Exam 10: Agency and Partnership

Chan sold a business to Scott and in the process they valued the good will of the business at $50,000. In the sale contract, it was agreed that this amount would be paid by Scott giving Chan 15% of the business profits until it was paid. This creates a partnership between them.

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

When one partner dies, what happens to the partnership?

Joe was a chauffeur, working for Sam. When Joe was taking the car in to have it serviced, he saw a brand new BMW and bought it on behalf of Sam. When he took it home, Sam was upset, explained that he didn't want a new BMW, and told him to take it back. Joe persuaded him to take it for a test drive first. Explain the legal position of the parties.

An agent owes a fiduciary duty to act in the best interests of the principal and the third party.

Which one of the following situations will result in the existence of a partnership? Assume no corporation has been created.

Distinguish between a partnership and a corporation.

A salesman in a men's clothing store has heard rumours that the store is going out of business. The boss is out of the store when a customer who has heard the same thing comes in and offers to purchase the entire stock, the display cases, and the fixtures. The salesman accepts on behalf of the employer. Discuss the legal position of the parties.

Joe, Harry, and Sam opened up a partnership supplying accounting services to the general public in a small town. Harry and his wife, unknown to Joe and Sam, also carried on a mail-order business at night that had nothing to do with accounting. Harry would, however, often come into the partnership office to use the photocopier and computer for correspondence related to his mail-order business. Joe and Sam found out about this activity when Harry forgot to take some papers away from the photocopier one night. Explain Harry's legal position.

Which of the following is correct with respect to the agency relationship?

Identify the true statement concerning the law of principal and agent.

Which of the following is correct with respect to an agent's performance of his duties?

An "innocent partner" in a limited liability partnership (LLP) is still liable for the ordinary debts of the partnership.

A recent article in the Lawyers Dia-Blog began: "Step aside, wrongful dismissal: the law of fiduciary duties is where you'll find the hottest legal action these days!" Which of the following is false with regard to the meaning of "fiduciary duty"?

Explain the liability of a partner for another partner's actions.

A partnership is less expensive to set up than a corporation.

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

Despite its organizational simplicity, sole proprietorships must satisfy many federal, provincial, and municipal requirements to carry on business. List and describe three regulatory requirements.

Joe was a salesman, newly hired by Radio Hut. On his first day on the job, he was left in charge of the store while the manager and the other salesmen went to lunch. They specifically told him not to sell anything over $50 but to just tell the customer to come back in an hour when they were back. While they were at lunch, a customer came in and decided to purchase a new Ultra HD TV and several accessories. The total sales price was $2600, and the customer couldn't wait. Joe sold her the merchandise at a $400 discount. When the customer returned the next day to pick up the goods, the manager refused to go through with the deal. Explain the manager's legal obligations in these circumstances.

What restrictions are there on a principal's right to ratify?