Exam 24: Sole Proprietorships and Partnerships

Why is it practical to think of a partnership as having its own separate personality rather than just the collective rights and duties of all the partners?

An individual who decides to carry on business in his or her name need not register the business.

Partners have fiduciary duties one to another,and if they are professionals they have fiduciary duties to their clients.How would these duties differ?

Carter,a partner in a financial planning firm,solicited a client without reporting it to the firm.He used the letterhead,business cards,and facilities of the firm.He then defrauded the client out of $138 000 and left for Honduras.Will the firm be liable to this client?

A and B have decided to carry on a business in partnership in Ontario,and A has his lawyer prepare a detailed partnership agreement setting out their respective rights and obligations.However,at the last minute,B refuses to sign the agreement and A,who trusts B,decides that the agreement is unnecessary.In this case,the partnership will be governed by

Usually the sharing of profits is an indication of a partnership.In which of the following situations will this be true?

Use this fact situation to answer the related questions that follow. A,B,and C have been carrying on a business in partnership for two years but are not getting along very well.The business manufactures plastic cups.A has just learned that B and C are going to throw him out of the partnership and,to get even with them,A,who has no assets,resigns and immediately enters into a contract with a third party on behalf of the business to purchase $100 000.00 worth of supplies.When the supplies arrive,B and C refuse to accept them. If the third party decides to sue for damages for breach of contract,it can sue

The greatest risk of liability to which a partner subjects her- or himself results from

You do not trust your partners and are concerned about liabilities you may incur if you continue to associate with them in business.To ensure that you are safe from any future liability toward third parties that did business with the partnership while you were a partner,you should

Three men decided to form a partnership to look for buried treasure.Luke and Mark had expensive equipment,experience,and expertise,but the third partner,Cyrus,had a treasure map.Cyrus had his holidays start a few days earlier than the other two,so he went ahead "to set up camp." Lo and behold,before the others arrived,Cyrus found the treasure.So when Luke and Mark arrived,he immediately dissolved the partnership and claimed the entire treasure for himself.Do Luke and Mark have any legal claim to the treasure?

Bill and Joe agreed to form a partnership to carry on their goal of distributing food to the needy as a charitable endeavour.Is this a true partnership?

A,a partner in a furniture business called A & B Furniture,causes an accident with the business's delivery truck and injures Alice,who is standing at a bus stop. Assume that in the law suit Alice will be entitled to $1 million in damages.Also assume that A has personal assets of $250 000.00 and B has personal assets of $450 000.00 and that the firm has assets of $1.5 million.In deciding who to sue,Alice will consider that

What protection does a limited partnership offer to the limited partner,and how can the benefit be destroyed by the limited partner?

Explain how a partnership can be formed by implication.

If there is no explicit partnership agreement,each partner will share in the profits of the partnership according to that partner's proportionate capital contribution.

A partnership is treated as a separate entity with respect to

Helen and George formed an equal partnership for the raising of flowers to sell at the county fair.After three seasons of mediocre results,George lost interest and only came around to "see how things were going." However,the fourth summer went very well for Helen and she made a large profit.Can George now claim half the profits?