Exam 11: Agency and Partnership

Jones is a partner in a law firm in a small town, and he is also doing legal work out of his home in the evening for himself. Which of the following statements is correct with respect to his responsibility for the money he earns?

Explain under what circumstances the third party can be sued by the principal in the event of default.

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

Dave and his sister Chris made unusual kites. They both created the designs; Dave made the patterns. Friends had always wanted to buy their kites. After Chris completed a college marketing program, she began to talk to Dave about going into business selling kites. Ed, a friend of Chris's, wanted to be involved. He said he could buy the supplies and do the other odd chores. They decided to try to make a go of it and to share the profits as follows: Dave 35%, Chris 35%, and Ed 30%. Things went well for 7 months. They even hired George to deliver kites to the increased number of stores buying them. Unfortunately for business, Chris and Ed became romantically involved. This was followed by a heated dispute. Ed disappeared with $1,300 collected from customers and $600 worth of supplies, which he had bought on behalf of the business from their regular supplier. At about the same time George negligently broke a customer's $200 lamp when he was delivering a kite. On these facts, which of the following is true?

A person owing a fiduciary duty must submerge personal interests in favour of the interests of the principal he or she represents.

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

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?

Explain what is meant by an agent's fiduciary duty to 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.

"An agent is free to withhold information from the principal as long as it doesn't hurt the principal." Discuss the accuracy of that statement.

Which of the following statements is true with respect to the obligations in a partnership relationship?

Joe and Mary promote several dances at school and split the profits. Will this be enough to establish a partnership?

If a third party relies on the principal's representation that the agent has the authority to act, which of the following is true?

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

Explain under what circumstances an agent can be liable for his conduct rather than the principal.

How is an agency relationship created?

When an agent acts beyond the specific authority given by the principal, that action will not be binding on the principal.

Explain what a retiring partner should do to ensure he is no longer liable for the company's obligations.

Joe was a lawyer and agreed to pay Sam, a banker, 25% of any fees that he received as a result of mortgage referral business directed his way by Sam. Because of Joe's carelessness, one of the customers referred to him by Sam lost his property. The customer sued both Joe and Sam. Explain the likelihood of his success.

When the object of the agency relationship becomes illegal, the agency agreement is frustrated and any authority terminated.