Question 1

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.

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Question 2

Explain what is meant by limited liability.

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Question 3

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

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Question 4

Distinguish between a partnership and a corporation.

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Question 5

Explain when a group of people would create a society.

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Question 6

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.

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Question 7

A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties.

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Question 8

What are the advantages and disadvantages of being a sole proprietor?

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Question 9

Joe, Sam, and Harry set up an accounting partnership in a small town. Harry, to earn money on the side, did some accounting for friends at night, for which he received a fee. When Joe and Sam found out about this, they demanded that the fees received be paid into the partnership business. Explain the legal position of Harry.

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Question 10

Joe sold Harry his barber shop for $100,000. He was paid $20,000 in cash, the other $80,000 to be paid by Harry giving Joe 20% of the profits of the business until the amount was paid off. Unfortunately, a customer, Sam, was injured by Harry, who managed to cut off Sam's right ear while giving him a shave. Sam sued both Harry and Joe. Explain his likelihood of success.

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Question 11

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

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Question 12

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

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Question 13

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

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Question 14

Joe is a salesman for Harry's Fine Cars Ltd. He had been told specifically that he had no authority to make any sale, take a trade-in, or otherwise deal with the vehicles without the manager's express approval of every deal. Sam, a customer, came in wanting to buy a used Cadillac and agreed to pay the $16,000 asking price. Unfortunately, the manager had left the lot, and so Joe took it upon himself to write up the agreement. When the manager returned, he liked the deal and realized that the customer might change his mind when he realized that the salesman didn't have the authority to bind the seller in contract. Under these circumstances, what could the manager of the car lot do?

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Question 15

"For a partnership to exist, the parties must have consented to its creation." Comment on the accuracy of that statement.

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Question 16

When two people enter into a partnership by agreement but neglect to set out the terms of the agreement, or where the parties becomes partners inadvertently, where are the terms and arrangements of that partnership are set out?

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Question 17

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.

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Question 18

"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.

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Question 19

Explain what is meant by an agent's fiduciary duty. Give three examples of how that fiduciary duty can be breached.

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