Exam 11: Agency and 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 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 dad will give them $9,000 but doesn't want his liability to ever go beyond that amount. On these facts, which of the following is true?

Which of the following is correct with respect to partnership?

Joe is in the process of assembling land for Ace contractors Ltd. to build a supermarket. He entered into a contract with the seller Sam. He did not disclose that he was acting for someone else when he entered into the contract. Explain Sam's rights when the contract is breached and he learns that Joe was acting for Ace.

Which of the following statements is correct with respect to limited partnerships?

Explain when a group of people would create a society.

Partners can agree among themselves as to what portion of liability they each will bear, and their losses will be limited to that portion when being sued by outsiders.

The ratification of a contract by the principal must be done in writing.

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

For an agency agreement to be binding, what is required and what is the effect if a required element is not met?

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 countless people got sick from the Salmon Alfredo dinner special. Which of The following statements is true?

Apparent authority is the authority the agent has based on what the principal has led the third party to believe.

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?

Where an agent has been guilty of fraudulent misrepresentation, the agent must sue the principal.

Joe R. notified his partners in writing that he would be retiring from the business partnership at the end of 2011. It was acknowledged and agreed upon and, at year end, the remaining partners paid him for his interest in the partnership. In February of 2012, one of the remaining partners misapplied some trust funds that a long-time client had placed in the care of the partnership for the purchase of a hotel. The partnership was sued, but the assets of the partnership were not sufficient to satisfy the judgment. The successful plaintiff went against the personal assets of the partners, including those of Joe R. What is the likely outcome?

Requirement of unanimous consent protects partners.

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

"A principal can ratify an agent's contract that was done without authority as long as the agent makes it clear that they are entering into the contract 'subject the principal's ratification.'" Discuss the accuracy of that statement.

"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.

Alison told her partners in writing that she would be leaving the law partnership at the current partnership year-end, January 31, 2014. At year-end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations. In February 2014, one of the remaining partners absconded with $2,000,000 held for Mr. Smith, a long-time client, taken in trust in September 2013. Mr. Smith sued the partnership, the partners, and Alison. Based on the foregoing facts, which of the following statements is true?

Norma and Janet decided to form a partnership for selling gourmet picnic baskets. To raise sufficient capital, they convinced their mothers to invest $5,000 each as limited partners. Norma's mother was an experienced restaurateur and watched the business with great interest. On several occasions, she advised them on the business and contacted old business associates to buy surplus stock. She even filled in taking orders in the office when needed. A customer who was made ill by contaminated food from a tin can supplied in one basket sued. What would be the liability, if any, of the mothers?