Exam 10: Agency and Partnership

Joe sold Harry his barber shop for $100,000. He was paid $20,000 in cash, the other $80,000 to be paid by Harry giving Joe 20% of the profits of the business until the amount was paid off. Unfortunately, a customer, Sam, was injured by Harry, who managed to cut off Sam's right ear while giving him a shave. Sam sued both Harry and Joe. Explain his likelihood of success.

Which of the following is considered to be a separate legal person in law?

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

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?

It is only where a principal consciously ratifies that a contract can be effectively ratified.

In the process of assembling land for Ace Construction Ltd. to build a supermarket, Joe entered into a contract with the seller Sam. In which of the following situations would Sam be able to sue the principal Ace?

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?

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

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

Explain when a group of people would create a society.

Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

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

A contract entered into by an agent cannot be ratified inadvertently by the principal.

Explain how the principle of fiduciary duty works in a partnership relationship.

Explain what is meant by limited liability.

"A partnership can be created by the conduct of the parties." Discuss the accuracy of this statement.

Explain under what circumstances a principal who is not an employer will be held responsible for the wrongful acts of his agent.

In which one of the following situations will the transaction not be binding on the principal?

"Partners must make clear in their partnership agreement any limitations on authority they wish to impose on each other when entering into contracts with outsiders." Discuss the accuracy of this statement.

Explain under what circumstances a principal can be held liable for torts committed by an agent.