Question 1

Explain what is meant by an "enduring power of attorney".

Accepted Answer

The power to act as

Question 2

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?

Accepted Answer

A)  Every general partner faces limited liability for the debts of the partnership. 
B)  Each partner is an agent for every other partner and of the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
C)  A partner is liable to pay from his personal assets only when the a partner has committed a criminal act. 
D)  A partner is liable for only the amount than he or she invested in the partnership firm. 
E)  Retiring from a partnership by giving notice to his partners frees a partner from liabilities he faced while being a partner of the firm. 
A)  Every general partner faces limited liability for the debts of the partnership. 
B)  Each partner is an agent for every other partner and of the firm itself, so a partner may be liable for the contracts made by an incompetent partner. 
C)  A partner is liable to pay from his personal assets only when the a partner has committed a criminal act. 
D)  A partner is liable for only the amount than he or she invested in the partnership firm. 
E)  Retiring from a partnership by giving notice to his partners frees a partner from liabilities he faced while being a partner of the firm.

Question 3

Identify the true statement concerning the law of principal and agent.

Accepted Answer

A)  An agent can never be liable to the third party himself while the principal will bear no such liability. 
B)  Agency is only created by way of a contract. 
C)  The principal and his agent owe each other the same duties. 
D)  An agent with no express authority can never bind his principal into a contract with a third party. 
E)  An agent who puts himself in a position where his interests conflict with those of his principal is in breach of his duties even though no actual harm comes to his principal. 
A)  An agent can never be liable to the third party himself while the principal will bear no such liability. 
B)  Agency is only created by way of a contract. 
C)  The principal and his agent owe each other the same duties. 
D)  An agent with no express authority can never bind his principal into a contract with a third party. 
E)  An agent who puts himself in a position where his interests conflict with those of his principal is in breach of his duties even though no actual harm comes to his principal.

Question 4

Grant got a job with Ace Computers Co. (Ace) as a salesman. He was given a course in salesmanship by Ace, business cards, and several of the company's order forms and brochures, and he was assigned an area in which to sell computers door-to-door on behalf of Ace. Grant would be paid on a commission basis. At his first house, he was so excited by the interest shown that he forgot the explicit instructions he had received -- only cash sales permitted. As agent for Ace, he sold a computer on time to a 70-year-old lady. She was to pay $25 per month for eight years because that was all she could afford. When Brown, sales manager of Ace, heard of the deal, he fired Grant and said he would not go through with the contract. However, the little old lady liked the computer very much and insisted that Ace provide her with one within the week as required by the contract. Which of the following accurately describes the legal position of the parties?

Accepted Answer

A)  Ace would not be bound because Grant failed to follow the exact instructions he had received. 
B)  Ace would be bound because the agent Grant acted within his apparent authority. 
C)  Grant had implied authority to sell computers on time; selling computers necessitates selling on time, despite the prohibition. 
D)  Ace is not bound by the contract because no representations of authority were made by it to the little old lady. 
E)  Brown is personally liable to the old lady because he is the employee of the company who decided not to honour the contract. 
A)  Ace would not be bound because Grant failed to follow the exact instructions he had received. 
B)  Ace would be bound because the agent Grant acted within his apparent authority. 
C)  Grant had implied authority to sell computers on time; selling computers necessitates selling on time, despite the prohibition. 
D)  Ace is not bound by the contract because no representations of authority were made by it to the little old lady. 
E)  Brown is personally liable to the old lady because he is the employee of the company who decided not to honour the contract.

Question 5

An agent contracted with a third party on behalf of a principal, but went beyond both his actual and apparent authority. The third party was never paid. Which of the following indicates the legal position of the third party? (He = third party)

Accepted Answer

A)  Since the agent had no authority, the third party has no remedy against anyone. 
B)  He can successfully sue the principal because the principal is always liable for the actions of his agent. 
C)  He can successfully sue the agent for breach of warranty of authority if the principal fails to ratify the contract. 
D)  He can ratify the deal and force the principal to go through with it. 
E)  He can sue the agent for the tort of nuisance. 
A)  Since the agent had no authority, the third party has no remedy against anyone. 
B)  He can successfully sue the principal because the principal is always liable for the actions of his agent. 
C)  He can successfully sue the agent for breach of warranty of authority if the principal fails to ratify the contract. 
D)  He can ratify the deal and force the principal to go through with it. 
E)  He can sue the agent for the tort of nuisance.

Question 6

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?

Accepted Answer

A)  If Novada didn't know what he was saying was false, having mixed this boat up with another, Yates can cannot sue either Novada or White Water for negligence, even if Novada was an independent agent rather than an employee. Salespeople are expected to be enthusiastic. 
B)  If Novada knew what he was saying was false, Yates could sue Novada and White Water for fraud even if Novada was an independent agent rather than an employee. 
C)  Yates can sue only the agent in this situation, not the principal. 
D)  Yates can only sue White Water if the contract itself specifically referred to a recent survey and this information was inaccurate. 
E)  Since this is a used boat, this is a "buyer beware" situation, and Yates should have had the boat inspected himself. He has no action against Novada or White Water in these circumstances. 
A)  If Novada didn't know what he was saying was false, having mixed this boat up with another, Yates can cannot sue either Novada or White Water for negligence, even if Novada was an independent agent rather than an employee. Salespeople are expected to be enthusiastic. 
B)  If Novada knew what he was saying was false, Yates could sue Novada and White Water for fraud even if Novada was an independent agent rather than an employee. 
C)  Yates can sue only the agent in this situation, not the principal. 
D)  Yates can only sue White Water if the contract itself specifically referred to a recent survey and this information was inaccurate. 
E)  Since this is a used boat, this is a "buyer beware" situation, and Yates should have had the boat inspected himself. He has no action against Novada or White Water in these circumstances.

Question 7

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.

Accepted Answer

Ratification is a two-edged sword, and a

Question 8

The fiduciary duty of an agent refers to his obligations to act within the limits of his actual or apparent authority.

Accepted Answer

A) True 
 B)False

Question 9

In Ocean City Realty Ltd. v. A & M Holdings Ltd., what did the Court hold was a key element in the duty of a fiduciary?

Accepted Answer

A)  To disclose the identities of all of the agent's other principals. 
B)  To disclose all pertinent information related to a transaction considered important by the principal. 
C)  To disclose whenever one profits at the expense of one's principal. 
D)  To disclose whenever one is competing with one's principal. 
E)  To disclose whenever one is putting personal interests ahead of the interests of one's principal. 
A)  To disclose the identities of all of the agent's other principals. 
B)  To disclose all pertinent information related to a transaction considered important by the principal. 
C)  To disclose whenever one profits at the expense of one's principal. 
D)  To disclose whenever one is competing with one's principal. 
E)  To disclose whenever one is putting personal interests ahead of the interests of one's principal.

Question 10

What restrictions are there on a principal's right to ratify?

Accepted Answer

The principal can only ratify

Question 11

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Accepted Answer

He can sue either th

Question 12

Explain what must be done to create a limited partnership.

Accepted Answer

Limited partners invest in the partnersh

Question 13

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% of the profits and also states specifically they are not to be viewed as partners. Based on these facts, which of the following statements is true?

Accepted Answer

A)  Chuck, Howard, and Ben are not partners because they do not share profits in proportion to their capital contributions. 
B)  Chuck, Howard, and Ben will not be considered partners because of their express intention in their agreement. 
C)  Chuck, Howard, and Ben are not partners because to be partners they must be professionals, such as dentists, lawyers, or doctors. 
D)  Chuck, Howard, and Ben will be considered partners in the eyes of the law, because they share profits and are involved in the management of the business. 
E)  Chuck, Howard, and Ben will be considered partners, but someone claiming against the partnership will only be able to collect 33-1/3 % from any one partner because of the agreement. 
A)  Chuck, Howard, and Ben are not partners because they do not share profits in proportion to their capital contributions. 
B)  Chuck, Howard, and Ben will not be considered partners because of their express intention in their agreement. 
C)  Chuck, Howard, and Ben are not partners because to be partners they must be professionals, such as dentists, lawyers, or doctors. 
D)  Chuck, Howard, and Ben will be considered partners in the eyes of the law, because they share profits and are involved in the management of the business. 
E)  Chuck, Howard, and Ben will be considered partners, but someone claiming against the partnership will only be able to collect 33-1/3 % from any one partner because of the agreement.

Question 14

Which of the following is true with regard to partnership?

Accepted Answer

A)  The terms of the Partnership Act will be implied in a partnership agreement that includes provisions on the same point. 
B)  A limited partnership is an arrangement in which a partner may limit liability to his capital contribution. 
C)  No partnership can be formed unless the parties intended to create a partnership. 
D)  Sharing gross receipts is sufficient evidence of the existence of a partnership. 
E)  A general partner is not an agent of the firm and the other partners. 
A)  The terms of the Partnership Act will be implied in a partnership agreement that includes provisions on the same point. 
B)  A limited partnership is an arrangement in which a partner may limit liability to his capital contribution. 
C)  No partnership can be formed unless the parties intended to create a partnership. 
D)  Sharing gross receipts is sufficient evidence of the existence of a partnership. 
E)  A general partner is not an agent of the firm and the other partners.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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. Explain the rights of his partners in this situation.

Accepted Answer

He is in the business of practising law

Question 17

Adams was approached by a Mr. McCarthy of XYZ Co., who requested that Adams pay $10,000 to extinguish a debt owed by the partnership of Adams and Jefferson. Adams denied the partnership and the liability. In asserting his claim, McCarthy cited the following facts all of which he could prove. Which of these facts is the strongest evidence of the existence of a partnership?

Accepted Answer

A)  That Adams and Jefferson co-owned property. 
B)  That Adams and Jefferson shared the profits from a business. 
C)  That Adams received a commission from Jefferson based on the sale price of the goods sold by Adams for Jefferson. 
D)  That Adams and Jefferson worked together for a non-profit charity. 
E)  That Adams and Jefferson shared gross returns from a business. 
A)  That Adams and Jefferson co-owned property. 
B)  That Adams and Jefferson shared the profits from a business. 
C)  That Adams received a commission from Jefferson based on the sale price of the goods sold by Adams for Jefferson. 
D)  That Adams and Jefferson worked together for a non-profit charity. 
E)  That Adams and Jefferson shared gross returns from a business.

Question 18

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

Accepted Answer

A)  When an agent fails to act in the best interest of the principal and is an independent contractor, this is just cause for constructive dismissal. 
B)  The agent must never take advantage of the third party. 
C)  The agent may profit at the expense of the principal, if the agent comes into some previously unknown information. 
D)  The principal need not reimburse the agent for any reasonable expenses incurred in the process of performing the agency responsibilities. 
E)  The agent must never compete with the principal. 
A)  When an agent fails to act in the best interest of the principal and is an independent contractor, this is just cause for constructive dismissal. 
B)  The agent must never take advantage of the third party. 
C)  The agent may profit at the expense of the principal, if the agent comes into some previously unknown information. 
D)  The principal need not reimburse the agent for any reasonable expenses incurred in the process of performing the agency responsibilities. 
E)  The agent must never compete with the principal.

Question 19

Joe was a chauffeur, working for Sam. When Joe was taking the car in to have it serviced, he saw a brand new BMW and bought it on behalf of Sam. When he took it home, Sam was upset, explained that he didn't want a new BMW, and told him to take it back. Joe persuaded him to take it for a test drive first. Explain the legal position of the parties.

Accepted Answer

When the principal took the ca

Question 20

Distinguish between a sole proprietorship and a corporation.

Accepted Answer

The sole proprietorship is sim

Explain what is meant by an "enduring power of attorney".

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?

Identify the true statement concerning the law of principal and agent.

An agent contracted with a third party on behalf of a principal, but went beyond both his actual and apparent authority. The third party was never paid. Which of the following indicates the legal position of the third party? (He = third party)

The fiduciary duty of an agent refers to his obligations to act within the limits of his actual or apparent authority.

In Ocean City Realty Ltd. v. A & M Holdings Ltd., what did the Court hold was a key element in the duty of a fiduciary?

What restrictions are there on a principal's right to ratify?

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Explain what must be done to create a limited partnership.

Which of the following is true with regard to partnership?

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

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. Explain the rights of his partners in this situation.

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

Distinguish between a sole proprietorship and a corporation.

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

Exam 11: Agency and Partnership

Explain what is meant by an "enduring power of attorney".

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?

Identify the true statement concerning the law of principal and agent.

An agent contracted with a third party on behalf of a principal, but went beyond both his actual and apparent authority. The third party was never paid. Which of the following indicates the legal position of the third party? (He = third party)

The fiduciary duty of an agent refers to his obligations to act within the limits of his actual or apparent authority.

In Ocean City Realty Ltd. v. A & M Holdings Ltd., what did the Court hold was a key element in the duty of a fiduciary?

What restrictions are there on a principal's right to ratify?

When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party?

Explain what must be done to create a limited partnership.

Which of the following is true with regard to partnership?

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

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. Explain the rights of his partners in this situation.

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

Distinguish between a sole proprietorship and a corporation.

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