Exam 11: Agency and Partnership

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.

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 percent 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 shaving him.Sam sued both Harry and Joe.Explain his likelihood of success.

What is limited liability?

A third party is bound to the principal only when he knows that agent is acting for that principal.

Explain how a person's status as a limited partner could be lost.

"Utmost good faith" is another term for a business's reputation and ongoing relations with customers.

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

Explain how the principle of estoppel can be important in an agency relationship.

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 father,an employee for B.C.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.One job followed another.Ted and Arnie now want to set up business formally and they need money.Ted's father will give them $9000 but doesn't want his liability to ever go beyond that amount.Given these facts,which of the following is true?

Where there is no contract of agency between the principal and the agent,the actions of that agent cannot bind the 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 regard to being a general partner?

An agent owes a fiduciary duty to the third party to act in that third party's best interest.

When an agent's authority is terminated by mutual agreement,what is the impact on the agent's actual and apparent authority?

Claire has been selling her famous cookies on her own to local bakeries.Her cookies are so popular that she needs to hire someone as an employee to help with the packaging and delivery.Claire has taken no formal steps regarding the form of business organization.Which of the following is true about Claire's situation?

Discuss the principle of ratification,and in your discussion,look at any injustice caused by its operation and limitations on its availability.

"As in other forms of business,when decisions are to be taken,the majority of the partners must approve the decision." Discuss the accuracy of that statement.

The Partnership Act provides that if the partners do not agree otherwise,certain terms of a partnership agreement will be implied.Which of the following is not such an implied term?

Which of the following is incorrect with respect to the creation of a partnership?

Chuck,Howard,and Ben decide to go into a business venture,developing and distributing educational software.For tax reasons,they do not incorporate.Each contributes $10 000,and Howard also contributes a truck and his programming expertise.They agree that all three will be actively involved in the day-to-day management of the business.To determine their rights and obligations,they enter into a one-page agreement that provides only that each of Chuck,Howard and Ben is to get 33 1/3 percent of the profits and also states specifically they are not to be viewed as partners.Given these facts,which of the following statements is true?

Ratification of a contract can take place by the principal knowingly taking a benefit under the contract.