Question 1

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

Accepted Answer

The answer of "An agent is free to withhold information...

Question 2

How is an agency relationship created?

Accepted Answer

The answer of How is an agency relationship created?...

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

The answer of Explain what a retiring partner should do...

Question 5

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

Question 6

In which one of the following situations is the principal not responsible for the conduct of his agent?

Accepted Answer

A)  When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an independent agent. 
B)  When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an employee of Ace. 
C)  In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an employee of Ace. 
D)  In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an independent agent. 
E)  When driving the employer's car to sell vacuums to a customer, Joe hit a pedestrian. Joe was an employee.

Question 7

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?

Accepted Answer

A)  Jones has no responsibility; the money he makes by this extra work is his. 
B)  If Jones did not have the consent of his partners, Jones must pay over all the money he makes through his business at home to the partnership. 
C)  If Jones is a 1/3 partner in the law firm, he need only pay over 1/3 of what he makes. 
D)  Such conduct will automatically dissolve the partnership, but he can keep what he has made. 
E)  Jones has a duty to tell the other partners, but the money is his and he can keep up the extra work regardless of the other partners' consent.

Question 8

With regard to liability of partners, which of the following is true?

Accepted Answer

A)  A limited partner has unlimited liability beyond the amount of his initial investment. 
B)  A general partner could not be liable for losses suffered by a client because of misapplication of funds unless he knew about or took part in the misapplication. 
C)  A general partner who retires from the partnership by giving notice of his leaving to the other partners could still be found liable for debt pursuant to a contract made when he was a partner. 
D)  A general partner has limited liability for any loss suffered because of the negligent act (e.g., omission) of one of her partners. 
E)  The partnership, and thus the partners, are liable for any loss suffered because of a tort committed by its employee outside the course of his employment.

Question 9

A ________ process for sole proprietorships is used to control or restrict certain types of businesses, such as door-to-door sales, credit information services, moneylenders, hotels, and cabarets.

Accepted Answer

A)  licensing 
B)  business activity 
C)  liability 
D)  finance 
E)  risk management

Question 10

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.

Accepted Answer

The answer of Joe is in the process of assembling...

Question 11

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

Accepted Answer

The answer of Discuss the extent of the obligations of...

Question 12

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

Accepted Answer

The answer of For an agency agreement to be binding...

Question 13

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

Accepted Answer

The answer of Explain how the principle of estoppel can...

Question 14

The requirement of unanimous consent protects partners.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true in respect of limited liability partnerships (LLPs)?

Accepted Answer

A)  Historically, professionals have relied primarily on incorporation for carrying on business. 
B)  Provincial limited liability partnership legislation has been introduced in various jurisdictions across Canada. 
C)  Professionals are prohibited from operating under a limited liability partnership. 
D)  The main advantage to those carrying on business as an LLP is that potential liability is limited for torts, for breach contract, and for breach of trust. 
E)  Unlike limited partners, those operating through LLPs are not burdened with limitations with respect to naming, registration, or other requirements.

Question 16

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

Accepted Answer

The answer of Explain what is meant by an "enduring...

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

If an agent breaches his duty to his principal, his principal can sue the agent successfully for

Accepted Answer

A)  breach of warranty of authority. 
B)  breach of the agency agreement. 
C)  breach of agency act. 
D)  wrongful representation. 
E)  the tort of deceit.

Question 19

Three students in a business faculty created a computer program that compared various retirement plans. They decided to go into business together to offer their services directly to the public. After doing a feasibility study, they felt there were profits to be made. For tax reasons, they decided not to incorporate. Each contributed $15,000 and Wayne, one of the three, contributed a computer. In a short written agreement, they agreed that all three would be actively involved in the management of the business, that all three would work to update the program, that they would share the profits equally, and that they should not be viewed as partners. Based on these facts, which of the following statements is true?

Accepted Answer

A)  They are not partners because they do not share profits in proportion to their capital contributions. 
B)  They would be considered partners despite their express intention to the contrary in their agreement. 
C)  They are not partners unless they realize a profit from their enterprise. 
D)  If one partner dies, the partnership would be dissolved even if they state otherwise in their agreement. 
E)  If Wayne were to go bankrupt, the partnership would be dissolved even if they state otherwise in their agreement.

Question 20

"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.

Accepted Answer

The answer of "As in other forms of business, when...

Exam 10: Agency and Partnership

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

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 she is no longer liable for the company's obligations.

In which one of the following situations is the principal not responsible for the conduct of his agent?

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?

With regard to liability of partners, which of the following is true?

A ________ process for sole proprietorships is used to control or restrict certain types of businesses, such as door-to-door sales, credit information services, moneylenders, hotels, and cabarets.

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

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

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

The requirement of unanimous consent protects partners.

Which of the following is true in respect of limited liability partnerships (LLPs) ?

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

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

If an agent breaches his duty to his principal, his principal can sue the agent successfully for

"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.