Question 1

A limited liability partnership involves:

Accepted Answer

In a limited liability partnership (LLP), partners are not personally liable for the negligence or misconduct of other partners, protecting them from personal losses due to another partner's actions.

Question 2

Virginia hires John as her agent to buy supplies. Byron contracts to send supplies to Wolf through John, knowing John is an agent. The supplies are sent but not paid for so Byron wants to sue on the contract. Which of the following statements is true?

Accepted Answer

Byron has a contract with Virginia only because John was acting as an agent for Virginia, and Byron knew John was an agent. Therefore, the principal (Virginia) is liable for the contract.

Question 3

Caterina Valente is given a job as a buyer in a department store. While nothing is specifically said to Caterina, a buyer normally has authority to act as agent for the business. What is this type of authority called?

Accepted Answer

Apparent authority occurs when a third party reasonably believes that an agent has authority to act on behalf of the principal, even if the agent does not have express authority. In this case, Caterina's role as a buyer typically implies she has the authority to act as an agent for the store.

Question 4

Howe, Hardy, and Harkins, a law firm in Alberta, decides to register as a limited liability partnership. Which of the following is TRUE?

Accepted Answer

A limited liability partnership (LLP) is a type of partnership in which the partners are not personally liable for the debts and liabilities of the partnership. This means that Howe will not be liable for the negligence of Hardy and Harkins. The firm will also be able to refer to itself as Howe, Hardy, and Harkins, LLP.

Question 5

Sara Vaughan told her tenants that her son would collect rents while she was in Florida. The son did collect the rents in October, November, and December. At Christmas Sara returned home and told her son that she would collect the January rents. The son went first thing in January, before the tenants knew Sara had returned, and collected the January rents. Will the tenants have to pay twice?

Accepted Answer

The son had apparent authority because the tenants were not informed of any change in the arrangement, so they reasonably believed he was still authorized to collect the rent.

Question 6

Kevin, a contractor, was advised by several persons in his community that Toby had been representing himself around the town, as being Kevinʹs agent and authorized to make home renovation contracts on his behalf. Kevin had in fact not authorized Toby to make these representations on his behalf but did nothing to address the situation. Two weeks later, Myra a homeowner, advised Kevin that she had made a contract to renovate her home with him through Toby and that if he did not carry out the work, she would take legal action against him. Which of the following statements is TRUE?

Accepted Answer

Kevin is estopped from denying the contract because he did not take action to correct Toby's false representation, leading Myra to reasonably believe Toby had authority.

Question 7

Sara Vaughan told her tenants that her son would collect rents while she was in Florida. The son did collect the rents in October, November, and December. At Christmas Sara returned home and told her son that she would collect the January rents. The son went first thing in January, before the tenants knew Sara had returned, and collected the January rents. What is the name of the type of authority given to the son when he collected the rents in October, November, and December?

Accepted Answer

The son had express authority to collect rents in October, November, and December because Sara Vaughan explicitly told her tenants that her son would collect the rents during her absence.

Question 8

Mumtaz, Badia and Ilya are partners in a business partnership, called MBI. Mumtaz contributes $15,000 to the business, Badia contributes $10,000 and Ilya contributes $5,000. There is no agreement of how they will share partnership profits and losses. In addition, the partnership borrows A $30,000 from the bank. The business doesn't work out, and MBI is unable to repay the loan. The bank sues Mumtaz personally. The amount Mumtaz can legally recover from Ilya is:

Accepted Answer

The answer of Mumtaz, Badia and Ilya are partners in...

Question 9

Which of the following statements respecting a limited partner is TRUE?

Accepted Answer

A limited partner is often referred to as a silent partner because they do not have a role in the day-to-day management of the business. Additionally, a limited partnership typically must be registered to provide legal recognition and protection.

Question 10

A Court may make an order dissolving a partnership on which of the following grounds?

Accepted Answer

A court may dissolve a partnership if the business conducts illegal activities, if a partner becomes mentally incompetent, if dissolution is equitable, or if the business is continually operating at a loss.

Question 11

Kevin, a contractor, authorized Toby to conclude contracts for home renovation on his behalf. Each time Toby met with a potential customer, he would advise the customer that he was acting on behalf of Kevin. Toby concluded a contract with Myra to renovate her home for $1,000. On finding out about the contract, Kevin refused to carry out the renovation as he believed that the price agreed upon was too low. Which of the following statements is TRUE?

Accepted Answer

Since Toby was acting as Kevin's authorized agent and disclosed this to Myra, the contract is binding on Kevin. Therefore, if Kevin refuses to perform, Myra can sue him for breach of contract.

Question 12

John Elliott and James Gardiner form a partnership to buy, repair and sell used cars. John is to do all the work; James supplies $10,000. They sign a limited partnership agreement limiting James's liability to $10,000 but do nothing else with the agreement. Which of the following statements is true?

Accepted Answer

James's liability could be limited, but the failure to publicly register the limited partnership makes the limitation ineffective.

Question 13

Which of the following would be the appropriate name for a limited liability partnership?

Accepted Answer

A limited liability partnership (LLP) is a type of business structure that provides limited liability to its owners, meaning that they are not personally liable for the debts and obligations of the business. The name of an LLP must include the letters "LLP" to indicate its status as a limited liability partnership.

Question 14

Alf and Liz set up a partnership to manufacture plastic containers for washing golf balls. They needed $30,000 capital to purchase the machinery. On December 27, Jeff put $30,000 into the partnership for purchasing the machinery on the understanding that he would be a limited partner. Liz was to register the limited partnership but with the New Year and a week's holiday she didn't have an opportunity to do the actual registration until January 15. On January 6, Alf purchased the machinery but decided on an upgraded machine at $50,000. In February, when payments on the machine stopped, the vendor sued Jeff for $25,000, being the balance owing on the purchase contract. In this situation, Jeff would be responsible for which of the following amounts?

Accepted Answer

Jeff is responsible for $25,000 because the limited partnership was not registered at the time of the purchase, making him liable as a general partner.

Question 15

Which of the following is NOT a duty imposed by the law on an agent:

Accepted Answer

The answer of Which of the following is NOT a...

Question 16

Joan Laxton, a real estate agent, listed a house on behalf of Max Patel, the owner. Joan secretly bought the house through her corporation, HerSelf Co., and resold it at a $20,000 profit. These acts by Joan are a beach of which of the following?

Accepted Answer

Joan's actions are a breach of fiduciary duty because, as a real estate agent, she has a duty to act in the best interests of her client, Max Patel, and not for her own personal gain.

Question 17

Brant Ranger, Paula Potts and Matthew Lane are all tax lawyers and partners in Ranger Potts & Lane LLP. They practiced together and were successful for many years before the partnership ran into difficulties. Lane was retained by Phillip Schooner, a wealthy client. Lane acted negligently for Schooner in several income tax transactions which breached the Income Tax Act and caused millions of dollars in losses to Schooner. Schooner brought a legal action over this. Which of the followings statements is TRUE? Schooner can claim against

Accepted Answer

In a limited liability partnership (LLP), the firm's assets and the personal assets of the partner who acted negligently (Lane) can be claimed against, but not the personal assets of the other partners.

Question 18

A limited partnership may have:

Accepted Answer

A limited partnership must have at least one general partner and at least one limited partner.

Question 19

Barbara Brown has hired Gerry Grey as her agent to purchase used machines for a manufacturing plant with instructions not to pay over $10,000 per machine. Gerry makes it clear that he is acting as agent for Barbara and makes a contract to purchase a machine for $15,000 from Rick Redd. When Barbara learns of it, she wants to cancel the contract. Which of the following statements is TRUE?

Accepted Answer

An agent's authority can be limited by the principal, but such limitations are not effective against third parties who have no knowledge of them.

Question 20

Carol Perez was a partner in the accounting firm of Lee, Park and Perez LLP. Carol defrauded a client of $3,000,000. If the client successfully sued for fraud, the client can claim against

Accepted Answer

In a partnership, all partners are jointly and severally liable for the actions of any partner, meaning the client can claim against the firm's assets and all partners' personal assets.

Quiz 9: The Organization of a Business