Question 1

Distinguish between the actual and the apparent authority of an agent.

Accepted Answer

The actual authority of an agent is dete

Question 2

John Agent entered into a contract with Joe Third Party to buy 50 stoves, payment to be made two weeks after John Agent picked up the stoves from Joe Third Party's warehouse. The stoves were picked up, but eight weeks later Joe still had not been paid. Joe found out that John Agent had been authorized to buy 50 stoves for Gord Principal. For some reason, John had not made it clear to Joe that he was acting as an agent, nor had he indicated that he was buying the goods for himself. Under the circumstances, which of the following is true?

Accepted Answer

A)  Third Party can successfully sue only Gord Principal. 
B)  Third Party can successfully sue only John Agent. 
C)  Third Party can successfully sue both Principal and Agent. 
D)  Third Party can elect to recover from either Principal or Agent but not both. 
E)  Third Party can ratify the contract with Gord. 
A)  Third Party can successfully sue only Gord Principal. 
B)  Third Party can successfully sue only John Agent. 
C)  Third Party can successfully sue both Principal and Agent. 
D)  Third Party can elect to recover from either Principal or Agent but not both. 
E)  Third Party can ratify the contract with Gord.

Question 3

In which one of the following situations would Sam not be liable for the conduct of his partner, Joe?

Accepted Answer

A)  Joe is in a partnership with Sam in a shoe store, and without telling Sam, Joe opens up a franchise of Big Toes Shoes in an adjoining municipality, which suffers a loss. 
B)  They made it clear in their partnership agreement that they would not be liable for each other's actions. 
C)  Joe, without the knowledge or consent of his partner Sam, purchases a gross of patent leather shoes in the name of the partnership shoe business. 
D)  Joe absconds with trust funds he has accepted from a client in his accounting partnership with Sam. 
E)  Joe is in a partnership with Sam and injures a customer while doing partnership business. 
A)  Joe is in a partnership with Sam in a shoe store, and without telling Sam, Joe opens up a franchise of Big Toes Shoes in an adjoining municipality, which suffers a loss. 
B)  They made it clear in their partnership agreement that they would not be liable for each other's actions. 
C)  Joe, without the knowledge or consent of his partner Sam, purchases a gross of patent leather shoes in the name of the partnership shoe business. 
D)  Joe absconds with trust funds he has accepted from a client in his accounting partnership with Sam. 
E)  Joe is in a partnership with Sam and injures a customer while doing partnership business.

Question 4

Which of the following is incorrect with respect to the responsibilities of partners to each other?

Accepted Answer

A)  Each partner owes the other partners a fiduciary duty. 
B)  Partners are free to compete with the partnership providing they do it on their own time. 
C)  Any information that one partner learns because of his position in the partnership must be used for the benefit of the partnership, not for personal use. 
D)  Unless the partners have agreed otherwise, profits and losses are shared equally. 
E)  Unless the partners have agreed otherwise, partners' expenses are to be reimbursed. 
A)  Each partner owes the other partners a fiduciary duty. 
B)  Partners are free to compete with the partnership providing they do it on their own time. 
C)  Any information that one partner learns because of his position in the partnership must be used for the benefit of the partnership, not for personal use. 
D)  Unless the partners have agreed otherwise, profits and losses are shared equally. 
E)  Unless the partners have agreed otherwise, partners' expenses are to be reimbursed.

Question 5

Full disclosure refers to an obligation to reveal all details of a transaction.

Accepted Answer

A) True 
 B)False

Question 6

With respect to ratification, which one of the following statements is true?

Accepted Answer

A)  Ratification is the act of a principal approving a contract when his agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
B)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. 
C)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
D)  Irving has been given authority to contract for the purchase of 1000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
E)  The ratification by the principal must be in writing to be effective. 
A)  Ratification is the act of a principal approving a contract when his agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
B)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. 
C)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
D)  Irving has been given authority to contract for the purchase of 1000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
E)  The ratification by the principal must be in writing to be effective.

Question 7

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

Accepted Answer

This is clearly a breach of th

Question 8

Ted Anderson and Arnie Lee began working together to write some computer programs for companies that needed to adapt standard programs to their particular needs. Ted's dad, an employee for Gong Telephone, would often hear about businesses with such needs, and would solicit clients for Ted and Arnie or advise Ted and Arnie on how to approach potential clients. Ted and Arnie now want to set up business formally and they need money. Ted's dad will give them $9000 but doesn't want his liability to ever go beyond that amount. On these facts, which of the following is true?

Accepted Answer

A)  Because Ted's dad does not do the programming, the main business of the firm, he can continue to provide services to the partnership, such as finding clients, and still be a limited partner. 
B)  Ted's dad cannot be a limited partner because it takes three or more general partners before a firm can have a limited partner. 
C)  If Ted's dad does not follow the statutory provisions governing limited partnerships, he could be deemed a general partner. 
D)  Ted's dad can only be a limited partner if Ted and Arnie are also both limited partners. 
E)  The only way to limit one's liability is to incorporate. 
A)  Because Ted's dad does not do the programming, the main business of the firm, he can continue to provide services to the partnership, such as finding clients, and still be a limited partner. 
B)  Ted's dad cannot be a limited partner because it takes three or more general partners before a firm can have a limited partner. 
C)  If Ted's dad does not follow the statutory provisions governing limited partnerships, he could be deemed a general partner. 
D)  Ted's dad can only be a limited partner if Ted and Arnie are also both limited partners. 
E)  The only way to limit one's liability is to incorporate.

Question 9

Usually, the name of the business must be registered for a sole proprietorship, and a licence to operate must be obtained from the appropriate level of government.

Accepted Answer

A) True 
 B)False

Question 10

Joe and Sam set up an import/export business in partnership, but they needed extra money. Harry was invited to invest as a limited partner. Unfortunately, the business began to lose money because of the poor business sense of Joe and Sam. Harry has the business expertise to turn the business around, or at least, so he thinks. What would your advice be to Harry in these circumstances?

Accepted Answer

Harry should likely not to get

Question 11

Although Jason had participated in the flower auction for the last nine years as an agent for Thos. Holt's Ltd. (Holt) with the authority to buy whatever he felt the store needed, this day he was given express instructions to buy only cut flowers. When flats of young camellia bushes with a rare gold flower were being sold, Jason bought them on behalf of the company. Which of the following is true?

Accepted Answer

A)  Holt is not bound by the contract because Jason's authority was expressly restricted. 
B)  Holt is not bound since Holt didn't ratify the contract. 
C)  Holt is not bound by the contract because Jason is in breach of his agency agreement. 
D)  Holt is estopped from denying Jason's authority. 
E)  The key to determining whether or not Holt is bound by the contract is this: in the circumstances, should the auctioneer have confirmed with Holt the extent of Jason's authority? 
A)  Holt is not bound by the contract because Jason's authority was expressly restricted. 
B)  Holt is not bound since Holt didn't ratify the contract. 
C)  Holt is not bound by the contract because Jason is in breach of his agency agreement. 
D)  Holt is estopped from denying Jason's authority. 
E)  The key to determining whether or not Holt is bound by the contract is this: in the circumstances, should the auctioneer have confirmed with Holt the extent of Jason's authority?

Question 12

Discuss how an agent's authority may be terminated, as well as the effect of such termination.

Accepted Answer

An agent's authority ends as soon as the

Question 13

Joe, Sam, and Harry set up an accounting partnership in a small town. Harry, to earn money on the side, did some accounting for friends at night, for which he received a fee. When Joe and Sam found out about this, they demanded that the fees received be paid into the partnership business. Explain the legal position of Harry.

Accepted Answer

Harry owes a fiduciary duty to the other

Question 14

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

Accepted Answer

A) True 
 B)False

Question 15

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

Accepted Answer

A)  within his express authority. 
B)  within his implied authority. 
C)  within his apparent authority. 
D)  outside his authority but the principal ratified it. 
E)  outside his actual and apparent authority. 
A)  within his express authority. 
B)  within his implied authority. 
C)  within his apparent authority. 
D)  outside his authority but the principal ratified it. 
E)  outside his actual and apparent authority.

Question 16

Dave and his sister Chris made unusual kites. They both created the designs; Dave made the patterns. Friends had always wanted to buy their kites. After Chris completed a college marketing program, she began to talk to Dave about going into business selling kites. Ed, a friend of Chris's, wanted to be involved. He said he could buy the supplies and do other odd chores. They decided to try to make a go of it and to share the profits as follows: Dave 35%, Chris 35%, and Ed 30%. Things went well for 7 months. They even hired George to deliver kites to the increased number of stores buying them. Chris and Ed became romantically involved. This was followed by a heated dispute. Ed disappeared with $1300 collected from customers and $600 worth of supplies, which he had bought on behalf of the business from their regular supplier. At about the same time, George negligently broke a customer's $200 lamp when he was delivering a kite. On these facts, which of the following is true?

Accepted Answer

A)  Since Dave, Chris, and Ed did not sign a partnership agreement, they are not considered a general partnership. 
B)  If the partnership funds are not sufficient to pay the partnership debts, the creditors can look to the individual partners for payment. 
C)  When Ed buys supplies for the business on credit, he is acting as an agent for the business and he alone is liable for those debts. 
D)  Although George broke the lamp while delivering kites, the partners are not liable, because it was George's own fault. 
E)  Only Chris would be responsible Ed's misapplication of the customers' money. 
A)  Since Dave, Chris, and Ed did not sign a partnership agreement, they are not considered a general partnership. 
B)  If the partnership funds are not sufficient to pay the partnership debts, the creditors can look to the individual partners for payment. 
C)  When Ed buys supplies for the business on credit, he is acting as an agent for the business and he alone is liable for those debts. 
D)  Although George broke the lamp while delivering kites, the partners are not liable, because it was George's own fault. 
E)  Only Chris would be responsible Ed's misapplication of the customers' money.

Question 17

Which of the following is true in respect of limited liability partnerships (LLPs)?

Accepted Answer

A)  Historically, professionals have relied primarily on incorporation for carrying on business. 
B)  Provincial limited liability partnership legislation has been introduced in various jurisdictions across Canada. 
C)  Professionals are prohibited from operating under a limited liability partnership. 
D)  The main advantage to those carrying on business as an LLP is that potential liability is limited for torts, for breach contract, and for breach of trust. 
E)  Unlike limited partners, those operating through LLPs are not burdened with limitations with respect to naming, registration, or other requirements. 
A)  Historically, professionals have relied primarily on incorporation for carrying on business. 
B)  Provincial limited liability partnership legislation has been introduced in various jurisdictions across Canada. 
C)  Professionals are prohibited from operating under a limited liability partnership. 
D)  The main advantage to those carrying on business as an LLP is that potential liability is limited for torts, for breach contract, and for breach of trust. 
E)  Unlike limited partners, those operating through LLPs are not burdened with limitations with respect to naming, registration, or other requirements.

Question 18

Which of the following is an example of just being an agent as opposed to an employee?

Accepted Answer

A)  Joe worked in the mailroom of Smith Textiles, sorting mail. 
B)  Joe worked as a mechanic for Smith Used Cars Ltd. 
C)  Joe worked as a janitor for Smith Textiles. 
D)  Joe worked as the purchasing agent for Smith Textiles Ltd. 
E)  Joe worked as a delivery driver for Smith Textiles Ltd. 
A)  Joe worked in the mailroom of Smith Textiles, sorting mail. 
B)  Joe worked as a mechanic for Smith Used Cars Ltd. 
C)  Joe worked as a janitor for Smith Textiles. 
D)  Joe worked as the purchasing agent for Smith Textiles Ltd. 
E)  Joe worked as a delivery driver for Smith Textiles Ltd.

Question 19

In the modern economy, agency-by-necessity situations are becoming more commonplace.

Accepted Answer

A) True 
 B)False

Question 20

Explain what is meant by an undisclosed principal and the significance of such a relationship.

Accepted Answer

An undisclosed principal is involved whe

Distinguish between the actual and the apparent authority of an agent.

In which one of the following situations would Sam not be liable for the conduct of his partner, Joe?

Which of the following is incorrect with respect to the responsibilities of partners to each other?

Full disclosure refers to an obligation to reveal all details of a transaction.

With respect to ratification, which one of the following statements is true?

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

Usually, the name of the business must be registered for a sole proprietorship, and a licence to operate must be obtained from the appropriate level of government.

Discuss how an agent's authority may be terminated, as well as the effect of such termination.

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

Which of the following is true in respect of limited liability partnerships (LLPs)?

Which of the following is an example of just being an agent as opposed to an employee?

In the modern economy, agency-by-necessity situations are becoming more commonplace.

Explain what is meant by an undisclosed principal and the significance of such a relationship.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters

Exam 10: Agency and Partnership

Distinguish between the actual and the apparent authority of an agent.

In which one of the following situations would Sam not be liable for the conduct of his partner, Joe?

Which of the following is incorrect with respect to the responsibilities of partners to each other?

Full disclosure refers to an obligation to reveal all details of a transaction.

With respect to ratification, which one of the following statements is true?

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

Usually, the name of the business must be registered for a sole proprietorship, and a licence to operate must be obtained from the appropriate level of government.

Discuss how an agent's authority may be terminated, as well as the effect of such termination.

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

Which of the following is true in respect of limited liability partnerships (LLPs)?

Which of the following is an example of just being an agent as opposed to an employee?

In the modern economy, agency-by-necessity situations are becoming more commonplace.

Explain what is meant by an undisclosed principal and the significance of such a relationship.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters