Question 1

Which of the following would you expect to find in the general by-law of a corporation?

Accepted Answer

A) a resolution issuing shares of the corporation 
B) the rules for calling shareholder meetings 
C) the characteristics of the shares of the corporation 
D) an employment contract 
E) the memorandum of association 
A) a resolution issuing shares of the corporation 
B) the rules for calling shareholder meetings 
C) the characteristics of the shares of the corporation 
D) an employment contract 
E) the memorandum of association

Question 2

Which of the following statements is TRUE?

Accepted Answer

A) Partners often have a high degree of trust and confidence in each other and it is necessary for an effective partnership that they do so. 
B) Partners do not have to worry about individual partners incurring unauthorized liabilities because each partner has a fiduciary duty to act in the best interests of the partnership. 
C) An indemnification agreement between partners will always be complete protection against unauthorized liabilities. 
D) A prohibition in a partnership agreement on partners incurring a specific obligation will prevent partnership liability arising if one of the partners tries to commit the partnership to such an obligation. 
E) Partners have contractual risk to partnership contracts entered into by other partners in the course of the partnership business,but they do not have a similar tort risk. 
A) Partners often have a high degree of trust and confidence in each other and it is necessary for an effective partnership that they do so. 
B) Partners do not have to worry about individual partners incurring unauthorized liabilities because each partner has a fiduciary duty to act in the best interests of the partnership. 
C) An indemnification agreement between partners will always be complete protection against unauthorized liabilities. 
D) A prohibition in a partnership agreement on partners incurring a specific obligation will prevent partnership liability arising if one of the partners tries to commit the partnership to such an obligation. 
E) Partners have contractual risk to partnership contracts entered into by other partners in the course of the partnership business,but they do not have a similar tort risk.

Question 3

Stella is planning to build a national chain of restaurants.She should choose to incorporate under the Canada Business Corporations Act for which of the following reasons?

Accepted Answer

A) Provincially incorporated corporations are prohibited from carrying on business in another province or territory. 
B) Provincially incorporated corporations need permission from each province and territory in which they want to carry on business. 
C) Provincially incorporated corporations have restrictions on the types of businesses that they can carry on. 
D) The limited liability of provincially incorporated corporations is not recognized in other provinces or territories. 
E) A company incorporated under the Canada Business Corporations Act has the right to carry on business across Canada but may have to comply with provincial registration requirements,provided those provincial registration requirements due not unconstitutionally interfere with that right. 
A) Provincially incorporated corporations are prohibited from carrying on business in another province or territory. 
B) Provincially incorporated corporations need permission from each province and territory in which they want to carry on business. 
C) Provincially incorporated corporations have restrictions on the types of businesses that they can carry on. 
D) The limited liability of provincially incorporated corporations is not recognized in other provinces or territories. 
E) A company incorporated under the Canada Business Corporations Act has the right to carry on business across Canada but may have to comply with provincial registration requirements,provided those provincial registration requirements due not unconstitutionally interfere with that right.

Question 4

The fiduciary duty owed by one partner to another requires which of the following of a partner?

Accepted Answer

A) paying over to the partnership any amounts earned from activities unrelated to the partnership 
B) giving up any business interests outside the partnership 
C) passing up opportunities to compete with the partnership 
D) looking after the personal health and welfare of the other partners 
E) providing information to the partnership about business opportunities not related to the partnership business 
A) paying over to the partnership any amounts earned from activities unrelated to the partnership 
B) giving up any business interests outside the partnership 
C) passing up opportunities to compete with the partnership 
D) looking after the personal health and welfare of the other partners 
E) providing information to the partnership about business opportunities not related to the partnership business

Question 5

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 6

Familias Inc is a small corporation.Jennifer is one of only three shareholders.Questions recently have arisen regarding Jennifer's relationship to the company.Which of the following statements is TRUE?

Accepted Answer

A) Because she is a shareholder,Jennifer cannot also be a creditor of the company. 
B) Because she is a shareholder,Jennifer cannot also be an employee of the company. 
C) Jennifer is taxed for one third of any profits that the company earns. 
D) If Jennifer dies,the company automatically will cease to exist unless the other shareholders purchase Jennifer's assets from her estate. 
E) Jennifer may be a director of the company even though she is also a shareholder,and as a director Jennifer would owe duties to the company. 
A) Because she is a shareholder,Jennifer cannot also be a creditor of the company. 
B) Because she is a shareholder,Jennifer cannot also be an employee of the company. 
C) Jennifer is taxed for one third of any profits that the company earns. 
D) If Jennifer dies,the company automatically will cease to exist unless the other shareholders purchase Jennifer's assets from her estate. 
E) Jennifer may be a director of the company even though she is also a shareholder,and as a director Jennifer would owe duties to the company.

Question 7

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 independent of the other 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 independent of the other without the other's participation. 
E) The sisters plan to buy a car,which will be used only in the partnership business.

Question 8

Darren and Jeff enter into a partnership where Darren is the limited partner and Jeff is the general partner.Which of the following is true?

Accepted Answer

A) Limited partners can never take an active role in the management of the partnership. 
B) Limited partners can take an active role in the management but they will lose their limited liability up to the amount of the general partner. 
C) Limited partners cannot take an active role in the management of the partnership,but they can advise management. 
D) In a limited partnership,the general partner and the limited partner have limited liability.That is why it is called a limited partnership. 
E) A limited partnership exists when two or more people carry on business with the intention of making a profit,but limited partnerships must be registered in order for the limited partner to retain limited liability. 
A) Limited partners can never take an active role in the management of the partnership. 
B) Limited partners can take an active role in the management but they will lose their limited liability up to the amount of the general partner. 
C) Limited partners cannot take an active role in the management of the partnership,but they can advise management. 
D) In a limited partnership,the general partner and the limited partner have limited liability.That is why it is called a limited partnership. 
E) A limited partnership exists when two or more people carry on business with the intention of making a profit,but limited partnerships must be registered in order for the limited partner to retain limited liability.

Question 9

Alice is the sole shareholder of AliCo Inc,a corporation incorporated under the Canada Business Corporations Act.She has elected Samra as the director and Samra has appointed Ezra to be the president of the corporation,responsible for its day-to-day business.Which of the following actions by Alice would be inconsistent with the separate legal existence of the corporation?

Accepted Answer

A) Alice lending money to the corporation 
B) Alice selling some real estate belonging to the corporation and keeping the money 
C) Alice selling some real estate to the corporation and keeping the profits 
D) Alice providing consulting services to the corporation and keeping the profits 
E) Alice selling her shares in the corporation to Samra 
A) Alice lending money to the corporation 
B) Alice selling some real estate belonging to the corporation and keeping the money 
C) Alice selling some real estate to the corporation and keeping the profits 
D) Alice providing consulting services to the corporation and keeping the profits 
E) Alice selling her shares in the corporation to Samra

Question 10

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 11

Compare the relative advantages and disadvantages of using a partnership and a corporation to carry on a business.

Accepted Answer

The corporation has several advantages o

Question 12

Stan is thinking about starting a toxic waste disposal business.He plans to collect the waste from businesses that produce it and then dispose of it in a sanitary landfill.In order to start this business,Stan will need a substantial amount of money to buy and develop the landfill site and purchase five trucks capable of transporting toxic waste.What concerns would you have about operating this business as a sole proprietorship if you were Stan? What alternative form of business organization would you recommend and why?

Accepted Answer

There would be two main concerns based o

Question 13

Only a few corporations have shares that,on the dissolution of the corporation,are entitled to receive the property of the corporation remaining after all the creditors and prior claim holders have been paid.

Accepted Answer

A) True 
 B)False

Question 14

Adam is lending $50 000 to a partnership being carried on by Selma and Jennifer.The arrangement he has with them is that they will pay him back out of their annual profits.Selma and Jennifer will decide how much to pay back out of profits in each year.Interest of 10 percent per year will have to be paid on whatever amount is outstanding after the payment of the profit share in each year.He is content with this rather uncertain arrangement because he does not need the money currently and the 10 percent return is a good rate.In order to protect his investment,he wants Selma and Jennifer to enter into a contract that requires them to continue carrying on the partnership business and to make monthly reports to him.Adam is concerned that he may be considered a partner in the business.Is he? Is there anything he can do to reduce the risk of being found a partner?

Accepted Answer

Adam's relationship with the partnership

Question 15

The CBCA

Accepted Answer

A) applies to every corporation that operates in Canada. 
B) requires that people who want to incorporate a corporation file a report that demonstrates that no other corporation already has the name that the corporation will use after it is incorporated. 
C) provides the model for the corporation legislation that exists in every province in Canada. 
D) applies only to corporations that conduct business in areas that,according to sections 91 and 92 of the Constitution,fall within the legislative authority of the federal government. 
E) governs most types of business organizations,including partnerships and sole proprietorships. 
A) applies to every corporation that operates in Canada. 
B) requires that people who want to incorporate a corporation file a report that demonstrates that no other corporation already has the name that the corporation will use after it is incorporated. 
C) provides the model for the corporation legislation that exists in every province in Canada. 
D) applies only to corporations that conduct business in areas that,according to sections 91 and 92 of the Constitution,fall within the legislative authority of the federal government. 
E) governs most types of business organizations,including partnerships and sole proprietorships.

Question 16

Yasmin and Elvis were partners.Yasmin committed a tort against Patagonia Inc while acting in the course of partnership business.Patagonia suffered a loss of $500 000.It successfully sued and now intends to satisfy judgment by collecting the appropriate amount.Which of the following statements is TRUE?

Accepted Answer

A) Patagonia can only take assets that qualify as partnership property. 
B) If Patagonia collects $500 000 from Yasmin personally,she is entitled to collect half that amount from Elvis in the absence of an agreement between them that allocates their responsibility differently. 
C) Patagonia is entitled to satisfy its judgment against assets personally held by Yasmin,but not against assets personally held by Elvis. 
D) Patagonia is entitled to collect from Elvis,but only to the amount that represents the value of the assets and services that Elvis has contributed to the partnership. 
E) Patagonia can recover from the partnership assets and the personal assets of Yasmin and Elvis,or both or all of them. 
A) Patagonia can only take assets that qualify as partnership property. 
B) If Patagonia collects $500 000 from Yasmin personally,she is entitled to collect half that amount from Elvis in the absence of an agreement between them that allocates their responsibility differently. 
C) Patagonia is entitled to satisfy its judgment against assets personally held by Yasmin,but not against assets personally held by Elvis. 
D) Patagonia is entitled to collect from Elvis,but only to the amount that represents the value of the assets and services that Elvis has contributed to the partnership. 
E) Patagonia can recover from the partnership assets and the personal assets of Yasmin and Elvis,or both or all of them.

Question 17

Sam and Jemma each owned a 50 percent interest in an office building.Which of the following is a factor that would support a conclusion that their relationship is NOT a partnership?

Accepted Answer

A) Sam and Jemma are actively involved in the management of the building. 
B) Sam and Jemma are jointly responsible for all expenses associated with the building. 
C) Sam and Jemma have a bank account out of which they pay expenses relating to the building and each has signing authority. 
D) Sam takes responsibility for finding tenants and Jemma collects the rents. 
E) Sam lent the money to Jenna for the office building and he has a 50 percent interest as security for the loan.Sam takes no active part in the business,its profits,or its loses. 
A) Sam and Jemma are actively involved in the management of the building. 
B) Sam and Jemma are jointly responsible for all expenses associated with the building. 
C) Sam and Jemma have a bank account out of which they pay expenses relating to the building and each has signing authority. 
D) Sam takes responsibility for finding tenants and Jemma collects the rents. 
E) Sam lent the money to Jenna for the office building and he has a 50 percent interest as security for the loan.Sam takes no active part in the business,its profits,or its loses.

Question 18

Jessica had operated a business for several years.Because the number of customers increased significantly,she persuaded Zach to work together with her.Two years after Zach came aboard,Jessica committed a tort while acting in the course of the business and caused a customer to suffer a substantial loss.A question has arisen as to whether Zach and Jessica were partners.Which of the following statements is TRUE?

Accepted Answer

A) A partnership may exist even if Zach and Jessica signed a document that expressly said that their relationship was not a partnership. 
B) Zach will be considered a partner as long as he was paid for his services out of the business's profits. 
C) A partnership cannot exist unless the business holds property apart from both Jessica and Zach. 
D) The parties' business organization cannot be a partnership if the business was losing money with the result that there were no profits to share. 
E) Because Zach and Jessica were working together,he is liable for her tort even if they were not formally partners. 
A) A partnership may exist even if Zach and Jessica signed a document that expressly said that their relationship was not a partnership. 
B) Zach will be considered a partner as long as he was paid for his services out of the business's profits. 
C) A partnership cannot exist unless the business holds property apart from both Jessica and Zach. 
D) The parties' business organization cannot be a partnership if the business was losing money with the result that there were no profits to share. 
E) Because Zach and Jessica were working together,he is liable for her tort even if they were not formally partners.

Question 19

Rupert is starting up a new high-tech business and needs to be able to attract some of the best computer programmers available.He has set up a corporation to carry on the business.It has two classes of shares: common shares which vote,and are entitled to receive dividends and the remaining property of the corporation on dissolution,and Class A preferred shares,which do not vote but are entitled to an annual dividend of 10 percent of the issue price and,on dissolution,to receive the amount invested in return for the preferred shares.Dividends on the Class A preferred shares must be paid before any dividends are paid on the common shares.Also,no payment on dissolution can be made to the holders of the common shares until payment is made to the holders of Class A preferred shares.Rupert holds all of the 100 common shares the corporation has issued.He expects that the common shares of the business will be sold in a couple of years for an enormous profit because the business will grow very fast.No Class A preferred shares have been issued.In order to attract programmers,Rupert wants to be able to offer them shares in his corporation in addition to paying them a good salary.What kind of shares should these be? Are there any concerns Rupert should have regarding his strategy?

Accepted Answer

Since the programmers will be receiving

Question 20

Yasir and Rahool are partners in an accounting firm.Each contributed $10 000 in capital and Yasir has loaned the partnership a further $15 000.The partnership also owes its bank $25 000.Yasir and Rahool want to dissolve the partnership.They plan to pay themselves back $10 000 each first,then distribute $25 000 to the bank,and finally pay back Yasir's loan if there is enough money left.This plan for distribution is consistent with the default rules of partnership law.

Accepted Answer

A) True 
 B)False

Which of the following would you expect to find in the general by-law of a corporation?

Which of the following statements is TRUE?

Stella is planning to build a national chain of restaurants.She should choose to incorporate under the Canada Business Corporations Act for which of the following reasons?

The fiduciary duty owed by one partner to another requires which of the following of a partner?

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?

Familias Inc is a small corporation.Jennifer is one of only three shareholders.Questions recently have arisen regarding Jennifer's relationship to the company.Which of the following statements is TRUE?

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?

Darren and Jeff enter into a partnership where Darren is the limited partner and Jeff is the general partner.Which of the following is true?

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."

Compare the relative advantages and disadvantages of using a partnership and a corporation to carry on a business.

Only a few corporations have shares that,on the dissolution of the corporation,are entitled to receive the property of the corporation remaining after all the creditors and prior claim holders have been paid.

The CBCA

Sam and Jemma each owned a 50 percent interest in an office building.Which of the following is a factor that would support a conclusion that their relationship is NOT 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

Special Contracts: Negotiable Instruments

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

Filters

Exam 21: Basic Forms of Business Organizations

Which of the following would you expect to find in the general by-law of a corporation?

Which of the following statements is TRUE?

Stella is planning to build a national chain of restaurants.She should choose to incorporate under the Canada Business Corporations Act for which of the following reasons?

The fiduciary duty owed by one partner to another requires which of the following of a partner?

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?

Familias Inc is a small corporation.Jennifer is one of only three shareholders.Questions recently have arisen regarding Jennifer's relationship to the company.Which of the following statements is TRUE?

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?

Darren and Jeff enter into a partnership where Darren is the limited partner and Jeff is the general partner.Which of the following is true?

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."

Compare the relative advantages and disadvantages of using a partnership and a corporation to carry on a business.

Only a few corporations have shares that,on the dissolution of the corporation,are entitled to receive the property of the corporation remaining after all the creditors and prior claim holders have been paid.

The CBCA

Sam and Jemma each owned a 50 percent interest in an office building.Which of the following is a factor that would support a conclusion that their relationship is NOT 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

Special Contracts: Negotiable Instruments

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

Filters