20 Questions
In a limited partnership, the liability for loss of a limited partner...
does not extend beyond his or her capital contribution
What distinguishes a limited liability partnership (LLP) from a regular partnership?
Individual partners are not liable for the negligent acts of the other partners
What is a requirement for the registration of partnerships in Canadian provinces and territories?
Most require it if the partners are carrying on business under a name other than their own
What triggers the dissolution of a partnership?
One partner's behavior being prejudicial to the business
What is a joint venture?
An utmost good faith relationship arising by contract when two or more businesses undertake a special project together
What is a limited partnership?
A special form of partnership requiring at least one general partner but allowing one or more limited partners
What may lead to a limited partner being deemed as a general partner by a court?
Participating in the management of the business
What is the consequence of a limited partner placing their name on the firm letterhead?
They may be deemed a general partner by a court
What is the main reason for licensing of services?
To ensure the qualifications of those offering services to the public
What is a key risk for sole proprietors?
Personal assets being vulnerable to business debt
What is the primary goal of an agency relationship?
Negotiation of contracts between the principal and third parties
What duty does an agent have in an agency relationship?
Obedience of lawful instructions and duty of confidentiality
How may an agency relationship be created?
By words or conduct, creating an agency by conduct or estoppel
In what situation may an agency of necessity be created?
In an emergency to prevent a loss
When is a principal liable to third parties?
In cases where the agent is acting within their authority
How can an agency be terminated?
After a specified time, by notice, by incapacity, or by completion of a particular task
What is a partnership?
Relationship between two or more persons who carry on business together with a view to profit
What is a key characteristic of a sole proprietorship?
One owner who is responsible for all debts and entitled to all profits
What is the role of an agent in a business context?
Acts on behalf of a principal, usually according to an agent-principal contract for service
Why are business structures highly regulated?
Even the simplest ones must comply with regulations and licenses
Study Notes
Business Structures and Legal Relationships
- Business structures are highly regulated, even the simplest ones must comply with regulations and licenses.
- Sole proprietorship has one owner who is responsible for all debts and entitled to all profits.
- Licensing of services is required to ensure the qualifications of those offering services to the public.
- Sole proprietors have personal risk as their personal assets are vulnerable to business debt.
- An agent acts on behalf of a principal, usually according to an agent-principal contract for service.
- The goal of an agency relationship is usually the negotiation of contracts between the principal and third parties.
- An agent has several duties, including obedience of lawful instructions and duty of confidentiality.
- An agency relationship may arise by words or conduct, creating an agency by conduct or estoppel.
- An agency of necessity may be created in an emergency to prevent a loss.
- A principal is liable to third parties in cases where the agent is acting within their authority.
- An agency may be terminated after a specified time, by notice, by incapacity, or by completion of a particular task.
- Partnerships are relationships between two or more persons who carry on business together with a view to profit.
Test your knowledge of business structures and legal relationships with this quiz. Explore the regulations and licenses involved in different business structures, the responsibilities of sole proprietors, the role and duties of agents, and the liability of principals in agency relationships. Learn about partnerships and their significance in business operations.
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