Question 1

Which one of the following statements is correct with respect to the liability of partners?

Accepted Answer

A)  When a partner enters into a partnership arrangement, he can only lose what he has invested in that partnership. 
B)  If a third party is injured because of an activity carried on by the partnership, that third party can only go after the personal assets of a partner if the assets of the partnership are not enough to provide compensation and the damage was actually caused by the conduct of that partner. 
C)  A general partner is responsible, independent of what he has invested, for any losses caused to outsiders through the partnership business if the assets of the partnership are not enough to cover the claim. 
D)  If there are three equal partners in a partnership, an injured third party can only collect one third of the claim from any one partner. 
E)  A partner can protect himself from any liability beyond his investment if one of the other partners specifically agrees in the partnership agreement to be responsible for all such liability. 
A)  When a partner enters into a partnership arrangement, he can only lose what he has invested in that partnership. 
B)  If a third party is injured because of an activity carried on by the partnership, that third party can only go after the personal assets of a partner if the assets of the partnership are not enough to provide compensation and the damage was actually caused by the conduct of that partner. 
C)  A general partner is responsible, independent of what he has invested, for any losses caused to outsiders through the partnership business if the assets of the partnership are not enough to cover the claim. 
D)  If there are three equal partners in a partnership, an injured third party can only collect one third of the claim from any one partner. 
E)  A partner can protect himself from any liability beyond his investment if one of the other partners specifically agrees in the partnership agreement to be responsible for all such liability.

Question 2

Which of the following is an example of an agent's breach of fiduciary duty to his principal?

Accepted Answer

A)  An agent for the vendor collects a commission from the purchaser but told his principal and obtained his consent. 
B)  An agent for the vendor makes a profit on the transaction he negotiates for his vendor above his commission and doesn't tell his principal/vendor. 
C)  An agent discloses to his principal/vendor that he is giving some of his commission to the purchaser to induce the purchaser to sign the contract that the principal/vendor wants. 
D)  An agent negotiates a higher price than the highest sale price reasonably possible at that time. 
E)  The agent takes presents from the third party and passes them on to the principal. 
A)  An agent for the vendor collects a commission from the purchaser but told his principal and obtained his consent. 
B)  An agent for the vendor makes a profit on the transaction he negotiates for his vendor above his commission and doesn't tell his principal/vendor. 
C)  An agent discloses to his principal/vendor that he is giving some of his commission to the purchaser to induce the purchaser to sign the contract that the principal/vendor wants. 
D)  An agent negotiates a higher price than the highest sale price reasonably possible at that time. 
E)  The agent takes presents from the third party and passes them on to the principal.

Question 3

Chris was a systems analyst hired to determine the best system for a retail china shop. After a careful analysis of the shop's needs and the available software, Chris presented a written report, which was approved by the owner of the business. Chris was paid his fee and was asked by the owner if he would act as his agent in purchasing the hardware and software recommended in the report. The purchase was not to exceed $40,000 and the commission was to be $1000. Chris agreed. Read each of the following separately and indicate which is true.

Accepted Answer

A)  The agreement to act as agent fails to be a valid agency contract because it is not in writing. 
B)  If Chris buys the hardware and software himself for $36,000 and sells it to the owner for $39,000, he is entitled to his commission because the price to the owner is still within the price allowed. 
C)  Chris will not be in breach of his fiduciary duty if he buys the recommended system from a firm in which he has an interest, even if he does not mention that fact to the owner. 
D)  Chris could be in breach of his duties if he delegates the task to someone else. 
E)  Chris is entitled to accept a commission from both the seller and the purchaser, as long as the total price paid by the purchaser is less than $40,000 and the hardware and software is comparable to that recommended in the report. 
A)  The agreement to act as agent fails to be a valid agency contract because it is not in writing. 
B)  If Chris buys the hardware and software himself for $36,000 and sells it to the owner for $39,000, he is entitled to his commission because the price to the owner is still within the price allowed. 
C)  Chris will not be in breach of his fiduciary duty if he buys the recommended system from a firm in which he has an interest, even if he does not mention that fact to the owner. 
D)  Chris could be in breach of his duties if he delegates the task to someone else. 
E)  Chris is entitled to accept a commission from both the seller and the purchaser, as long as the total price paid by the purchaser is less than $40,000 and the hardware and software is comparable to that recommended in the report.

Question 4

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business. Which of the following is true in regards to being a general partner?

Accepted Answer

A)  A partner is liable for only the amount that he or she invested in the partnership firm. 
B)  Every general partner faces limited liability for the debts of the partnership. 
C)  Each partner is an agent for every other partner and of the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
D)  Retiring from a partnership by giving notice to his partners frees a partner from liabilities he faced while being a partner of the firm. 
E)  A partner is liable to pay from his personal assets only when the partner has committed a criminal act. 
A)  A partner is liable for only the amount that he or she invested in the partnership firm. 
B)  Every general partner faces limited liability for the debts of the partnership. 
C)  Each partner is an agent for every other partner and of the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
D)  Retiring from a partnership by giving notice to his partners frees a partner from liabilities he faced while being a partner of the firm. 
E)  A partner is liable to pay from his personal assets only when the partner has committed a criminal act.

Question 5

Joe and Mary promote several dances at a community hall and split the profits. Will this be enough to establish a partnership?

Accepted Answer

Yes. The definition of a partnership is

Question 6

If a third party relies on the principal's representation that the agent has the authority to act, which of the following is true?

Accepted Answer

A)  The principal can claim the agent had no authority. 
B)  The agent is solely liable for the conduct if it results in injury to the third party. 
C)  The principal can claim estoppel. 
D)  The principal cannot claim the agent had no authority. 
E)  The agent can sue the principal for breach of contract. 
A)  The principal can claim the agent had no authority. 
B)  The agent is solely liable for the conduct if it results in injury to the third party. 
C)  The principal can claim estoppel. 
D)  The principal cannot claim the agent had no authority. 
E)  The agent can sue the principal for breach of contract.

Question 7

What are the advantages and disadvantages of being a sole proprietor?

Accepted Answer

Disadvantages include unlimite

Question 8

One advantage of sole proprietorships is that under the principle of vicarious liability, the sole proprietor is not responsible for any tort committed by an employee during the course of employment.

Accepted Answer

A) True 
 B)False

Question 9

Joe is in the process of assembling land for Ace Contractors Ltd. to build a supermarket. He entered into a contract with the seller, Sam. He did not disclose that he was acting for someone else when he entered into the contract. Explain Sam's rights when the contract is breached and he learns that Joe was acting for Ace.

Accepted Answer

This is an example of an undisclosed pri

Question 10

Explain what a retiring partner should do to ensure she is no longer liable for the company's obligations.

Accepted Answer

To avoid being liable for any future ind

Question 11

Describe what is meant by an agent's apparent authority.

Accepted Answer

When a principal has led someone to beli

Question 12

As a general rule, sole proprietors are subject to fewer government regulations than partnerships.

Accepted Answer

A) True 
 B)False

Question 13

Ravinder is the sole proprietor of a shoe store. He is also a partner in a restaurant, which has recently been sued for negligence after many people got sick from the salmon Alfredo dinner special. Which of the following statements is true?

Accepted Answer

A)  The shoe store assets will only be available to the successful plaintiffs in the restaurant action if the shoe store is operated by Ravinder in conjunction with the restaurant. 
B)  Because of the concept of limited liability, Ravinder can lose only what he has invested in the restaurant. 
C)  The successful plaintiffs in the restaurant action can only go after the assets of the shoe store if Ravinder was the actual person who prepared the salmon Alfredo on the night in question. 
D)  Although the successful plaintiffs in the restaurant action can go after Ravinder's personal assets, they cannot go after the assets of the shoe store because the shoe store is a separate legal entity from Ravinder. 
E)  If the plaintiffs win their lawsuit against the restaurant, they can look to the assets of the shoe store to pay off the debt. 
A)  The shoe store assets will only be available to the successful plaintiffs in the restaurant action if the shoe store is operated by Ravinder in conjunction with the restaurant. 
B)  Because of the concept of limited liability, Ravinder can lose only what he has invested in the restaurant. 
C)  The successful plaintiffs in the restaurant action can only go after the assets of the shoe store if Ravinder was the actual person who prepared the salmon Alfredo on the night in question. 
D)  Although the successful plaintiffs in the restaurant action can go after Ravinder's personal assets, they cannot go after the assets of the shoe store because the shoe store is a separate legal entity from Ravinder. 
E)  If the plaintiffs win their lawsuit against the restaurant, they can look to the assets of the shoe store to pay off the debt.

Question 14

Explain why the law of partnership poses a danger to people carrying on joint business activities.

Accepted Answer

Here students must show that they unders

Question 15

Joe is a salesman for Harry's Fine Cars Ltd. He had been told specifically that he had no authority to make any sale, take a trade-in, or otherwise deal with the vehicles without the manager's express approval of every deal. Sam, a customer, came in wanting to buy a used Cadillac and agreed to pay the $16,000 asking price. Unfortunately, the manager had left the lot, and so Joe took it upon himself to write up the agreement. When the manager returned, he liked the deal and realized that the customer might change his mind when he realized that the salesman didn't have the authority to bind the seller in contract. Under these circumstances, what could the manager of the car lot do?

Accepted Answer

He could ratify the contract,

Question 16

An agent need not disclose the fact that he is acting for a principal in dealings with a third party, and that contract may still be binding on that third party.

Accepted Answer

A) True 
 B)False

Question 17

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Accepted Answer

The third party can

Question 18

Which of the following is a violation of the fiduciary duty of a partner?

Accepted Answer

A)  Where one partner uses information that he has gained from the partnership for the advantage of the partnership 
B)  Where a partner uses the partnership property for partnership business 
C)  Where one partner carries on a business unrelated to the partnership with the permission of the partners 
D)  When one partner starts another business that is the same as or in competition with the partnership business without the consent of the other partners 
E)  Where one partner learns of an investment opportunity in the field of the partnership and tells the partners, but the partners decline on the opportunity so he takes advantage of it himself 
A)  Where one partner uses information that he has gained from the partnership for the advantage of the partnership 
B)  Where a partner uses the partnership property for partnership business 
C)  Where one partner carries on a business unrelated to the partnership with the permission of the partners 
D)  When one partner starts another business that is the same as or in competition with the partnership business without the consent of the other partners 
E)  Where one partner learns of an investment opportunity in the field of the partnership and tells the partners, but the partners decline on the opportunity so he takes advantage of it himself

Question 19

Novada worked as a salesperson for White Water Yachts Inc. Yates, who was looking at a 30-foot sailboat called the "Mostly Toad," approached him. Yates asked Novada if the boat has been surveyed (inspected) recently, and he was told that it had been just last year and it was in great shape. In fact, it had never been surveyed and had serious fiberglass delaminating problems below in the bilge. Yates bought the boat and in the first month of sailing the boat delaminated and sank. Yates and his family survived, but both he and his wife suffered some serious long-term injuries. Which of the following is correct with respect to the legal position of the parties?

Accepted Answer

A)  If Novada knew what he was saying was false, Yates could sue Novada and White Water for fraud even if Novada was an independent agent rather than an employee. 
B)  If Novada didn't know what he was saying was false, having mixed this boat up with another, Yates can cannot sue either Novada or White Water for negligence, even if Novada was an independent agent rather than an employee. Salespeople are expected to be enthusiastic. 
C)  Since this is a used boat, this is a "buyer beware" situation, and Yates should have had the boat inspected himself. He has no action against Novada or White Water in these circumstances. 
D)  Yates can only sue White Water if the contract itself specifically referred to a recent survey and this information was inaccurate. 
E)  Yates can sue only the agent in this situation, not the principal. 
A)  If Novada knew what he was saying was false, Yates could sue Novada and White Water for fraud even if Novada was an independent agent rather than an employee. 
B)  If Novada didn't know what he was saying was false, having mixed this boat up with another, Yates can cannot sue either Novada or White Water for negligence, even if Novada was an independent agent rather than an employee. Salespeople are expected to be enthusiastic. 
C)  Since this is a used boat, this is a "buyer beware" situation, and Yates should have had the boat inspected himself. He has no action against Novada or White Water in these circumstances. 
D)  Yates can only sue White Water if the contract itself specifically referred to a recent survey and this information was inaccurate. 
E)  Yates can sue only the agent in this situation, not the principal.

Question 20

The relationship between the partners is governed by contract law.

Accepted Answer

A) True 
 B)False

Which one of the following statements is correct with respect to the liability of partners?

Which of the following is an example of an agent's breach of fiduciary duty to his principal?

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business. Which of the following is true in regards to being a general partner?

Joe and Mary promote several dances at a community hall and split the profits. Will this be enough to establish a partnership?

If a third party relies on the principal's representation that the agent has the authority to act, which of the following is true?

What are the advantages and disadvantages of being a sole proprietor?

One advantage of sole proprietorships is that under the principle of vicarious liability, the sole proprietor is not responsible for any tort committed by an employee during the course of employment.

Explain what a retiring partner should do to ensure she is no longer liable for the company's obligations.

Describe what is meant by an agent's apparent authority.

As a general rule, sole proprietors are subject to fewer government regulations than partnerships.

Ravinder is the sole proprietor of a shoe store. He is also a partner in a restaurant, which has recently been sued for negligence after many people got sick from the salmon Alfredo dinner special. Which of the following statements is true?

Explain why the law of partnership poses a danger to people carrying on joint business activities.

An agent need not disclose the fact that he is acting for a principal in dealings with a third party, and that contract may still be binding on that third party.

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Which of the following is a violation of the fiduciary duty of a partner?

The relationship between the partners is governed by contract law.

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

Which one of the following statements is correct with respect to the liability of partners?

Which of the following is an example of an agent's breach of fiduciary duty to his principal?

Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business. Which of the following is true in regards to being a general partner?

Joe and Mary promote several dances at a community hall and split the profits. Will this be enough to establish a partnership?

If a third party relies on the principal's representation that the agent has the authority to act, which of the following is true?

What are the advantages and disadvantages of being a sole proprietor?

One advantage of sole proprietorships is that under the principle of vicarious liability, the sole proprietor is not responsible for any tort committed by an employee during the course of employment.

Explain what a retiring partner should do to ensure she is no longer liable for the company's obligations.

Describe what is meant by an agent's apparent authority.

As a general rule, sole proprietors are subject to fewer government regulations than partnerships.

Ravinder is the sole proprietor of a shoe store. He is also a partner in a restaurant, which has recently been sued for negligence after many people got sick from the salmon Alfredo dinner special. Which of the following statements is true?

Explain why the law of partnership poses a danger to people carrying on joint business activities.

An agent need not disclose the fact that he is acting for a principal in dealings with a third party, and that contract may still be binding on that third party.

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Which of the following is a violation of the fiduciary duty of a partner?

The relationship between the partners is governed by contract law.

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