Question 1

A principal who does not approve of the terms of a contract concluded with an agent, is free to adjust the terms as he or she sees fit.

Accepted Answer

A) True 
 B)False

Question 2

Fiduciary duty in a partnership context best translates as:

Accepted Answer

A) You must put the other partners' interests ahead of your own. 
B) Each partner must watch out for her own interests. 
C) Every partner for himself. 
D) You must act honestly 
E) Both B and C

Question 3

A Fiduciary duty is owed by an agent to a principal and a franchisor to a franchisee.

Accepted Answer

A) True 
 B)False

Question 4

Sara Vaughan told her tenants that her son would collect rents while she was in Florida. The son did collect the rents in October, November, and December. At Christmas Sara returned home and told her son that she would collect the January rents. The son went first thing in January, before the tenants knew Sara had returned, and collected the January rents. What is the name of the type of authority given to the son when he collected the rents in October, November, and December?

Accepted Answer

A) Apparent 
B) Express 
C) By necessity 
D) By estoppels 
E) Impressed

Question 5

Naya Cortez and Peter Sharma started a car audio business together as a partnership. Which of the following names can they not use for their new business?

Accepted Answer

A) Cortez, Sharma and Co. 
B) Car Audio studio 
C) Cortez and Sharma, Ltd. 
D) The Audio Experts 
E) Both B and D

Question 6

Anne and Natasha form a partnership. There is no partnership agreement. Anne does twice as much work as Natasha and wants a bigger share of the profits. Which of the following is TRUE?

Accepted Answer

A) The court will decide the distribution of profits according to the Partnership Act. 
B) The court will split the profits according to the number of hours each worked 
C) The court will split the profits equally 
D) The court will split the profits based on what is fair 
E) Both A and C

Question 7

William Jones and Vincent Costa form a partnership to run a construction business. Which of the following names does NOT require registration?

Accepted Answer

A) Jones and Costa Construction 
B) Bill and Vinny's Construction Co. 
C) World's Best Construction 
D) Canadian Contractors 
E) All require registration.

Question 8

Fatima and Hani form a partnership to cut lawns for a summer job. Hani does extra work in his spare time and paint a building earning $5,000. Fatima learns of the painting project and claimed a share of the money. Which of the following is TRUE?

Accepted Answer

A) Hani has to pay a share of the money to Fatima because they are partners 
B) Hani has to pay a share of the money to Fatima because he owes her a fiduciary duty 
C) Hani has to pay a share of the money to Fatima because the income of all partners has to be shared equally under The Partnership Act 
D) Hani does not have to pay any money to Fatima because painting is not part of the partnership act 
E) Hani has breached the contract with Fatima and will have to pay her $5,000 plus punitive damages

Question 9

The four usual methods of fixing value when a small business is being sold are by an expert appraisal, a fixed priced formula, arbitration and a shotgun clause.

Accepted Answer

A) True 
 B)False

Question 10

Incorporation ensures that business assets and personal assets remain separate.

Accepted Answer

A) True 
 B)False

Question 11

Each partner in a general partnership can be personally liable for the full amount of a debt the partnership owes.

Accepted Answer

A) True 
 B)False

Question 12

Howe, Hardy, and Harkins, a law firm in Alberta, decides to register as a limited liability partnership. Which of the following is TRUE?

Accepted Answer

A) Such an entity is not permitted. 
B) Henceforth, the firm will refer to itself as Howe, Hardy, and Harkins, LLP. 
C) Howe will continue to be liable for the negligence of Hardy and Harkins. 
D) Once the limited liability partnership is registered, Howe will not be liable for the negligence of Hardy and Harkins. 
E) Both B and D.

Question 13

Which of the following statements about franchises is TRUE?

Accepted Answer

A) A franchise is a separate legal entity. 
B) A franchise is one type of corporation 
C) A franchise is not a separate legal entity 
D) A franchise is one form of limited partnership 
E) A franchise is one type of joint venture.

Question 14

Mumtaz, Badia and Ilya are partners in a business partnership, called MBI. Mumtaz contributes $15,000 to the business, Badia contributes $10,000 and Ilya contributes $5,000. There is no agreement of how they will share partnership profits and losses. In addition, the partnership borrows A $30,000 from the bank. The business doesn't work out, and MBI is unable to repay the loan. The bank sues Mumtaz personally. The amount Mumtaz can legally recover from Ilya is:

Accepted Answer

A) nothing 
B) $5,000 
C) $10,000 
D) $15,000 
E) $30,000

Question 15

The standard franchise agreement is governed by tort law.

Accepted Answer

A) True 
 B)False

Question 16

Mumtaz, Badia and Ilya are partners in a business partnership, called MBI. Mumtaz contributes $15,000 to the business, Badia contributes $10,000 and Ilya contributes $5,000. The partners agree among themselves that they will share partnership profits and losses in proportion to their contributions. In addition, the partnership borrows $30,000 from the bank. The business doesn't work out, MBI is unable to repay the loan. The bank sues Mumtaz personally. The amount the bank can legally recover from Mumtaz is:

Accepted Answer

A) nothing 
B) $5,000 
C) $10,000 
D) $15,000 
E) $30,000

Question 17

Which of the following are standard terms often in a franchise agreement?

Accepted Answer

A) exclusivity clause 
B) non-competition clause 
C) confidentiality clause 
D) termination/renewal clause 
E) all of the above

Question 18

On the death of a partner:

Accepted Answer

A) If a partner has a spouse, that spouse becomes a partner. 
B) The surviving partners must select a new partner to replace the deceased or the partnership is dissolved. 
C) The partnership is dissolved automatically 
D) The partnership is dissolved unless the partnership agreement provides otherwise. 
E) The partnership reverts to a sole proprietorship.

Question 19

Which of the following factors does the Court consider in order to determine if a partnership exists?

Accepted Answer

A) whether there is a joint contribution to the capital to start a business 
B) whether the parties have an intention to share profits and losses 
C) whether there is joint participation in the management of the business 
D) A and B 
E) all of the above.

Question 20

A purchaser of a franchise might have to pay which of the following fees and charges?

Accepted Answer

A) A fee for use of the franchise's name 
B) A percentage of the revenues generated by the business 
C) A share of the franchisor's advertising costs 
D) Both A and B 
E) All of the above

Exam 9: The Organization of a Business

A principal who does not approve of the terms of a contract concluded with an agent, is free to adjust the terms as he or she sees fit.

Fiduciary duty in a partnership context best translates as:

A Fiduciary duty is owed by an agent to a principal and a franchisor to a franchisee.

Naya Cortez and Peter Sharma started a car audio business together as a partnership. Which of the following names can they not use for their new business?

Anne and Natasha form a partnership. There is no partnership agreement. Anne does twice as much work as Natasha and wants a bigger share of the profits. Which of the following is TRUE?

William Jones and Vincent Costa form a partnership to run a construction business. Which of the following names does NOT require registration?

Fatima and Hani form a partnership to cut lawns for a summer job. Hani does extra work in his spare time and paint a building earning $5,000. Fatima learns of the painting project and claimed a share of the money. Which of the following is TRUE?

The four usual methods of fixing value when a small business is being sold are by an expert appraisal, a fixed priced formula, arbitration and a shotgun clause.

Incorporation ensures that business assets and personal assets remain separate.

Each partner in a general partnership can be personally liable for the full amount of a debt the partnership owes.

Howe, Hardy, and Harkins, a law firm in Alberta, decides to register as a limited liability partnership. Which of the following is TRUE?

Which of the following statements about franchises is TRUE?

The standard franchise agreement is governed by tort law.

Which of the following are standard terms often in a franchise agreement?

On the death of a partner:

Which of the following factors does the Court consider in order to determine if a partnership exists?

A purchaser of a franchise might have to pay which of the following fees and charges?