Exam 7: Methods of Carrying on Business

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.

Which one of the following statements about general partnerships is false?

Partners can agree among themselves as to what portion of liability they each will bear,and their losses will be limited to that portion when being sued by outsiders.

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?

Adams was approached by a Mr.McCarthy of XYZ Co.,who requested that Adams pay $10 000 to extinguish a debt owed by the partnership of Adams and Jefferson.Adams denied the partnership and the liability.In asserting his claim,McCarthy cited the following facts,all of which he could prove.Which of these facts is the strongest evidence of the existence of a partnership?

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?

When a partnership dissolves,which of the following is not one of the causes?

In the BCE case,the Supreme Court clarified the fiduciary duty owed by directors.Which of the following correctly reflects the court's view in this case?

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

Which of the following might be a successful claim (i.e.,defence)if a director is charged personally for violation of environmental regulations,resulting in pollution?

To whom does the director owe the duty to be careful?

If a corporation were 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 would be true?

Which of the following is correct with respect to partnership?

In 2011,Rambolin incorporated Rambolin Industries Ltd.and became its sole shareholder.He loaned the corporation $10 000 and took a chattel mortgage from the corporation as security for repayment of the loan.He became director,president,and secretary of the corporation.The corporation prospered.Last year,you began supplying the corporation with office supplies.You were paid at the end of each month for supplies delivered during that month.For the last six months,however,you have not been paid.You learn that other suppliers also have not been paid because sales have dropped drastically,apparently due to Rambolin's nasty temper caused by ill health.Which of the following is true?

Often shareholders in closely held corporations want to formally set out their rights and responsibilities with respect to each other that are not already included in the incorporating documents.To best achieve this they have the following document prepared on their behalf:

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

In which of the following is there not a fiduciary duty owed?

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?

Which of the following statements is correct with respect to regulation of the purchase,sale,and promotion of securities in Canada?

Joe R.notified his partners in writing that he would be retiring from the business partnership at the end of 2013.It was acknowledged and agreed upon and,at year-end,the remaining partners paid him for his interest in the partnership.In February 2014,one of the remaining partners misapplied some trust funds that a long-time client had placed in the care of the partnership for the purchase of a hotel.The partnership was sued,but the assets of the partnership were not sufficient to satisfy the judgment.The successful plaintiff went against the personal assets of the partners,including those of Joe R.What is the likely outcome?