepted Answer

A) True 
 B)False

Question 4

Which statement best describes the circumstances in which a court will disregard the separate existence of a corporation and impose liability on a shareholder for obligations owed by the corporation to a creditor? A court will impose liability on a shareholder

Accepted Answer

A) when the corporation has breached its contract with the creditor. 
B) when the creditor is an individual who really needs the money, and imposing liability on the shareholder is the only way to ensure that the individual obtains relief. 
C) when a business has been incorporated to do something, or facilitate the doing of something, that is illegal or improper, such as fraud. 
D) when a corporation does not have sufficient assets to meet its reasonably foreseeable liabilities resulting from carrying on its business. 
E) when the court decides in its unfettered discretion that it would be just, fair, and equitable to all parties to do so. 
A) when the corporation has breached its contract with the creditor. 
B) when the creditor is an individual who really needs the money, and imposing liability on the shareholder is the only way to ensure that the individual obtains relief. 
C) when a business has been incorporated to do something, or facilitate the doing of something, that is illegal or improper, such as fraud. 
D) when a corporation does not have sufficient assets to meet its reasonably foreseeable liabilities resulting from carrying on its business. 
E) when the court decides in its unfettered discretion that it would be just, fair, and equitable to all parties to do so.

Question 5

Eileen is considering incorporating a corporation under the Canada Business Corporations Act to carry on her toxic waste disposal business.She has heard that incorporation is a foolproof strategy to avoid personal liability for obligations of the business.Which of the following is FALSE?

Accepted Answer

A) Sometimes, at the request of a creditor, courts will disregard the separate legal existence of the corporation and impose liability on a shareholder, but these circumstances generally involve egregious or fraudulent conduct using the corporation as a cloak to facilitate that conduct. 
B) Sophisticated creditors may demand that a shareholder guarantee a debt of the corporation, with the result that the shareholder becomes liable for the debt as well as the corporation. 
C) Incorporation will generally shield shareholders for the claims of trade creditors and consumers. 
D) Incorporation does reduce risk for shareholders by protecting them against liability for torts for which the corporation is liable. 
E) A shareholder of a corporation obtains no business advantage by conducting business through a corporation as opposed to a proprietorship. 
A) Sometimes, at the request of a creditor, courts will disregard the separate legal existence of the corporation and impose liability on a shareholder, but these circumstances generally involve egregious or fraudulent conduct using the corporation as a cloak to facilitate that conduct. 
B) Sophisticated creditors may demand that a shareholder guarantee a debt of the corporation, with the result that the shareholder becomes liable for the debt as well as the corporation. 
C) Incorporation will generally shield shareholders for the claims of trade creditors and consumers. 
D) Incorporation does reduce risk for shareholders by protecting them against liability for torts for which the corporation is liable. 
E) A shareholder of a corporation obtains no business advantage by conducting business through a corporation as opposed to a proprietorship.

Question 6

In 2006, Sally opened a restaurant called Traders' Place in rented premises in Ottawa's booming financial district.She operated the restaurant as a sole proprietorship.By 2012, the business had grown and she determined that she needed experienced help to run the business.In November 2012, Sally approached Marty to see if he would become the manager of the Traders' Place business.He agreed and the following were the terms of his agreement with Sally.??Each month, Marty was paid $1000 plus 1 percent of the total restaurant revenues for that month.Total monthly revenues, on average, were about $100 000.At the end of each complete calendar year that Marty worked, if the restaurant had made a profit for the year equal to or exceeding $200 000, Marty was entitled to receive 10 percent of the profits.??Marty was responsible for managing the restaurant, including?- opening and closing the restaurant, ?- hiring, firing and scheduling staff, and?- ordering food and paying suppliers.??Sally was responsible for the financial side of the business, including budgeting, accounting and payroll, as well as marketing.In 2013, Traders' Place profits exceeded $200 000 and Marty was paid 10 percent of the profits in accordance with the agreement.Are Marty and Sally carrying on business as a partnership?

Accepted Answer

The test to be applied is, are Marty and

Question 7

Babak and Cal are partners in a restaurant business.Their partnership agreement says that Babak does not have authority to sign contracts for supplies for the partnership business.Babak contracted with Doris for the supply of 10 kilograms of haddock for the partnership.Which of the following is TRUE?

Accepted Answer

A) The contract is not binding on the partnership. 
B) The contract is binding on the partnership unless Doris knew that Babak did not have authority to contract. 
C) The contract is not binding on the partnership unless Doris asked Babak if he had authority to contract on behalf of the partnership. 
D) The contract is binding on the partnership if Doris thought that Cal was a partner. 
E) The contract is binding on the partnership, but Cal is not personally responsible for the contract. 
A) The contract is not binding on the partnership. 
B) The contract is binding on the partnership unless Doris knew that Babak did not have authority to contract. 
C) The contract is not binding on the partnership unless Doris asked Babak if he had authority to contract on behalf of the partnership. 
D) The contract is binding on the partnership if Doris thought that Cal was a partner. 
E) The contract is binding on the partnership, but Cal is not personally responsible for the contract.

Question 8

Ten years ago, Tad and Tori created a partnership.At that time, Tad contributed $400 000 in property and Tori contributed $600 000 in cash as capital for the partnership.Two years later, Tori provided $300 000 to the partnership as an interest-free loan.That loan has not yet been repaid.During the entire life of the partnership, Tori performed approximately 60 percent of the partnership's work, while Tad tended to devote much of his time to various charitable causes that were unrelated to the partnership.The partnership has now been dissolved.Sale of the partnership assets produced a fund of $1.2 million.It is necessary to spend $200 000 on debts that the partnership still owes to various creditors.Assuming that the parties have not replaced or modified the default rules applicable to their partnership,

Accepted Answer

A) Tori will receive an amount equal to her original contribution and repayment of her loan. 
B) Tori will receive an amount that reflects the fact that she performed 60 percent of the partnership's work. 
C) Tad and Tori will receive the same amount. 
D) A judge will consider all of the circumstances and then exercise a discretion to determine how much each party is entitled to receive. 
E) Tori will receive $800 000. 
A) Tori will receive an amount equal to her original contribution and repayment of her loan. 
B) Tori will receive an amount that reflects the fact that she performed 60 percent of the partnership's work. 
C) Tad and Tori will receive the same amount. 
D) A judge will consider all of the circumstances and then exercise a discretion to determine how much each party is entitled to receive. 
E) Tori will receive $800 000.

Question 9

Owen is a prominent accountant in his community.He is retiring from a partnership he has been in with several other accountants.He directs the partners to get rid of all letterhead with his name on it.Inadvertently, some of the firm's old letterhead is retained.The firm uses one of these pieces of old letterhead showing Owen as a partner to order several computers from a local business that the partnership had not dealt with previously.The business decides to sell the computers to the firm on credit.Owen is definitely liable as a partner to pay for the computers.

Accepted Answer

A) True 
 B)False

Question 10

"No one should invest in a limited partnership unless they are prepared to stay out of management." Do you agree or disagree with this statement? Explain why.

Accepted Answer

This statement is true, but only to some

Question 11

If two sisters, Simone and Claire, were setting up a partnership to provide French lessons, which of the following arrangements would require a change to the default rules under partnership law?

Accepted Answer

A) Simone and Claire each want to receive 50 percent of the profits from the business. 
B) If one of the sisters had to pay out 100 percent of a business obligation, the other would reimburse her for 50 percent of the cost. 
C) Simone and Claire would each contribute the same amount to the partnership initially. 
D) Either sister can make management decisions for the partnership business without the other's participation. 
E) The sisters plan to buy a car, which will be used only in the partnership business. 
A) Simone and Claire each want to receive 50 percent of the profits from the business. 
B) If one of the sisters had to pay out 100 percent of a business obligation, the other would reimburse her for 50 percent of the cost. 
C) Simone and Claire would each contribute the same amount to the partnership initially. 
D) Either sister can make management decisions for the partnership business without the other's participation. 
E) The sisters plan to buy a car, which will be used only in the partnership business.

Question 12

Preferred shares would be of interest to an investor having which of the following characteristics?

Accepted Answer

A) an investor looking for the highest return and prepared to take the greatest risk 
B) an investor looking for an investment where the return is guaranteed 
C) an investor who is looking for a return that is fixed but not guaranteed 
D) an investor who wants a voice in the affairs of the corporation through the voting rights attached to the shares 
E) an investor who wants to be sure to get their money back 
A) an investor looking for the highest return and prepared to take the greatest risk 
B) an investor looking for an investment where the return is guaranteed 
C) an investor who is looking for a return that is fixed but not guaranteed 
D) an investor who wants a voice in the affairs of the corporation through the voting rights attached to the shares 
E) an investor who wants to be sure to get their money back

Question 13

ABC Corporation is financed by both debt and equity.In its shareholder agreement, it promises to pay monthly dividends to all shareholders.Recently, it has come into some financial trouble and is having trouble making payments.Which of the following is true?

Accepted Answer

A) ABC should pay dividends or risk bankruptcy. 
B) ABC should pay its creditors or risk bankruptcy. 
C) ABC must pay dividends or it risks being sued for breach of contract. 
D) ABC must pay both dividends and its creditors or risk bankruptcy. 
E) ABC should declare bankruptcy now to avoid any obligations it currently has. 
A) ABC should pay dividends or risk bankruptcy. 
B) ABC should pay its creditors or risk bankruptcy. 
C) ABC must pay dividends or it risks being sued for breach of contract. 
D) ABC must pay both dividends and its creditors or risk bankruptcy. 
E) ABC should declare bankruptcy now to avoid any obligations it currently has.

Question 14

Which of the following is FALSE?

Accepted Answer

A) A sole proprietor is exclusively responsible for performing all contracts entered into in connection with the business. 
B) Sole proprietors must include any income or loss from the sole proprietorship business in their income for income tax purposes. 
C) A sole proprietor is vicariously liable for torts of employees in the course of the sole proprietorship business. 
D) A sole proprietor cannot be an employee of the sole proprietorship business. 
E) A sole proprietorship is a cautious method of forming of business as the proprietor has no legal liability for tort of contract and the proprietorship business is a separate legal entity from the proprietor. 
A) A sole proprietor is exclusively responsible for performing all contracts entered into in connection with the business. 
B) Sole proprietors must include any income or loss from the sole proprietorship business in their income for income tax purposes. 
C) A sole proprietor is vicariously liable for torts of employees in the course of the sole proprietorship business. 
D) A sole proprietor cannot be an employee of the sole proprietorship business. 
E) A sole proprietorship is a cautious method of forming of business as the proprietor has no legal liability for tort of contract and the proprietorship business is a separate legal entity from the proprietor.

Question 15

If two people share profits from a business, they are necessarily in a partnership.

Accepted Answer

A) True 
 B)False

Explain the meaning of the requirement for the existence of a partnership that the people carrying on the business have a "view to a profit."

Incorporation is a process that only lawyers may carry out.

Which statement best describes the circumstances in which a court will disregard the separate existence of a corporation and impose liability on a shareholder for obligations owed by the corporation to a creditor? A court will impose liability on a shareholder

Eileen is considering incorporating a corporation under the Canada Business Corporations Act to carry on her toxic waste disposal business.She has heard that incorporation is a foolproof strategy to avoid personal liability for obligations of the business.Which of the following is FALSE?

"No one should invest in a limited partnership unless they are prepared to stay out of management." Do you agree or disagree with this statement? Explain why.

If two sisters, Simone and Claire, were setting up a partnership to provide French lessons, which of the following arrangements would require a change to the default rules under partnership law?

Preferred shares would be of interest to an investor having which of the following characteristics?

ABC Corporation is financed by both debt and equity.In its shareholder agreement, it promises to pay monthly dividends to all shareholders.Recently, it has come into some financial trouble and is having trouble making payments.Which of the following is true?

Which of the following is FALSE?

If two people share profits from a business, they are necessarily in a partnership.

Risk Management and Sources of Law

Litigation and Alternative Dispute Resolution

Introduction to Torts

Intentional Torts

Miscellaneous Torts Affecting Business

Negligence

The Nature and Creation of Contracts

Consideration and Privity

Representations and Terms

Contractual Defects

Discharge and Breach

Contractual Remedies

Special Contracts: Sale of Goods

Real Property: Interests and Leases

Real Property: Sales and Mortgages

Personal Property: Bailment and Insurance

Intellectual Property

Electronic Commerce

Agency and Other Methods of Carrying on Business

Legal Rules for Corporate Governance

Secured Transactions

Dealing With Bankruptcy and Insolvency

Government Regulation of Business

Individual Employment

Organized Labour

Online: Special Contracts: Negotiable Instruments

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Exam 20: Basic Forms of Business Organizations

Explain the meaning of the requirement for the existence of a partnership that the people carrying on the business have a "view to a profit."

Incorporation is a process that only lawyers may carry out.

Which statement best describes the circumstances in which a court will disregard the separate existence of a corporation and impose liability on a shareholder for obligations owed by the corporation to a creditor? A court will impose liability on a shareholder

Eileen is considering incorporating a corporation under the Canada Business Corporations Act to carry on her toxic waste disposal business.She has heard that incorporation is a foolproof strategy to avoid personal liability for obligations of the business.Which of the following is FALSE?

"No one should invest in a limited partnership unless they are prepared to stay out of management." Do you agree or disagree with this statement? Explain why.

If two sisters, Simone and Claire, were setting up a partnership to provide French lessons, which of the following arrangements would require a change to the default rules under partnership law?

Preferred shares would be of interest to an investor having which of the following characteristics?

ABC Corporation is financed by both debt and equity.In its shareholder agreement, it promises to pay monthly dividends to all shareholders.Recently, it has come into some financial trouble and is having trouble making payments.Which of the following is true?

Which of the following is FALSE?

If two people share profits from a business, they are necessarily in a partnership.

Risk Management and Sources of Law

Litigation and Alternative Dispute Resolution

Introduction to Torts

Intentional Torts

Miscellaneous Torts Affecting Business

Negligence

The Nature and Creation of Contracts

Consideration and Privity

Representations and Terms

Contractual Defects

Discharge and Breach

Contractual Remedies

Special Contracts: Sale of Goods

Real Property: Interests and Leases

Real Property: Sales and Mortgages

Personal Property: Bailment and Insurance

Intellectual Property

Electronic Commerce

Agency and Other Methods of Carrying on Business

Legal Rules for Corporate Governance

Secured Transactions

Dealing With Bankruptcy and Insolvency

Government Regulation of Business

Individual Employment

Organized Labour

Online: Special Contracts: Negotiable Instruments

Filters