Question 1

In a contractual joint venture, how do the participants protect themselves from the liabilities of their partners?

Accepted Answer

The participants limit their liability b

Question 2

Is a well- drafted, carefully thought- out partnership agreement a guarantee of a successful partnership? If not, what is?

Accepted Answer

A well- drafted agreement simply minimis

Question 3

Timothy worked on the Salmon Queen fishing trawler off the coast of British Columbia last summer. He was paid according to the profits the boat made from each week's catch. In the legal sense, Timothy is

Accepted Answer

A)  a partner with the others in the crew. 
B)  an employee getting paid on the basis of the employer's profits. 
C)  getting commissions as defined by the owner. 
D)  working under contract for the boat's owner. 
E)  a limited partner, not having the usual partnership liability. 
A)  a partner with the others in the crew. 
B)  an employee getting paid on the basis of the employer's profits. 
C)  getting commissions as defined by the owner. 
D)  working under contract for the boat's owner. 
E)  a limited partner, not having the usual partnership liability.

Question 4

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

Accepted Answer

A limited partnership permits the limite

Question 5

Which of the following statements about a limited partnership is CORRECT?

Accepted Answer

A)  Registration of a limited partnership is not required. 
B)  A limited partner has unlimited liability if that partner fails to make a required equity contribution. 
C)  Limited partnerships must have at least one limited partner and at least two general partners. 
D)  The designated limited partner can manage the partnership at any time. 
E)  Any limited partner who takes an active part in the management of the partnership incurs unlimited liability. 
A)  Registration of a limited partnership is not required. 
B)  A limited partner has unlimited liability if that partner fails to make a required equity contribution. 
C)  Limited partnerships must have at least one limited partner and at least two general partners. 
D)  The designated limited partner can manage the partnership at any time. 
E)  Any limited partner who takes an active part in the management of the partnership incurs unlimited liability.

Question 6

Jack wants to establish a partnership with Mary. Mary does not want to be in the partnership with Jack. Jack does not really need Mary's agreement to be in the partnership before a partnership is created. All that he has to do is create the documents and register the partnership, naming Mary as a partner.

Accepted Answer

A) True 
 B)False

Question 7

A contractual joint venture differs from a partnership in that

Accepted Answer

A)  profits are retained jointly for use in another project. 
B)  there is a fiduciary relationship between the participants. 
C)  it pools assets and expertise for a business endeavor. 
D)  the liability will be construed to be joint and several. 
E)  it is a relationship for a specific undertaking with a limited duration. 
A)  profits are retained jointly for use in another project. 
B)  there is a fiduciary relationship between the participants. 
C)  it pools assets and expertise for a business endeavor. 
D)  the liability will be construed to be joint and several. 
E)  it is a relationship for a specific undertaking with a limited duration.

Question 8

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

Accepted Answer

A)  to pay the seller of a business an amount for goodwill varying with the profits 
B)  to pay an employee as part of his remuneration 
C)  to pay the spouse of a deceased partner an annuity 
D)  to repay a debt owed 
E)  none of the above 
A)  to pay the seller of a business an amount for goodwill varying with the profits 
B)  to pay an employee as part of his remuneration 
C)  to pay the spouse of a deceased partner an annuity 
D)  to repay a debt owed 
E)  none of the above

Question 9

Partners in a partnership are exposed to unlimited liability. In addition to having their own personal assets available to satisfy creditors they also can become liable for the actions of other partners. Give an example which illustrates this possibility.

Accepted Answer

Partners can be jointly and severally li

Question 10

A partnership agreement falls under the Statute of Frauds

Accepted Answer

A)  if it is to be dealing with real property. 
B)  since memories will fade and a written record is essential. 
C)  if by its terms it extends beyond one year and performance has not begun. 
D)  since it involves the formation of a company. 
E)  if it is to last longer than a year. 
A)  if it is to be dealing with real property. 
B)  since memories will fade and a written record is essential. 
C)  if by its terms it extends beyond one year and performance has not begun. 
D)  since it involves the formation of a company. 
E)  if it is to last longer than a year.

Question 11

Chico and Amos decide to be partners in the storage and delivery business. Chico has some land with buildings to contribute, and Amos has a large van and a small truck to contribute. After two years (and sharing profits equally), they decide that the business is not worth all the trouble, so they liquidate. The land and buildings bring $45,000 and the two vehicles bring $7,000. How should the proceeds be divided?

Accepted Answer

A)  It depends on whether they want to remain friends. 
B)  It all depends on their original intentions as to what was partnership property. 
C)  Chico should get the $45,000. 
D)  Since they are equal partners, they should each get $26,000. 
E)  In absence of a clear agreement, the Partnership Act gives each back their original investment. 
A)  It depends on whether they want to remain friends. 
B)  It all depends on their original intentions as to what was partnership property. 
C)  Chico should get the $45,000. 
D)  Since they are equal partners, they should each get $26,000. 
E)  In absence of a clear agreement, the Partnership Act gives each back their original investment.

Question 12

A partnership can only be formed by two or more natural persons.

Accepted Answer

A) True 
 B)False

Question 13

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". Low and behold, before the others arrived, Cyrus found the treasure. So when they did arrive, he immediately dissolved the partnership and claimed the entire treasure for himself. Do Luke and Mark have any legal claim to the treasure?

Accepted Answer

A)  Yes, the treasure was found before the partnership was dissolved. 
B)  Yes, because Cyrus has both possession and the upper hand. 
C)  No, the partnership was dissolved before the treasure was made known. 
D)  No, Luke and Mark's assets were not used to find the treasure. 
E)  Yes, they have a fiduciary duty to take their share. 
A)  Yes, the treasure was found before the partnership was dissolved. 
B)  Yes, because Cyrus has both possession and the upper hand. 
C)  No, the partnership was dissolved before the treasure was made known. 
D)  No, Luke and Mark's assets were not used to find the treasure. 
E)  Yes, they have a fiduciary duty to take their share.

Question 14

No formal registration is required to bring a Limited Partnership into existence.

Accepted Answer

A) True 
 B)False

Question 15

A change in the nature of the partnership

Accepted Answer

A)  requires prior notification to the Registry Office. 
B)  is equivalent to the formation of a new partnership. 
C)  requires agreement, oral or written, by all existing partners. 
D)  is considered a conventional matter as related to the partnership business. 
E)  requires consent, in writing, at a formal business meeting. 
A)  requires prior notification to the Registry Office. 
B)  is equivalent to the formation of a new partnership. 
C)  requires agreement, oral or written, by all existing partners. 
D)  is considered a conventional matter as related to the partnership business. 
E)  requires consent, in writing, at a formal business meeting.

Question 16

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

Accepted Answer

A)  negligence or other torts of the firm's partners. 
B)  failure to create a binding partnership agreement under the Partnership Act. 
C)  possible contractual obligations of the partnership. 
D)  illegal activities of other partners. 
E)  personal liabilities incurred by the other partners. 
A)  negligence or other torts of the firm's partners. 
B)  failure to create a binding partnership agreement under the Partnership Act. 
C)  possible contractual obligations of the partnership. 
D)  illegal activities of other partners. 
E)  personal liabilities incurred by the other partners.

Question 17

Which of the following would be considered a business partnership?

Accepted Answer

A)  Two people own property and collect rent from tenants. 
B)  Two entrepreneurs jointly develop an invention. 
C)  Three B.C. merchants pool orders to fill a trans- Canada truck. 
D)  Farmer Green is share cropping with a land owner in Alberta. 
E)  A group of investors form a syndicate to buy a portfolio of securities. 
A)  Two people own property and collect rent from tenants. 
B)  Two entrepreneurs jointly develop an invention. 
C)  Three B.C. merchants pool orders to fill a trans- Canada truck. 
D)  Farmer Green is share cropping with a land owner in Alberta. 
E)  A group of investors form a syndicate to buy a portfolio of securities.

Question 18

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?

Accepted Answer

A)  No, since Carter was breaking his fiduciary duty to the other partners. 
B)  Yes, because the firm could then go after Carter and collect for its loss. 
C)  No, since this act to defraud is illegal and partners do not have to support illegal acts. 
D)  Yes, since all partners are responsible for "any wrongful act" of another partner. 
E)  Yes, since Carter was working without apparent authority. 
A)  No, since Carter was breaking his fiduciary duty to the other partners. 
B)  Yes, because the firm could then go after Carter and collect for its loss. 
C)  No, since this act to defraud is illegal and partners do not have to support illegal acts. 
D)  Yes, since all partners are responsible for "any wrongful act" of another partner. 
E)  Yes, since Carter was working without apparent authority.

Question 19

Explain what a limited liability partnership is. Why might one want to form a limited liability partnership rather than a limited partnership?

Accepted Answer

A limited liability partnership is one i

Question 20

For the last 14 months Greer has been a junior partner in a Vancouver law firm. Until now he was receiving a monthly salary of $5000. Senior partners have just decided to stop all salaries because of a pending lawsuit against the firm. It was determined the firm would not make profits for at least the next eight months. Is the firm obliged to continue Greer's salary?

Accepted Answer

A)  No, since partners can only be paid out of profits. 
B)  Yes, since salaries are an expense that comes off before profits are figured. 
C)  Yes, since salaries are the first call on the firm's profits. 
D)  No, since the firm cannot claim the doctrine of frustration. 
E)  Yes, since Greer has a wife and kids that are dependant on the salary for basic living expenses. 
A)  No, since partners can only be paid out of profits. 
B)  Yes, since salaries are an expense that comes off before profits are figured. 
C)  Yes, since salaries are the first call on the firm's profits. 
D)  No, since the firm cannot claim the doctrine of frustration. 
E)  Yes, since Greer has a wife and kids that are dependant on the salary for basic living expenses.

Exam 26: Sole Proprietorships and Partnerships

In a contractual joint venture, how do the participants protect themselves from the liabilities of their partners?

Is a well- drafted, carefully thought- out partnership agreement a guarantee of a successful partnership? If not, what is?

Timothy worked on the Salmon Queen fishing trawler off the coast of British Columbia last summer. He was paid according to the profits the boat made from each week's catch. In the legal sense, Timothy is

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

Which of the following statements about a limited partnership is CORRECT?

A contractual joint venture differs from a partnership in that

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

Partners in a partnership are exposed to unlimited liability. In addition to having their own personal assets available to satisfy creditors they also can become liable for the actions of other partners. Give an example which illustrates this possibility.

A partnership agreement falls under the Statute of Frauds

A partnership can only be formed by two or more natural persons.

No formal registration is required to bring a Limited Partnership into existence.

A change in the nature of the partnership

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

Which of the following would be considered a business partnership?

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?

Explain what a limited liability partnership is. Why might one want to form a limited liability partnership rather than a limited partnership?

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

The Nature of a Corporation and Its Formation

The Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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