Question 1

Distinguish between a sole proprietorship and a corporation.

Accepted Answer

A sole proprietorship is simply a person going into business on his or her own without going through any formal process like incorporation.The owner is the legal personality.With a corporation,people own shares in a separate legal personality called the corporation.

Question 2

Explain "lifting the corporate veil."

Accepted Answer

This is where the courts will look to impose responsibility on the shareholders of a corporation as opposed to the normal situation where liability is limited to the corporation itself.This is usually restricted to situations where the corporation is being used by a shareholder to commit a crime,fraud,etc.

Question 3

Explain what a retiring partner should do to ensure that he is no longer liable for the company's obligations.

Accepted Answer

To avoid being liable for any future indebtedness,the retiring partner should take steps to ensure that any customers are told of his retirement and that his name is no longer associated with the partnership.Otherwise,he would continue to be liable on the basis of apparent authority.Regarding old obligations and liabilities that occurred before he retired,the retiring partner is still obligated.However,he should try to have the remaining partners agree to indemnify him for any obligations that arise after he leaves.

Question 4

Explain under what circumstances a partnership can come to an end.

Accepted Answer

Usually by notice,but it may be by the e

Question 5

Explain under what circumstances a shareholder's right to dissent arises.

Accepted Answer

A shareholder's right to dissent arises

Question 6

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 businesswoman 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 7

Which one of the following statements is correct with respect to sole proprietorships?

Accepted Answer

A) The sole proprietor is restricted to service-type businesses. 
B) A sole proprietorship involves limited liability. 
C) The sole proprietor is a society under the Societies Act. 
D) A sole proprietorship involves unlimited liability for the proprietor. 
E) A sole proprietorship is a separate legal entity with one shareholder. 
A) The sole proprietor is restricted to service-type businesses. 
B) A sole proprietorship involves limited liability. 
C) The sole proprietor is a society under the Societies Act. 
D) A sole proprietorship involves unlimited liability for the proprietor. 
E) A sole proprietorship is a separate legal entity with one shareholder.

Question 8

A sole proprietor carries on business alone and cannot employ others in the process.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?

Accepted Answer

A) No major decision can be taken without a majority vote agreement of all partners. 
B) Only the partners that have contributed the largest capital amount have the right to share in management. 
C) All profits are shared equally among the partners. 
D) A partner can sell her share of the partnership to another person without the agreement of the other partners. 
E) Personal expenses incurred by the partners in the course of business are reimbursed. 
A) No major decision can be taken without a majority vote agreement of all partners. 
B) Only the partners that have contributed the largest capital amount have the right to share in management. 
C) All profits are shared equally among the partners. 
D) A partner can sell her share of the partnership to another person without the agreement of the other partners. 
E) Personal expenses incurred by the partners in the course of business are reimbursed.

Question 11

"A partnership can be created by the conduct of the parties." Discuss the accuracy of this statement.

Accepted Answer

This is accurate.A partnership

Question 12

When the partners fail to register their partnership,they can neither sue nor be sued.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) A violation occurs where one partner carries on a business unrelated to the partnership with the permission of the partners. 
B) A violation occurs where a partner uses the partnership property for partnership business. 
C) A violation occurs where one partner learns of an investment opportunity in the field of the partnership and tells the partners.The partners decline on the opportunity,so he takes advantage of it himself. 
D) A violation occurs where one partner uses information that he has gained from the partnership for the advantage of the partnership. 
E) A violation occurs where one partner starts another business,without the consent of the other partners,that is the same as or in competition with the partnership business. 
A) A violation occurs where one partner carries on a business unrelated to the partnership with the permission of the partners. 
B) A violation occurs where a partner uses the partnership property for partnership business. 
C) A violation occurs where one partner learns of an investment opportunity in the field of the partnership and tells the partners.The partners decline on the opportunity,so he takes advantage of it himself. 
D) A violation occurs where one partner uses information that he has gained from the partnership for the advantage of the partnership. 
E) A violation occurs where one partner starts another business,without the consent of the other partners,that is the same as or in competition with the partnership business.

Question 14

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 15

Which of the following statements is true with respect to the obligations in a partnership relationship?

Accepted Answer

A) In the absence of agreement to the contrary,the partnership is dissolved when one of the partners serves the others with notice to the effect that he wishes to continue. 
B) When a partnership is dissolved,its resources must be used to pay its debts and liabilities; if its assets are insufficient to do this,the partners must use personal resources to meet those obligations. 
C) When a partnership is dissolved,each partner can only be forced by a creditor to pay a portion of the debt equal to his share of the capital contributed. 
D) A partnership can be dissolved only by court order. 
E) In the absence of agreement to the contrary,when one of the partners is injured,the partnership is dissolved. 
A) In the absence of agreement to the contrary,the partnership is dissolved when one of the partners serves the others with notice to the effect that he wishes to continue. 
B) When a partnership is dissolved,its resources must be used to pay its debts and liabilities; if its assets are insufficient to do this,the partners must use personal resources to meet those obligations. 
C) When a partnership is dissolved,each partner can only be forced by a creditor to pay a portion of the debt equal to his share of the capital contributed. 
D) A partnership can be dissolved only by court order. 
E) In the absence of agreement to the contrary,when one of the partners is injured,the partnership is dissolved.

Question 16

Describe the advantages offered in a franchise arrangement to the franchisee.

Accepted Answer

The franchisee gets the advantages of co

Question 17

Explain what is meant by limited liability related to corporations.

Accepted Answer

In a corporation,the corporati

Question 18

Three classmates incorporated about a week after graduation.The authorized capital was 500 000 common no-par-value shares.Each classmate took one share,and each was a director.If the directors decide to issue more shares from the treasury to raise more capital,which of the following provisions ensures that they keep their proportionate holdings?

Accepted Answer

A) relief-from-oppression provision 
B) dissent procedure 
C) pre-emptive right provision 
D) indoor-management rule 
E) derivative-action provision 
A) relief-from-oppression provision 
B) dissent procedure 
C) pre-emptive right provision 
D) indoor-management rule 
E) derivative-action provision

Question 19

Jack Kihn incorporated and put $20 000 into the corporation by way of a shareholder's loan and took back a chattel mortgage on the corporation's equipment.The corporation created decorative boxes.An employee of the company delivered some boxes to a customer,who complained about the colour used.The employee became so angry that he shoved the customer,who fell into a glass display case,causing $30 000 damage to the customer and the case.On these facts,which of the following is false?

Accepted Answer

A) The employee is liable for his tort and his employer is also liable. 
B) Although Kihn is the sole shareholder of the corporation,he is not responsible for company debts. 
C) Kihn himself is vicariously liable for the damage caused by the employee. 
D) The employee is liable for the tort of battery. 
E) If the corporation went bankrupt,Kihn himself would be a secured creditor. 
A) The employee is liable for his tort and his employer is also liable. 
B) Although Kihn is the sole shareholder of the corporation,he is not responsible for company debts. 
C) Kihn himself is vicariously liable for the damage caused by the employee. 
D) The employee is liable for the tort of battery. 
E) If the corporation went bankrupt,Kihn himself would be a secured creditor.

Question 20

Discuss the problem of liability with respect to partnership and how this difficulty can be overcome if partnership is chosen as the method of carrying on business.

Accepted Answer

Partners have unlimited liability for th

Distinguish between a sole proprietorship and a corporation.

Explain "lifting the corporate veil."

Explain what a retiring partner should do to ensure that he is no longer liable for the company's obligations.

Explain under what circumstances a partnership can come to an end.

Explain under what circumstances a shareholder's right to dissent arises.

Which one of the following statements is correct with respect to sole proprietorships?

A sole proprietor carries on business alone and cannot employ others in the process.

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

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?

"A partnership can be created by the conduct of the parties." Discuss the accuracy of this statement.

When the partners fail to register their partnership,they can neither sue nor be sued.

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

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

Which of the following statements is true with respect to the obligations in a partnership relationship?

Describe the advantages offered in a franchise arrangement to the franchisee.

Explain what is meant by limited liability related to corporations.

Discuss the problem of liability with respect to partnership and how this difficulty can be overcome if partnership is chosen as the method of carrying on business.

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

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Exam 7: Methods of Carrying on Business

Distinguish between a sole proprietorship and a corporation.

Explain "lifting the corporate veil."

Explain what a retiring partner should do to ensure that he is no longer liable for the company's obligations.

Explain under what circumstances a partnership can come to an end.

Explain under what circumstances a shareholder's right to dissent arises.

Which one of the following statements is correct with respect to sole proprietorships?

A sole proprietor carries on business alone and cannot employ others in the process.

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

Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise?

"A partnership can be created by the conduct of the parties." Discuss the accuracy of this statement.

When the partners fail to register their partnership,they can neither sue nor be sued.

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

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

Which of the following statements is true with respect to the obligations in a partnership relationship?

Describe the advantages offered in a franchise arrangement to the franchisee.

Explain what is meant by limited liability related to corporations.

Discuss the problem of liability with respect to partnership and how this difficulty can be overcome if partnership is chosen as the method of carrying on business.

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