Exam 10: Agency and Partnership

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

The unlimited liability of partners means that not only can they lose their entire investment in the business, but their personal assets are also at risk, such as their home and car.

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.

Explain what is meant by an agent's fiduciary duty to the principal.

Which of the following is correct with respect to the law of partnership?

Which of the following is correct with respect to the law of partnership?

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?

When the object of the agency relationship becomes illegal, the agency agreement is frustrated and any authority terminated.

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.

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?

What option does a principal have if the agent has acted beyond both actual and apparent authority, but the principal wants to proceed with the agreement?

A chauffeur, going against specific instructions, purchases a new car on behalf of his employer. The employer has done nothing to lead the seller to believe the chauffeur has authority but is persuaded by the chauffeur to go for a drive before returning the vehicle. Explain the legal position of the parties.

An agent with no express, implied, or apparent authority to do so identified himself as an agent for his principal, and on behalf of his principal bought a computer. The principal refused to ratify the contract. On these facts, which of the following is true?

Dennis, Sam, George, and Ray were partners in an accounting business, and Ray decided he wanted to retire. He sold his share of the partnership to Leonardo, but Leonardo is not a partner unless the other partners approve the change.

Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation.

The only situation where an agent can be sued by a third party is where he has gone beyond his apparent and actual authority.

Explain under what circumstances the third party can be sued by the principal in the event of default.

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.

In which one of the following situations has the duty between partners not been breached?

The partners can change the terms of their responsibilities to each other in the partnership agreement, but cannot change their obligations to third parties.