Question 1

A franchisee provides the product, equipment, and a licence to use the name, trademark, and logos.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is an advantage of incorporation?

Accepted Answer

A) Shareholders owe a duty to the corporation. 
B) Shareholders are liable for debts of the corporation. 
C) Shares are easily transferred. 
D) Shareholders can veto the decisions of directors. 
E) There are no tax advantages as compared to a sole proprietorship. 
A) Shareholders owe a duty to the corporation. 
B) Shareholders are liable for debts of the corporation. 
C) Shares are easily transferred. 
D) Shareholders can veto the decisions of directors. 
E) There are no tax advantages as compared to a sole proprietorship. C

Question 3

If a corporation was wronged by negligent and fraudulent acts committed by one of its directors and consequently suffered a $45 000 loss, and if the board of directors will not take any action on behalf of the corporation against the wrongdoer, which of the following is true?

Accepted Answer

A) A representative (derivative) action allows a shareholder to commence an action on behalf of the corporation. 
B) If the company failed to commence an action through its authorized agents (e.g., its directors), no action could be taken, because a corporation is merely a legal concept and must act through its authorized agents. 
C) The shareholders could proceed under the "dissent" procedure and force the corporation to pay them a fair market value for their shares. 
D) The shareholders could sue the corporation for oppression. 
E) The shareholders could force the directors to start the action on the basis of their "pre-emptive right." 
A) A representative (derivative) action allows a shareholder to commence an action on behalf of the corporation. 
B) If the company failed to commence an action through its authorized agents (e.g., its directors), no action could be taken, because a corporation is merely a legal concept and must act through its authorized agents. 
C) The shareholders could proceed under the "dissent" procedure and force the corporation to pay them a fair market value for their shares. 
D) The shareholders could sue the corporation for oppression. 
E) The shareholders could force the directors to start the action on the basis of their "pre-emptive right." A

Question 4

The partners can change the terms of their responsibilities to each other in the partnership agreement, but not in relationship to their obligations to third parties.

Accepted Answer

A) True 
 B)False

Question 5

Explain the nature of the director's duties to the corporation.

Accepted Answer

A fiduciary duty is owed, in that the di

Question 6

Which of the following is correct with respect to the law of partnership?

Accepted Answer

A) A partnership cannot be created inadvertently. 
B) Each partner is vicariously liable for the wrongful acts of their partners committed in the course of the partnership business. 
C) Partners are only liable for the torts of their partners if they in fact knew that the wrongful conduct was taking place. 
D) Joint and several liability means that each partner can be sued several times. 
E) Partners have unlimited liability, meaning that they can lose up to the amount they have invested in the business. 
A) A partnership cannot be created inadvertently. 
B) Each partner is vicariously liable for the wrongful acts of their partners committed in the course of the partnership business. 
C) Partners are only liable for the torts of their partners if they in fact knew that the wrongful conduct was taking place. 
D) Joint and several liability means that each partner can be sued several times. 
E) Partners have unlimited liability, meaning that they can lose up to the amount they have invested in the business.

Question 7

Explain the liability of a partner for another partner's actions.

Accepted Answer

Each partner is vicariously liable in to

Question 8

Which of the following statements is correct with respect to unlimited liability?

Accepted Answer

A) Only the partner's share of the partnership assets can be used to satisfy the debt incurred by another partner. 
B) Each partner can be held responsible for the debts of the partnership no matter how great they are. 
C) Unlimited liability means the partner can lose what he has invested but no more. 
D) The partner cannot only lose what she has invested but can also be required to pay an additional amount equal to what she has invested. 
E) If there are two partners, each partner can be held responsible for an amount equal to but no more than one half of the debts of the partnership. 
A) Only the partner's share of the partnership assets can be used to satisfy the debt incurred by another partner. 
B) Each partner can be held responsible for the debts of the partnership no matter how great they are. 
C) Unlimited liability means the partner can lose what he has invested but no more. 
D) The partner cannot only lose what she has invested but can also be required to pay an additional amount equal to what she has invested. 
E) If there are two partners, each partner can be held responsible for an amount equal to but no more than one half of the debts of the partnership.

Question 9

Mr.Malik, an investment counsellor by training, sat on the board of directors of Talbot Enterprises Ltd., a broadly held corporation.During a meeting of the board, he advised the corporation to buy some condominiums given the present soft real estate market.Malik did not disclose that he owned shares in the corporation that owned the properties, nor did he disclose that he would be entitled to a commission for every unit he helped sell.When the question was put to the board, he voted in favour of it.Read each of the following statements separately, and indicate which is true.

Accepted Answer

A) A director must disclose his interest in a contract before the board, but is not required to refrain from voting for it. 
B) A shareholder, learning of his actions, could proceed under the dissent procedure, which would cause the corporation to buy his shares at fair market value. 
C) Malik doesn't have to disclose his interest in the contract if he has signed an agreement with the other directors relieving them of their fiduciary duties. 
D) Malik has breached his fiduciary duty, but if the sale was fair, he need not give up his profits. 
E) Malik must account for any profit made because he failed to disclose his interest and voted on the question. 
A) A director must disclose his interest in a contract before the board, but is not required to refrain from voting for it. 
B) A shareholder, learning of his actions, could proceed under the dissent procedure, which would cause the corporation to buy his shares at fair market value. 
C) Malik doesn't have to disclose his interest in the contract if he has signed an agreement with the other directors relieving them of their fiduciary duties. 
D) Malik has breached his fiduciary duty, but if the sale was fair, he need not give up his profits. 
E) Malik must account for any profit made because he failed to disclose his interest and voted on the question.

Question 10

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business.Which of the following is true with regard to being a general partner?

Accepted Answer

A) Each partner is an agent for every other partner and for the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
B) Every general partner faces limited liability for the debts of the partnership. 
C) A partner is liable for only the amount that he or she invested in the partnership firm. 
D) Retiring from a partnership by giving notice to the partners frees a partner from the liabilities he or she faced while being a partner of the firm. 
E) A partner is liable to pay from his or her personal assets only when the partner has committed a criminal act. 
A) Each partner is an agent for every other partner and for the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
B) Every general partner faces limited liability for the debts of the partnership. 
C) A partner is liable for only the amount that he or she invested in the partnership firm. 
D) Retiring from a partnership by giving notice to the partners frees a partner from the liabilities he or she faced while being a partner of the firm. 
E) A partner is liable to pay from his or her personal assets only when the partner has committed a criminal act.

Question 11

An example of estoppel is when a person allows himself or herself to be called a partner.

Accepted Answer

A) True 
 B)False

Question 12

Alison told her partners in writing that she would be leaving the law partnership at the current partnership year-end, January 31, 2014.At year-end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations.In February 2014, one of the remaining partners absconded with $2 million held for Mr.Smith, a long-time client, taken in trust in September 2013.Mr.Smith sued the partnership, the partners, and Alison.Based on the facts described, which of the following statements is true?

Accepted Answer

A) Alison has no right to recover any funds she has to pay from her former partners. 
B) Mr.Smith can recover on his judgment out of the partnership assets. 
C) Even if Alison gave Mr.Smith actual notice of her leaving the partnership, and he agreed that she would no longer be obligated for the partnership, she can be held liable to Mr.Smith. 
D) After the partnership assets are exhausted, Mr.Smith can recover on his judgment from any one of the remaining partners but not from Alison. 
E) Only the remaining partners, not Alison, have the right to recover anything they have to pay from the absconding partner. 
A) Alison has no right to recover any funds she has to pay from her former partners. 
B) Mr.Smith can recover on his judgment out of the partnership assets. 
C) Even if Alison gave Mr.Smith actual notice of her leaving the partnership, and he agreed that she would no longer be obligated for the partnership, she can be held liable to Mr.Smith. 
D) After the partnership assets are exhausted, Mr.Smith can recover on his judgment from any one of the remaining partners but not from Alison. 
E) Only the remaining partners, not Alison, have the right to recover anything they have to pay from the absconding partner.

Question 13

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

Accepted Answer

This question requires students to demon

Question 14

Art Raskle was an officer, director, and employee of a broadly held corporation.At a directors meeting, he was surprised but pleased to learn that the corporation was discussing a resolution to contract with the firm of Fielding's Office Supply for $200 worth of office equipment.Raskle and a business woman had recently bought that business; Raskle has a 45% interest in it.Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0.Several months after completion of the purchase, the other directors learned of Raskle's interest in Fielding's Office Supply and called on him to account to the corporation for any profit made.Which of the following is true?

Accepted Answer

A) Raskle must account for any profit made because he failed to disclose his interest and voted on the question. 
B) Raskle is not in breach of any fiduciary duty because the dollar value of the contract falls below the minimum statutory threshold. 
C) Raskle has not breached his fiduciary duty because his vote did not determine the matter.Had he not voted, the result would have been the same. 
D) Raskle has breached his fiduciary duty but if the sale was "fair" and if the shareholders approve the sale by a special resolution after full disclosure, he need not account to the corporation for any profit made. 
E) Raskle is not in breach of his fiduciary duty because directors of corporations vote on contracts in which they have an interest all the time. 
A) Raskle must account for any profit made because he failed to disclose his interest and voted on the question. 
B) Raskle is not in breach of any fiduciary duty because the dollar value of the contract falls below the minimum statutory threshold. 
C) Raskle has not breached his fiduciary duty because his vote did not determine the matter.Had he not voted, the result would have been the same. 
D) Raskle has breached his fiduciary duty but if the sale was "fair" and if the shareholders approve the sale by a special resolution after full disclosure, he need not account to the corporation for any profit made. 
E) Raskle is not in breach of his fiduciary duty because directors of corporations vote on contracts in which they have an interest all the time.

Question 15

Explain the limitations of the liability of partners for the acts of other partners.

Accepted Answer

Each partner has unlimited liability for

Question 16

The Partnership Act allows the partners to change their liabilities and obligations to third parties.

Accepted Answer

A) True 
 B)False

Question 17

Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation.

Accepted Answer

The main advantages of partnership are i

Question 18

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

Accepted Answer

A) When in conflict, the terms of the federal Partnership Act override the provincial partnership acts. 
B) The Partnership Act is enacted by the federal government and creates a uniform and cohesive system of partnership law for all of Canada. 
C) The Partnership Act states clearly that a partnership is only created by specific agreement between the partners to that effect. 
D) The Partnership Act sets out provisions that will govern the relations between the partners unless those partners have agreed otherwise. 
E) The Partnership Act always overrides any provisions contrary to it set out by the partners in the partnership agreement. 
A) When in conflict, the terms of the federal Partnership Act override the provincial partnership acts. 
B) The Partnership Act is enacted by the federal government and creates a uniform and cohesive system of partnership law for all of Canada. 
C) The Partnership Act states clearly that a partnership is only created by specific agreement between the partners to that effect. 
D) The Partnership Act sets out provisions that will govern the relations between the partners unless those partners have agreed otherwise. 
E) The Partnership Act always overrides any provisions contrary to it set out by the partners in the partnership agreement.

Question 19

John and two friends incorporated a closely held corporation.Each bought an equal number of common shares in the corporation.Each became a director, an officer, and an authorized agent of the corporation.Which of the following is true?

Accepted Answer

A) Each of them, as a director, owes a fiduciary duty to the others, as shareholders. 
B) As director, each owes a fiduciary duty to the creditors of the corporation. 
C) The corporation is more highly regulated and less free of government regulations and control than a broadly held corporation would be. 
D) If the affairs of the corporation are being conducted in a manner that is unfairly prejudicial to any one shareholder, that shareholder could seek relief from such oppression from the court. 
E) Since the corporation is a legal fiction, all of its activities must be carried out through principals. 
A) Each of them, as a director, owes a fiduciary duty to the others, as shareholders. 
B) As director, each owes a fiduciary duty to the creditors of the corporation. 
C) The corporation is more highly regulated and less free of government regulations and control than a broadly held corporation would be. 
D) If the affairs of the corporation are being conducted in a manner that is unfairly prejudicial to any one shareholder, that shareholder could seek relief from such oppression from the court. 
E) Since the corporation is a legal fiction, all of its activities must be carried out through principals.

Question 20

Which of the following statements best describes a partnership?

Accepted Answer

A) Partnership involves two or more persons carrying on business with a view toward profits. 
B) Partnerships are created when two or more persons specifically agree to be in partnership. 
C) Partnerships are like any other form of contract; they can only be created when there is consensus between the parties in the form of offer and acceptance to that effect. 
D) Partnerships involve limited liability. 
E) Partnerships are only created when they have been properly registered with the government. 
A) Partnership involves two or more persons carrying on business with a view toward profits. 
B) Partnerships are created when two or more persons specifically agree to be in partnership. 
C) Partnerships are like any other form of contract; they can only be created when there is consensus between the parties in the form of offer and acceptance to that effect. 
D) Partnerships involve limited liability. 
E) Partnerships are only created when they have been properly registered with the government.

A franchisee provides the product, equipment, and a licence to use the name, trademark, and logos.

Which of the following is an advantage of incorporation?

If a corporation was wronged by negligent and fraudulent acts committed by one of its directors and consequently suffered a $45 000 loss, and if the board of directors will not take any action on behalf of the corporation against the wrongdoer, which of the following is true?

The partners can change the terms of their responsibilities to each other in the partnership agreement, but not in relationship to their obligations to third parties.

Explain the nature of the director's duties to the corporation.

Which of the following is correct with respect to the law of partnership?

Explain the liability of a partner for another partner's actions.

Which of the following statements is correct with respect to unlimited liability?

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business.Which of the following is true with regard to being a general partner?

An example of estoppel is when a person allows himself or herself to be called a partner.

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

Explain the limitations of the liability of partners for the acts of other partners.

The Partnership Act allows the partners to change their liabilities and obligations to third parties.

Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation.

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

John and two friends incorporated a closely held corporation.Each bought an equal number of common shares in the corporation.Each became a director, an officer, and an authorized agent of the corporation.Which of the following is true?

Which of the following statements best describes a partnership?

The Canadian Legal System

Torts and Professional Liability

Formation of Contracts

Enforcing Contractual Obligations

Legislation in the Marketplace

Agency and Employment

Property

Ideas and Information

Electronic Commerce and International Trade

Filters

Exam 7: Methods of Carrying on Business

A franchisee provides the product, equipment, and a licence to use the name, trademark, and logos.

Which of the following is an advantage of incorporation?

If a corporation was wronged by negligent and fraudulent acts committed by one of its directors and consequently suffered a $45 000 loss, and if the board of directors will not take any action on behalf of the corporation against the wrongdoer, which of the following is true?

The partners can change the terms of their responsibilities to each other in the partnership agreement, but not in relationship to their obligations to third parties.

Explain the nature of the director's duties to the corporation.

Which of the following is correct with respect to the law of partnership?

Explain the liability of a partner for another partner's actions.

Which of the following statements is correct with respect to unlimited liability?

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business.Which of the following is true with regard to being a general partner?

An example of estoppel is when a person allows himself or herself to be called a partner.

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

Explain the limitations of the liability of partners for the acts of other partners.

The Partnership Act allows the partners to change their liabilities and obligations to third parties.

Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation.

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

John and two friends incorporated a closely held corporation.Each bought an equal number of common shares in the corporation.Each became a director, an officer, and an authorized agent of the corporation.Which of the following is true?

Which of the following statements best describes a partnership?

The Canadian Legal System

Torts and Professional Liability

Formation of Contracts

Enforcing Contractual Obligations

Legislation in the Marketplace

Agency and Employment

Property

Ideas and Information

Electronic Commerce and International Trade

Filters