Exam 10: Agency and Partnership

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.

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

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

Joe Smith owns a book store as the sole proprietor. He is also a partner in a hotel, which borrowed $100,000 from the bank. Which of the following statements is true?

Societies are separate legal entities, separate and apart from the members who make them up.

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

Which of the following will establish the existence of a partnership?

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

When a principal is undisclosed, the third party is restricted to suing the agent.

When one partner dies, what happens to the partnership?

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

An agency relationship can be created by

Explain how partnership can be brought to an end.

Explain under what circumstances a partnership can come to an end.

"Partners in a limited liability partnership (LLP) are not liable for the liability of the partnership." Discuss the accuracy of this statement.

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

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?

Adams was approached by a Mr. McCarthy of XYZ Co., who requested that Adams pay $10,000 to extinguish a debt owed by the partnership of Adams and Jefferson. Adams denied the partnership and the liability. In asserting his claim, McCarthy cited the following facts, all of which he could prove. Which of these facts is the strongest evidence of the existence of a partnership?

Sam hires Joe to negotiate and sign a contract with Ken on Sam's behalf. Which of the following is true?

Because of an alarming drop in the earnings of Microminds Ltd., Roger, the principal contract negotiator and president of the software development company, called a meeting to discuss productivity and customer satisfaction. At the meeting were Michael, a troubleshooter who helped customers over the phone who needed guidance in using the company's software; Ralph, the receptionist and purchaser of the office supplies for the company; Keith and Jason, salesmen hired on a commission basis (i.e., not as employees but as independent contractors); Mr. Toman, purchasing agent for the Vancouver School Board, an important customer; and Mr. Rice, purchasing agent for Matol Toys Ltd., also a customer. Which of these is acting as an agent?