Business Law - Chapter 21

What happens if a debt obligation is not repaid?

Why do business people need to determine whether they are entering into a partnership?

What happens to a corporation if a shareholder dies or withdraws from the business?

Those running a sole proprietorship in real estate agents or car dealers are required to obtain a _____

Comes into existence when two or more people carry on business together with a view to a profit

 Business organization law does not address the risks that owners face as a result of actions by managers.

The main disadvantage of a sole proprietorship is that it is complex to set up but easy to conduct.

The termination of a partnership relationship.

In general partnerships, no formalities are required, however, some partnerships may have to obtain a license

All benefits of the partnership business accrue directly to the shareholders

You should Enter the relationship without seeking advice from a lawyer

Under what condition can you be held liable as a partner even if you were not one?

What is the effect of disregarding the corporation's separate existence?

Which legislation governs the creation of corporations in Canada?

Like sole proprietors, partners carry on business on their own behalf

Who is responsible for managing or supervising the management of a corporation?

Default rules: All partners are equal in terms of their financial interest and their rights to participate in management

The main advantage of a sole proprietorship is unlimited personal liability

After incorporation, what determines the governing laws of a corporation?

When does a corporation come into existence?

Focusing on the relationship that owners and managers have with the business and with each other.

When a person starts a business on their own, without adopting any other form of business organization.

Requires a partner to act honestly and in good faith with a view to the best interests of the partnership.

Legal issues concerning the partnership are usually resolved on the basis of both the statute and the ___

When a partner fails to follow the rules and creates a liability to a third party, the firm may still be liable.

Registration creates ownership interest in the business name.

A ____ is a contract between shareholders that customizes their governance agreements

Except in the small partnerships, partners generally delegate certain mgmt. functions to particular partners/committees

The name of a sole proprietorship must be registered if that name is something other than the proprietor’s personal name

When are partners liable for torts committed by their fellow partners?

3rd parties may take all the sole proprietors personal & business assets to satisfy business obligations

All of a partners assets- not just those committed to the business- may be seized to satisfy a partnership obligation

Which of the following is true about the risk borne by partners in a partnership?

A partner who breaches the fiduciary duty must pay any resulting profits to the partnership.

In a general partnership, the most important is the ____

The partnership is legally separated from the partners

Shareholders are said to have unlimited liability as they cannot lose more than they invest in the corporation

If a partnership has a debt or other obligation, each partner is liable to the full extent of the obligation

A partner cannot be employed by the partnership

What must a third party prove to hold a partnership liable for a contract agreed to by one partner?

A partnership agreement cannot be used to manage the risk of liability

What are some risks associated with being a partner in a business?

 Incorporation is often a ____ expensive and ____ effective strategy. 

What are the main filings required to incorporate under the CBCA and similar provincial Acts?

Individual partners are not personally liable for the prof. negligence of their partners & others if obligations are met

For income tax purposes the income or loss from the sole proprietorship is taxed in the hands of the sole proprietorship

A sole proprietor can be an employee of the business because you have the ability to be an employee and manager

What should you do to avoid liability as a partner?

A share of the loss is given to each partner based on the partner’s entitlement to share in the profits of the business

Standard form agreement for the internal org. of a partnership that applies unless the partners agree to other arrangme.

Under sole proprietorship, you can still be liable for the business's obligations- despite dissolving the business.

Which type of shares usually receives fixed dividends and has priority in payment on dissolution?

Risk mgmt., examine the proposed relationship carefully to determine whether you should enter into a partnership

______ set out the fundamental characteristics of the corporation

What might be the financial consequences for someone mistakenly found to be a partner?

Unlike a sole proprietorship and a partnership, a corporation has a separate legal existence.

A judge may allow a creditor to claim directly against a controlling shareholder if the corp. lacks sufficient assets

People may share profits without carrying on business together if employees remuneration varies with the employer profit

Not all partners has access to the partnership books

A partner is entitled to interest on capital that they contribute.

Which of the following indicate the existence of a partnership?

Addresses the risks that other stakeholders experience in their relationships with businesses but only to limited extent

Default rules can be changed, giving partners great flexibility to customize the partnership’s structure to their fit

How is a corporation treated for income tax purposes?

A sole proprietor is exclusively responsible for:

Under provincial partnership statutes, when does a partnership become liable for contracts entered into by a partner?

Corporations incorporated under the CBCA have a right to carry on business throughout Canada, no license is required

At least one general partner (unlimited personal liability) and one limited partner (liability limited partnership cont.

Most law and accounting firms have now become limited liability partnerships

In most corporations, what is the role of shareholders in management?

What is the exception to the rule that any partner can incur liabilities for the partnership?

When are you generally not liable as a partner for partnership liabilities?

In a sole proprietorship, you can enter a contract to employ someone else to cut your neighbor's grass

Each partner has a right to participate in the management of the partnership business.

Each partner shares equally in capital and profits. They must also contribute equally to any losses.

If a partner breaches the agreement, they may need to compensate others for any liabilities paid to a third party.

People may share profits without carrying on business together if a loan is to be repaid out of the profits

Dissolution occurs when a partner dies or becomes insolvent