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1 / 1 point
What is the term for a third party with whom an agent
conducts business on behalf of a principal?

  agent

  defendant

  outsider

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1 / 1 point
It is possible to form an agency relationship by words or
actions.

  True

  False

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1 / 1 point
Which of the following occurs when a person represents
himself as another's agent, even though he is not, and the
purported principal then adopts the acts of the "agent"?

  implicated authority

  actual authority

  agency by ratification
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0 / 1 point
One aspect of an agent's fiduciary obligation is

  the agent cannot act for two principals that compete with each

  the agent cannot act for two principals even when these princi

  the agent cannot have another job

  the agent must pay the principal for the principal's out of pocke

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1 / 1 point
Which of the following is required to establish an agency
relationship?

  a wide array of transactions

  dealing with the cornerstone of a business

  a delegation of authority

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0 / 1 point
Which statement best describes franchise agreements in
Canada?

  Franchisors owe fiduciary obligations to franchisees.

  Franchises are unregulated in Canada.

   Franchisors owe a duty of good faith and fair dealing to franchi

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0 / 1 point
Double taxation, is most likely to affect which of the
following business structures?

  sole proprietorship

  partnership

  corporation

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0 / 1 point
If a Sole Proprietor breaches a contract

  his potential liability is restricted to what he invested in the bu

  the other party may claim against the sole proprietor's persona

  his potential liability is limited to the value of the business

  the sole proprietorship can get sued but not the sole proprietor

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0 / 1 point
What is one way that a partnership can come to an end?

  breach of warranty of authority

  one partner giving notice to the others of his intention to disso

   the failure to pay annual registration fees with the appropriate

  the sale of any of the partnership assets

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The share structure decided prior to corporation can refer
to the number and (A. selection / B. class) of shares.

  Selection

  Class

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Under what circumstances would a court "lift the corporate
veil"?

  where the corporation has committed a criminal offence

  where the corporation is a "mere facade" concealing the true f

  where there are fewer than 50 shareholders

  where the corporation's shares are traded on the stock exchan

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Isabella and Emily both attended a recent seminar for
directors regarding corporate governance. The seminar
focused on the recent departure of certain courts from the
traditional shielding of directors from personal liability
where their actions were taken in furtherance of their
duties to the company and their conduct was justifiable.
What type of liability are Emily and Isabella concerned
with?

  liability in tort

  liability in contract

  statutory offence liability

  criminal offence liability

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Which of the following would a risk manager indicate as
being a key point with respect to managing agency
relationships?

  Choosing to avoid conflicts of interests is an agent's duty.

  Choose wisely, instruct carefully, and review regularly.

  Fiduciary duties must be specified in the agency agreement.

  Fiduciary duties are automatically owed to the principal.

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The principal's duties to an agent are normally set out in
the contract. What obligations do these contracts usually
contain?

  a duty to reimburse the agent for reasonable expenses associa

  a duty to ratify all contracts entered into by the agent

  a duty to make full disclosure to the agent

  a duty to give notice to third parties of the principal and agent

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Which of the following is considered, as a general rule, to
be within the scope of an agent's fiduciary duties?

  full disclosure of acceptance of each secret commission and p

  absolute prohibition against acting for two principals

  sending a client's file for storage with an outside storage facili

  personal interests supersede the interests of the principal

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0 / 1 point
Which statement best describes the principal and agent
relationship?

  The onus is on the third party to ensure the agent is acting wit

  The principal can be liable even if the agent exceeds his autho
   The principal is always protected from vicarious liability of an a
employee.

  The principal will not be bound by contracts in which the agent

into the contract on behalf of the principal.

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1 / 1 point
Which of the following employees is mostly likely an agent
on behalf of their employer?

  custodian

  sales clerk

  typist

  maintenance worker

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1 / 1 point
Which of the following may result in a loss of limited
liability in a corporation?

  employee misrepresentation of a product

  employee negligence

  fraud on creditors

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1 / 1 point
Which of the following will be most influenced by
restrictions contained in the incorporating documents or by
a shareholders' agreement?

  transfer of ownership of shares

  voluntary surrender of legal status

  general application laws

  perpetual existence of the entity

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1 / 1 point
Which of the following forms of business organization
provides the most flexibility but also the greatest liability
risk for the owner?

  partnership

  sole proprietorship

  joint venture

  corporation

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1 / 1 point
Shareholders (A. have the right to/ B. may receive)
dividends if the corporation is profitable.

  have the right to

  may receive
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0 / 1 point
A corporation may be incorporated federally (A. only / B. or
provincially).

  only

  or provincially

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0 / 1 point
Of the 1000 issued and outstanding common voting shares
of Trunda Adventures Corp., Isaac holds 501, Marielle holds
250, and Lorenzo holds the remaining 249.Which of the
following rests ONLY with Isaac based on this
arrangement?

  the right to ask questions

  the right to attend meetings

  the right to control the company

  the right to introduce motions

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The (A. common / B. preferred) shares of a corporation
typically carry the priority right to the distribution of
dividends and the proceeds on dissolution.

  common

  preferred

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1 / 1 point
In what way are an agent's actual authority and an agent's
apparent authority similar?

  Both must be expressed in writing.

  Both bind the principal.

  Both are defined by statute.

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0 / 1 point
Jack sent a cover letter with his new purchasing agent,
Kuan Huo, advising suppliers of Kuan's authority to
transact purchases under $33 000. How would a court
considering a dispute in which a plaintiff alleges Kuan had
apparent authority to enter into a $42 000 purchase
contract most likely resolve this dispute?

  Deny the third party's claim based on the principal's stated lim

  Deny a first-party claim on the grounds it ought to have known

   Deny the outsider's claim based on the agent's unenduring auth

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0 / 1 point
Conducting business with the use of an agent

  is usually the last option of a business owner

  is too risky to be used other than in emergency situations

  is an efficient way for the business owner to conduct business

  requires that the agency agreement be approved by the courts

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0 / 1 point
Which of the following exemplifies the liability of an agent
who acts without authority and contracts with a third
party?

  The third party is liable to the principal for breach of warranty

  The principal is liable to the agent for breach of agency by ratif

  The agent is liable to the third party for breach of warranty of a

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0 / 1 point
What constrains a lawyer's ability to place herself in a
position where her own interests conflict with the interests
of the principal?

  a profit rule
   a trust rule

  a constraint rule

  a conflict rule

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1 / 1 point
The directors of a corporation

  are agents of the corporation

  manage the day to day affairs of the corporation

  are liable for the debts of the corporation

  must own shares in the corporation

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0 / 1 point
Which of the following would most likely be a requirement
of provincial legislation with respect to a limited liability
partnership?

  liability insurance to compensate victims for loss

  the use of "limited partnership" or "LP" in the firm name

  access to partners' personal assets to satisfy claims

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1 / 1 point
Ellayne manages a busy law practice as a sole practitioner.
Which of the following is a major risk of Ellayne's choice of
business form?

  complications arising from the inability to contract for employee

  adverse affects of illness or incapacity

  complications arising from the hiring and firing of employees

  adverse affects of taxation of profits

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0 / 1 point
Which of the following is a distinguishing feature of a
limited partnership?

  The liability of each partner is limited to their capital contribut

  The liability of some partners is limited to their capital contribu

  Limited partners may participate in the day-to-day managemen

  Limited partnerships are only available to professionals.

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0 / 1 point
A corporation comes into existence

  upon the shareholders entering into a comprehensive sharehol

  upon the shareholders carrying on business with the goal of sh

   upon the corporation starting the carry on business

  upon the registration of the required corporate documents with

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1 / 1 point
Which of the following is NOT normally a source of personal
liability for a director of a corporation?

  unpaid employee wages

  unremitted taxes

  failure to maintain health and safety standards

  contracts entered into by the corporation

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0 / 1 point
What is the legal term for the corporate practice of paying
the litigation expenses of officers and directors for
lawsuits related to corporate affairs?

  compensation

  indemnification

  ratification

  surety
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0 / 1 point
Although Geraldine's job title at a local car dealership is
"sales director," in reality, all car deals must be approved
by the dealership's owner. One day, Geraldine exceeded
her authority and approved a sales contract when the
owner was away. Why might the contract be binding on the
dealership?

  because she was acting with apparent authority

  because the owner wasn't there to stop her

  because she had authority

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0 / 1 point
An agent who has been given permission to "download
responsibility for performance" (A. is / B. is not) required to
personally perform the obligations arising from the agency
relationship.

  is

  is not

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1 / 1 point
An agent (A. sometimes / B. automatically) owes a fiduciary
duty to his principal.

  sometimes
   automatically

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0 / 1 point
Which of the following is an example of a fiduciary duty
owed by an agent to a principal?

  duty to avoid conflicts of interest

  duty of personal performance

  duty to ratify on behalf of the principal

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0 / 1 point
Sherif is the general manager of a clothing store. His
authority to hire an electrician to repair a faulty light in the
store would likely arise from which of the following?

  personal care power

  his implied authority

  his fiduciary duty

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0 / 1 point
Joint and several liability of partners means:

  partners must agree to divide profits and liabilities equally

  partners will never become liable for more than their stated sh
   the partners cannot agree to divide liabilities unequally

  one partner can be held liable for all of the debt of the partners

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0 / 1 point
A sole proprietorship is created when the person operating
the business:

  registers the business with the appropriate government agency

  incorporates

  commences to operate the business

  starts to make a profit

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0 / 1 point
Raven and Dita operate Read4Life, a reading tutor service.
They have pooled their resources and are carrying on
business together with the hope of turning a profit. In law,
how is their business relationship characterized?

  limited partnership

  sole proprietors

  general partnership

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1 / 1 point
Which of the following statements best describes how a
partnership comes into existence?

  The partners must sign a written partnership agreement.

  The partners must register the partnership.

  Two or more people carry on business together with a view to p

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1 / 1 point
A corporation can be funded by (A. equity / B. other
corporations) or through debt, i.e., borrowing funds.

  equity

  other corporations

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The exercise of care, diligence, and skill in the
performance of their duties (A. is / B. is not) usually enough
to reduce the exposure to personal liability that corporate
directors face.

  is

  is not

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What is the legal term for the corporate practice of paying
the litigation expenses of officers and directors for
lawsuits related to corporate affairs?

  compensation

  indemnification

  ratification

  surety