For the last 14 months,Greer has been a junior partner in a Vancouver law firm.Until now he was receiving a monthly salary of $5000.Senior partners have just decided to stop all salaries because of a pending lawsuit against the firm.It was determined the firm would not make profits for at least the next eight months.Is the firm obliged to continue Greer's salary?

Question

Quizplus · Accepted Answer

As a junior partner, Greer's salary is not guaranteed and can only be paid out of profits. Since the firm has determined that there will be no profits for at least eight months, they are not obligated to continue paying his salary. This is in line with the first statement, which indicates that Greer's salary had been paid for the last 14 months, presumably out of profits made during that time. Option B is incorrect, as salaries are not the first call on a firm's profits, but rather an expense that comes off before profits are calculated (as stated in option D). Option C is not relevant to the question, as the doctrine of frustration refers to situations where unforeseeable events make it impossible to perform a contract, which is not the case here. Option E is also irrelevant, as an employee's personal circumstances do not factor into the legal obligation of the firm to pay salaries.

For the Last 14 Months,Greer Has Been a Junior Partner