Question 1

Where a corporation borrows money, only the corporation is responsible for that debt, not the shareholders.

Accepted Answer

A) True 
 B)False

Question 2

Joe and Mary promote several dances at school and split the profits.Will this be enough to establish a partnership?

Accepted Answer

Yes.The definition of a partnership is t

Question 3

Directors owe a fiduciary duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 4

In a franchise arrangement, describe the advantages offered in such a business structure to the franchisor.

Accepted Answer

The franchisee must pay a (usually subst

Question 5

Joe and Sam were in business school together, and after they graduated they decided to open an ice cream store in a mall.They had skipped the classes in which they were taught about different methods and forms of carrying on business and so gave no thought to how they would structure their relationship.Which of the following is true with respect to the legal positions of Joe and Sam?

Accepted Answer

A) If a customer were injured because of poorly kept food and Sam did not have the assets to pay his half, Joe would only have to pay his half of the damages suffered. 
B) If Sam were to find a great deal on anchovy ice cream and purchase 2000 litres of it, only Sam would be liable for the debt incurred as a result of the purchase. 
C) If Sam opens another ice cream store in another mall in a nearby city without telling Joe, he must share any profits he makes with Joe. 
D) Sam and Joe are not in a partnership since they have not specifically agreed to be. 
E) If Sam opens another ice cream store in another mall in a nearby city without telling Joe, Joe would be liable for any losses Sam suffered (along with Sam). 
A) If a customer were injured because of poorly kept food and Sam did not have the assets to pay his half, Joe would only have to pay his half of the damages suffered. 
B) If Sam were to find a great deal on anchovy ice cream and purchase 2000 litres of it, only Sam would be liable for the debt incurred as a result of the purchase. 
C) If Sam opens another ice cream store in another mall in a nearby city without telling Joe, he must share any profits he makes with Joe. 
D) Sam and Joe are not in a partnership since they have not specifically agreed to be. 
E) If Sam opens another ice cream store in another mall in a nearby city without telling Joe, Joe would be liable for any losses Sam suffered (along with Sam).

Question 6

Explain under what circumstances a shareholder's right to sue against oppression arises.

Accepted Answer

Where the directors of the corporation m

Question 7

A franchisee normally pays an initial investment of capital, a franchise fee, and a percentage of the profits.

Accepted Answer

A) True 
 B)False

Question 8

Shareholders have a right to bring an action against the directors on behalf of the company when the directors fail in their duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 9

Distinguish between a sole proprietorship and a corporation.

Accepted Answer

A sole proprietorship is simply a person

Question 10

When a personal guarantee has been signed by a shareholder, the creditor can demand payment from that shareholder despite the separate legal entity nature of the corporation.

Accepted Answer

A) True 
 B)False

Question 11

In a franchise arrangement, one business enters into a contract with another to sell its products exclusively.Which of the following is true with respect to a franchise?

Accepted Answer

A) The franchisee provides the technical expertise to manage the franchise. 
B) The franchisor must comply with rules, standards, and specifications with respect to products and prices. 
C) Examples of franchises in Canada include Tim Hortons, KFC, and Budget Car Rental. 
D) An advantage of a franchise arrangement is the equal bargaining position of the parties. 
E) The franchisee and franchisor are in partnership together. 
A) The franchisee provides the technical expertise to manage the franchise. 
B) The franchisor must comply with rules, standards, and specifications with respect to products and prices. 
C) Examples of franchises in Canada include Tim Hortons, KFC, and Budget Car Rental. 
D) An advantage of a franchise arrangement is the equal bargaining position of the parties. 
E) The franchisee and franchisor are in partnership together.

Question 12

Explain how a person's status as a limited partner could be lost.

Accepted Answer

If the limited partner fails to register

Question 13

A partnership enjoys tax advantages not available to a sole proprietor.

Accepted Answer

A) True 
 B)False

Question 14

Mr.Ace of Oink Inc., a closely held corporation, is one of three shareholders.After several years of considerable success, the corporation hit hard times.The other shareholders, Mr.Bane and Mr.Curr, in the best interests of the corporation, voted Mr.Ace out as a director and voted not to renew his employment contract.Upset by these events, Mr.Ace wanted to sell his interest and leave the corporation.The other two shareholders, however, refused to buy his shares.Furthermore, when Mr.Ace attempted to sell his shares to his brother, who was interested in the corporation, the other shareholders refused to register the brother as a member.Which of the following is true?

Accepted Answer

A) Mr.Ace could sue the corporation for breach of its fiduciary duty. 
B) Mr.Ace could have avoided such a dilemma through the provisions of a shareholders' agreement. 
C) The court would "lift the corporate veil" because Mr.Bane and Mr.Curr were hiding behind the corporation to commit a fraud. 
D) Mr.Ace could sell his shares to whomever he chose and the remaining shareholders must register the new owner. 
E) Because of statutory pre-emptive right provisions, if Ace wants out, the other shareholders must buy him out. 
A) Mr.Ace could sue the corporation for breach of its fiduciary duty. 
B) Mr.Ace could have avoided such a dilemma through the provisions of a shareholders' agreement. 
C) The court would "lift the corporate veil" because Mr.Bane and Mr.Curr were hiding behind the corporation to commit a fraud. 
D) Mr.Ace could sell his shares to whomever he chose and the remaining shareholders must register the new owner. 
E) Because of statutory pre-emptive right provisions, if Ace wants out, the other shareholders must buy him out.

Question 15

Explain the power of a minority shareholder in decision-making situations.

Accepted Answer

The majority prevails, and an

Question 16

Shareholders do not owe a duty to the corporation.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z is the major shareholder in a corporation that opens a restaurant in the same city. 
B) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z owns 50% of the shares in the company that supplies the restaurant with its food supplies. 
C) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z runs a catering business in the evenings using the restaurant's facilities. 
D) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z opens a shoe store in Regina as well. 
E) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z opens up a restaurant in the same city as a sole proprietorship. 
A) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z is the major shareholder in a corporation that opens a restaurant in the same city. 
B) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z owns 50% of the shares in the company that supplies the restaurant with its food supplies. 
C) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z runs a catering business in the evenings using the restaurant's facilities. 
D) X, Y, and Z have a partnership in a restaurant business in Winnipeg.Unknown to his partners, Z opens a shoe store in Regina as well. 
E) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z opens up a restaurant in the same city as a sole proprietorship.

Question 18

Dennis, Sam, George, and Ray were partners in an accounting business, and Ray decided he wanted to retire.He sold his share of the partnership to Leonardo, but Leonardo is not a partner unless the other partners approve the change.

Accepted Answer

A) True 
 B)False

Question 19

In which of the following relationships is a fiduciary duty owed?

Accepted Answer

A) The officers of a corporation to the shareholders 
B) The director of a corporation to the corporation 
C) The director of a corporation to the shareholders 
D) A principal to his agent 
E) An employer to his or her employees 
A) The officers of a corporation to the shareholders 
B) The director of a corporation to the corporation 
C) The director of a corporation to the shareholders 
D) A principal to his agent 
E) An employer to his or her employees

Question 20

If a person wants to invest in a partnership but avoid the obligations associated with partnership, what can she do?

Accepted Answer

She can invest as a limited partner.To d

Where a corporation borrows money, only the corporation is responsible for that debt, not the shareholders.

Joe and Mary promote several dances at school and split the profits.Will this be enough to establish a partnership?

Directors owe a fiduciary duty to the corporation.

In a franchise arrangement, describe the advantages offered in such a business structure to the franchisor.

Explain under what circumstances a shareholder's right to sue against oppression arises.

A franchisee normally pays an initial investment of capital, a franchise fee, and a percentage of the profits.

Shareholders have a right to bring an action against the directors on behalf of the company when the directors fail in their duty to the corporation.

Distinguish between a sole proprietorship and a corporation.

When a personal guarantee has been signed by a shareholder, the creditor can demand payment from that shareholder despite the separate legal entity nature of the corporation.

In a franchise arrangement, one business enters into a contract with another to sell its products exclusively.Which of the following is true with respect to a franchise?

Explain how a person's status as a limited partner could be lost.

A partnership enjoys tax advantages not available to a sole proprietor.

Explain the power of a minority shareholder in decision-making situations.

Shareholders do not owe a duty to the corporation.

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

Dennis, Sam, George, and Ray were partners in an accounting business, and Ray decided he wanted to retire.He sold his share of the partnership to Leonardo, but Leonardo is not a partner unless the other partners approve the change.

In which of the following relationships is a fiduciary duty owed?

If a person wants to invest in a partnership but avoid the obligations associated with partnership, what can she do?

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

Where a corporation borrows money, only the corporation is responsible for that debt, not the shareholders.

Joe and Mary promote several dances at school and split the profits.Will this be enough to establish a partnership?

Directors owe a fiduciary duty to the corporation.

In a franchise arrangement, describe the advantages offered in such a business structure to the franchisor.

Explain under what circumstances a shareholder's right to sue against oppression arises.

A franchisee normally pays an initial investment of capital, a franchise fee, and a percentage of the profits.

Shareholders have a right to bring an action against the directors on behalf of the company when the directors fail in their duty to the corporation.

Distinguish between a sole proprietorship and a corporation.

When a personal guarantee has been signed by a shareholder, the creditor can demand payment from that shareholder despite the separate legal entity nature of the corporation.

In a franchise arrangement, one business enters into a contract with another to sell its products exclusively.Which of the following is true with respect to a franchise?

Explain how a person's status as a limited partner could be lost.

A partnership enjoys tax advantages not available to a sole proprietor.

Explain the power of a minority shareholder in decision-making situations.

Shareholders do not owe a duty to the corporation.

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

Dennis, Sam, George, and Ray were partners in an accounting business, and Ray decided he wanted to retire.He sold his share of the partnership to Leonardo, but Leonardo is not a partner unless the other partners approve the change.

In which of the following relationships is a fiduciary duty owed?

If a person wants to invest in a partnership but avoid the obligations associated with partnership, what can she do?

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