Question 1

The fiduciary must comply with the spirit of the obligations owed by it and not merely the letter.

Accepted Answer

A fiduciary must act in the best interest of the beneficiary, adhering not just to the specific terms of their obligation but also to the underlying principles and intentions, ensuring the beneficiary's interests are prioritarily served.

Question 2

LLPs protect individual partners from personal liability for negligence committed by another partner in the firm,so long as the partner did not know about the negligence or participate in the work that was done negligently.

Accepted Answer

In a Limited Liability Partnership (LLP), individual partners are protected from personal liability for the negligent acts of other partners or employees not under their direct control, provided they themselves did not participate in or have knowledge of the negligence. This structure allows partners to be shielded from joint liability for the misconduct of others in the firm.

Question 3

In very limited circumstances,a professional duty of confidentiality must be violated when a patient tells her doctor that she is going to either hurt herself or intends to cause harm another.

Accepted Answer

Healthcare professionals have a duty to breach confidentiality if they believe a patient poses a risk of serious harm to themselves or others, as part of their duty to protect the patient and the public.

Question 4

Although courts have traditionally denied the claims of third parties who suffered an economic loss as a result of the reliance on a professional's negligent misstatements,modern public intolerance of white collar crime has begun to override the court's underlying policy of protecting the professions.

Accepted Answer

Modern public intolerance of white-collar crime has led to a shift in legal perspectives, allowing courts to reconsider and sometimes allow claims from third parties affected by professional negligence.

Question 5

In the case of a negligently prepared audit,a reasonably foreseeable use and reliance by a number of individual third parties establishes that the professional's duty of care exists.By applying the judiciary's imposed policy considerations at the second step of the test,the court is able to shield the professional from liability by limiting the use of the audit to its statutory purpose.

Accepted Answer

The statement reflects the principle that while a professional (such as an auditor) owes a duty of care to those they could reasonably foresee as relying on their work, courts can limit the scope of this duty based on policy considerations. This includes restricting the auditor's liability to the audit's statutory purposes, thereby protecting professionals from extensive liability to an indeterminate class of users.

Question 6

Professionals who are employees are governed by the basic principles of employment law.

Accepted Answer

Employment law governs the rights and duties between employers and workers, including professionals who are employees, ensuring fair treatment, workplace safety, and proper compensation.

Question 7

The recent removal of interprovincial barriers to professional practice will only prove themselves to be beneficial to Canadian society if the professionals are actually competent with various differing legal procedures,forms,and laws in each of the provinces the professional purports to practise in.

Accepted Answer

Removing interprovincial barriers allows professionals to practice across provinces, but their effectiveness and the benefits to society depend on their competence with the specific legal and procedural differences in each province. Without this knowledge, the quality of service could be compromised.

Question 8

Lawyer-client privilege belongs to the client-not the lawyer-and can only be waived by the client.

Accepted Answer

Lawyer-client privilege is a legal concept that protects the confidentiality of communications between a lawyer and their client. It is the client's right to waive this privilege, not the lawyer's, because the privilege is designed to encourage open and honest communication between the client and their legal counsel.

Question 9

In general,an auditor does not owe a duty of care to persons other than its client.

Accepted Answer

An auditor's primary responsibility is to their client, and they typically do not owe a duty of care to third parties unless specific circumstances or legal obligations extend that duty.

Question 10

Where shareholders have detrimentally relied on a negligently prepared professional audit to make investment decisions,their only recourse against the professional is their indirect right to bring a derivative action on behalf of the company.

Accepted Answer

Shareholders cannot sue the auditor directly for negligence, but they can bring a derivative action on behalf of the company.

Question 11

LLPs protect individual partners from personal liability for negligence committed by another partner in the firm.

Accepted Answer

In a Limited Liability Partnership (LLP), individual partners are protected from personal liability for negligent acts committed by another partner or employees not under their direct supervision, allowing only the partnership's assets to be used for settling such claims.

Question 12

Self regulating professions are empowered by special statutes to create a governing body for themselves and to specify when individuals may represent themselves as being qualified to practise in a particular province.

Accepted Answer

Self-regulating professions are granted authority through legislation to establish their own regulatory bodies, which set the standards for who can practice the profession within a specific jurisdiction, ensuring that only qualified individuals represent themselves as such.

Question 13

Professionals are subject to criminal prosecution in addition to discipline from their professional body if their misconduct constitutes a criminal offence.

Accepted Answer

Professionals can face both disciplinary action from their professional regulatory body for breaches of professional standards and criminal prosecution if their actions constitute a criminal offense under the law.

Question 14

The essence of the professional-client relationship is fiduciary.

Accepted Answer

The essence of the professional-client relationship is fiduciary because it is based on trust, with the professional acting in the best interest of the client.

Question 15

Most Canadian professions are regulated by government agencies.

Accepted Answer

Most Canadian professions are self-regulated by professional bodies rather than directly by government agencies, although they must adhere to government legislation and standards.

Question 16

The self regulating model applied to professions has come under attack for its alleged failure to protect the public interest by the sacrifice of professional accountability in favour of self interest and protection of members.

Accepted Answer

The self-regulating model for professions has been criticized for prioritizing the interests and protection of its members over public interest and accountability, leading to concerns about its effectiveness in safeguarding the public.

Question 17

If a contract price is not stated in a professional services contract,the principle of quantum meruit will be deemed to be inapplicable.

Accepted Answer

Quantum meruit is a principle that allows a party to recover the reasonable value of services provided when a contract does not specify a price, making it applicable even when a contract price is not stated.

Question 18

Where professional incorporation is allowed,it typically does not protect the professional from the liability of greatest concern-personal liability for negligence.

Accepted Answer

The answer of Where professional incorporation is allowed,it typically does...

Question 19

When shareholders use audited statements as the basis for their investment decisions,court imposed policy has shaped the law to consider this use outside the intended statutory purpose of the audit.In so doing,the courts have allowed the professional to be released from any duty of care to these individuals for any investment losses incurred as a result of relying on the audit.

Accepted Answer

The first line of the given text states that "When shareholders use audited statements as the basis for their investment decisions, court imposed policy has shaped the law to consider this use outside the intended statutory purpose of the audit." This means that the courts have allowed shareholders to use audited statements for purposes other than what they were originally intended for, such as making investment decisions.

Question 20

Professional service contracts define the parameters of the work that professionals are engaged to do,provided all essential terms have been included in the agreement at the time it was created.

Accepted Answer

Professional service contracts indeed define the parameters of the work that professionals are engaged to do, ensuring that all essential terms are included in the agreement at the time it is created to provide clarity and set expectations for both parties involved.

Quiz 22: Professional Services