Question 1

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

Accepted Answer

A)  Partners are only liable for the torts of their partners if they in fact knew that the wrongful conduct was taking place. 
B)  A partnership cannot be created inadvertently. 
C)  Partners have unlimited liability, meaning that they can lose up to the amount they have invested in the business. 
D)  Each partner is vicariously liable for the wrongful acts of their partners committed in the course of the partnership business. 
E)  Joint and several liability means that each partner can be sued several times. 
A)  Partners are only liable for the torts of their partners if they in fact knew that the wrongful conduct was taking place. 
B)  A partnership cannot be created inadvertently. 
C)  Partners have unlimited liability, meaning that they can lose up to the amount they have invested in the business. 
D)  Each partner is vicariously liable for the wrongful acts of their partners committed in the course of the partnership business. 
E)  Joint and several liability means that each partner can be sued several times. D

Question 2

Discuss the extent of the obligations of the agent to the principal based on his fiduciary duty.

Accepted Answer

It is very important that students understand the nature of a fiduciary duty, and this question requires them to demonstrate that understanding with respect to the agency relationship. Some of the things they can mention are as follows. The agent must disclose information he is aware of that may be of relevance, whether or not the agent thinks it will benefit the principal. There is a duty not to take kick-backs or to work as agent for both sides unless it is disclosed and there is permission. There is a duty not to act in conflict of interest and so to put the interest of the principal before your own. The agent can't sell things that the agent owns or has an interest in to the principal without disclosing that fact. The agent can't purchase things for himself from the principal without disclosing that fact. The agent can't take advantage of opportunities that come to him because of his position that should be disclosed to the principal. The agent must account for profits that he makes because of a violation of this duty. In short, this is an utmost good faith relationship, and the agent must act in the best interest of the principal, putting his own interests second to those of the principal. Students may supply other examples of the obligations of a fiduciary.

Question 3

Which of the following is correct with respect to sole proprietorships?

Accepted Answer

A)  The sole proprietor has unlimited liability. 
B)  Sole proprietorship exists where two or more people carry on business together with a view towards profits. 
C)  The sole proprietor has limited liability. 
D)  A sole proprietorship must be incorporated. 
E)  The sole proprietorship is a separate legal entity. 
A)  The sole proprietor has unlimited liability. 
B)  Sole proprietorship exists where two or more people carry on business together with a view towards profits. 
C)  The sole proprietor has limited liability. 
D)  A sole proprietorship must be incorporated. 
E)  The sole proprietorship is a separate legal entity. A

Question 4

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 can ratify the contract, wh

Question 5

When two people enter into a partnership by agreement but neglect to set out the terms of such agreement, or where the parties becomes partners inadvertently, the terms and arrangements of that partnership are set out where?

Accepted Answer

The answer of When two people enter into a partnership...

Question 6

Discuss how a partnership arrangement may be brought to an end, and the effect of dissolution.

Accepted Answer

Students should note that a partnership

Question 7

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?

Accepted Answer

A)  The agent could be sued by the seller of the computer for breach of his warranty of authority. 
B)  The seller of the computer could sue the agent for breach of contract for saying he was an agent. 
C)  The seller could sue the principal for breach of warranty of authority. 
D)  The principal would have to pay for the computer because the agent was an agent for that principal. 
E)  By exceeding his authority, the agent has become the buyer of the computer himself. 
A)  The agent could be sued by the seller of the computer for breach of his warranty of authority. 
B)  The seller of the computer could sue the agent for breach of contract for saying he was an agent. 
C)  The seller could sue the principal for breach of warranty of authority. 
D)  The principal would have to pay for the computer because the agent was an agent for that principal. 
E)  By exceeding his authority, the agent has become the buyer of the computer himself.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

Accepted Answer

This is clearly a breach of th

Question 10

Although Jason had participated in the flower auction for the last nine years as an agent for Thos. Holt's Ltd. (Holt), with the authority to buy whatever he felt the store needed, this day he was given express instructions to buy only cut flowers. When flats of young camellia bushes with a rare gold flower were being sold, Jason bought them on behalf of the company. Which of the following is true?

Accepted Answer

A)  The key to determining whether or not Holt is bound by the contract is this: in the circumstances, should the auctioneer have confirmed with Holt the extent of Jason's authority? 
B)  Holt is not bound since Holt didn't ratify the contract. 
C)  Holt is not bound by the contract, because Jason is in breach of his agency agreement. 
D)  Holt is not bound by the contract, because Jason's authority was expressly restricted. 
E)  Holt is estopped from denying Jason's authority. 
A)  The key to determining whether or not Holt is bound by the contract is this: in the circumstances, should the auctioneer have confirmed with Holt the extent of Jason's authority? 
B)  Holt is not bound since Holt didn't ratify the contract. 
C)  Holt is not bound by the contract, because Jason is in breach of his agency agreement. 
D)  Holt is not bound by the contract, because Jason's authority was expressly restricted. 
E)  Holt is estopped from denying Jason's authority.

Question 11

A recent article in the Lawyers Weekly began: "Step aside, wrongful dismissal: the law of fiduciary duties is where you'll find the hottest legal action these days"! Which of the following is false with regard to the meaning of "fiduciary duty"?

Accepted Answer

A)  The principal owes the agent a fiduciary duty just as the agent owes it to his principal. 
B)  Fiduciary law is based on the principle of acting with utmost good faith. 
C)  An agent must place the interests of his principal above all except the law. 
D)  Fiduciary law governs situations in which one party places trust and confidence in another who consents to act in accordance with that trust. 
E)  In some fields, fiduciary duties are imposed both by the common law and by statute. 
A)  The principal owes the agent a fiduciary duty just as the agent owes it to his principal. 
B)  Fiduciary law is based on the principle of acting with utmost good faith. 
C)  An agent must place the interests of his principal above all except the law. 
D)  Fiduciary law governs situations in which one party places trust and confidence in another who consents to act in accordance with that trust. 
E)  In some fields, fiduciary duties are imposed both by the common law and by statute.

Question 12

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, troubleshooter, who helped customers over the phone who needed guidance in using the company's software; Ralph, 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 an agent?

Accepted Answer

A)  All of them except Michael 
B)  Roger, Toman, and Rice only 
C)  All of them except Keith and Jason 
D)  Only Roger 
E)  All of them 
A)  All of them except Michael 
B)  Roger, Toman, and Rice only 
C)  All of them except Keith and Jason 
D)  Only Roger 
E)  All of them

Question 13

Explain what is meant by limited liability.

Accepted Answer

In a corporation, the corporat

Question 14

Explain under what circumstances a principal will be responsible for the wrongful acts of an agent who's not an employee.

Accepted Answer

When the agent has committed a

Question 15

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

Accepted Answer

When a principal has led someone to beli

Question 16

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the proper definition of a partnership as set out in the Partnership Act?

Accepted Answer

A)  A partnership exists only where two or more people enter into a written agreement to be partners. 
B)  A partnership exists where any business is carried on with a view towards profits. 
C)  Partnership exists where two or more persons carry on business together with a view towards profits. 
D)  A partnership is only created where the partners actually share the profits from a business. 
E)  A partnership is created where a corporation with shareholders is registered with the federal government. 
A)  A partnership exists only where two or more people enter into a written agreement to be partners. 
B)  A partnership exists where any business is carried on with a view towards profits. 
C)  Partnership exists where two or more persons carry on business together with a view towards profits. 
D)  A partnership is only created where the partners actually share the profits from a business. 
E)  A partnership is created where a corporation with shareholders is registered with the federal government.

Question 18

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

Accepted Answer

A)  Irving has been given authority to contract for the purchase of 1,000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1,200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
B)  The ratification by the principal must be in writing to be effective. 
C)  Ratification is the act of a principal approving a contract when his agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
D)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
E)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. 
A)  Irving has been given authority to contract for the purchase of 1,000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1,200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
B)  The ratification by the principal must be in writing to be effective. 
C)  Ratification is the act of a principal approving a contract when his agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
D)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
E)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract.

Question 19

With respect to the formation of agency by estoppel, which of the following statements is true?

Accepted Answer

A)  When a third party suspects that the agent he deals with has no authority, there is no obligation on him to question the agent's alleged authority. 
B)  The issue of apparent authority arises only if a person acts as an agent when he has express or implied authority. 
C)  If the principal tells an agent specifically not to sell something and the agent, in disobedience of those instructions, sells it anyway, the principal may be bound by the contract because of estoppel. 
D)  When a party terminates an express agency agreement with his agent and notifies third parties with whom that agent normally dealt, that party will be liable on a contract made for him by that "fired" agent. 
E)  When a party represents, by words or conduct, that someone is his agent, that party can later deny liability on a contract made for him by that agent on the basis that no express agency agreement existed. 
A)  When a third party suspects that the agent he deals with has no authority, there is no obligation on him to question the agent's alleged authority. 
B)  The issue of apparent authority arises only if a person acts as an agent when he has express or implied authority. 
C)  If the principal tells an agent specifically not to sell something and the agent, in disobedience of those instructions, sells it anyway, the principal may be bound by the contract because of estoppel. 
D)  When a party terminates an express agency agreement with his agent and notifies third parties with whom that agent normally dealt, that party will be liable on a contract made for him by that "fired" agent. 
E)  When a party represents, by words or conduct, that someone is his agent, that party can later deny liability on a contract made for him by that agent on the basis that no express agency agreement existed.

Question 20

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?

Accepted Answer

A)  Third Party can successfully sue both Principal and Agent. 
B)  Third Party can elect to recover from either Principal or Agent but not both. 
C)  Third Party can successfully sue only John Agent. 
D)  Third Party can successfully sue only Gord Principal. 
E)  Third party can ratify the contract with Gord. 
A)  Third Party can successfully sue both Principal and Agent. 
B)  Third Party can elect to recover from either Principal or Agent but not both. 
C)  Third Party can successfully sue only John Agent. 
D)  Third Party can successfully sue only Gord Principal. 
E)  Third party can ratify the contract with Gord.

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

Discuss the extent of the obligations of the agent to the principal based on his fiduciary duty.

Which of the following is correct with respect to sole proprietorships?

When two people enter into a partnership by agreement but neglect to set out the terms of such agreement, or where the parties becomes partners inadvertently, the terms and arrangements of that partnership are set out where?

Discuss how a partnership arrangement may be brought to an end, and the effect of dissolution.

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?

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

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

A recent article in the Lawyers Weekly began: "Step aside, wrongful dismissal: the law of fiduciary duties is where you'll find the hottest legal action these days"! Which of the following is false with regard to the meaning of "fiduciary duty"?

Explain what is meant by limited liability.

Explain under what circumstances a principal will be responsible for the wrongful acts of an agent who's not an employee.

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

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

Which of the following is the proper definition of a partnership as set out in the Partnership Act?

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

With respect to the formation of agency by estoppel, which of the following statements is true?

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Corporations

Real, Personal and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

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Exam 11: Agency and Partnership

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

Discuss the extent of the obligations of the agent to the principal based on his fiduciary duty.

Which of the following is correct with respect to sole proprietorships?

When two people enter into a partnership by agreement but neglect to set out the terms of such agreement, or where the parties becomes partners inadvertently, the terms and arrangements of that partnership are set out where?

Discuss how a partnership arrangement may be brought to an end, and the effect of dissolution.

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?

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

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

A recent article in the Lawyers Weekly began: "Step aside, wrongful dismissal: the law of fiduciary duties is where you'll find the hottest legal action these days"! Which of the following is false with regard to the meaning of "fiduciary duty"?

Explain what is meant by limited liability.

Explain under what circumstances a principal will be responsible for the wrongful acts of an agent who's not an employee.

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

A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

Which of the following is the proper definition of a partnership as set out in the Partnership Act?

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

With respect to the formation of agency by estoppel, which of the following statements is true?

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Corporations

Real, Personal and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

Filters