Quiz
Law
This quiz has question types that open in the usual player.
Questions in this quiz (37)
1 If people act as though they are in partnership before a written agreement is signed, will partnership will be found?
- ATrue
- BFalse
2A written partnership agreement may have been signed but, if the people have failed to act on that agreement, no partnership will be found.
- ATrue
- BFalse
3A written partnership agreement may have been signed but, if the people have [blank_start]failed[blank_end] to act on that agreement, no partnership will be found.
- Afailed
4Khan v Miah (2000)
4 people agreed to run an Indian restaurant and takeaway business. After time and money spent (equipment, bank loan to purchase premises), Relationship between parties turned sour and ended.
Was partnership formed?- ANO partnership had been formed, was no business run, no food to be ordered and no customers to serve.
- Bthere WAS a partnership created. Intended partnerships business was operation of restaurant and takeaway bar, once the assets had been acquired, money spent or liabilities incurred in carrying out business, partnership will have commenced.
5Definition of partnership:
'Partnership is the relation which exists between persons carrying on a business [blank_start]in common[blank_end] with a view of [blank_start]profit[blank_end];- Ain common
- Bprofit
6Frazer Edmiston Pty (plaintiff) v AGT (defendant) (Qld) Pty Ltd (1988)
Facts:
- Plaintiff had priority to lease a desirable shop. To secure lease plaintiff needs to return signed letter of acceptance. Before the plaintiff could do this, he entered into negotiations with the defendant to form a partnership retailing sunglasses. During negotiations plaintiff left letter with defendant, who signed it and sent back to landlord, thus taking over the lease.
Defendant refused to enter into the partnership with plaintiff
Issue:
Was a partnership formed?- APartnership not-created, the defendant was found to be in a fiduciary relationship with the plaintiff.
- BPartnership was created, the defendant was found to be in a fiduciary relationship with the plaintiff.
7Fiduciary Duties
Involving trust in the partnership
Each partner must:- Aprovide full accounts and information
- BAccount for private profits
- Ccompete with partnership
- Dcannot carry on business of the same nature which competes with partnership
- Emake private or secret profits
8Gallagher v Schulz (1988)
Facts:
- Defendant (schulz) entered into partnership with Mrs Gallagher for the construction of 2 flats on Mrs Gallagers land.
- Schulz due to his property experience agreed to manage the construction of the flats.
Issue:
Was there a fiduciary relationship?- ATrue
- BFalse
9Chan v Zacharia (1984)
Facts:
- 2 doctors in partnership.
- After partnership dissolved lease on premise came up for renewal.
- One partner renewed the lease in his own name.
Issue:
Could one of the partners renew the lease for the valuable property for them-selves?- ATrue
- BFalse
10Determining if there is a partnership
- ACo-owning property is not a partnership it is common for two people to own a house and not make a profit.
- BSharing of gross returns end of year split profits
- CShare of profit or a payment which is contingent on the profits of the business does not make that person a partner.
- DA creditor will only get their loan back plus a set rate of interest, partner will obtain a lot more.
- Ereceive share of profit from the business
11Section 8 proves that the partner in the partnership are not liable for the acts of every partner if the partner was caring on the partnership the usual course of business.
- ATrue
- BFalse
12Partnership and co-partners will not be liable for the unauthorised act of the errant partner if:
- AThe third party with whom the partner was dealing knew that the person had no authority.
- BThe third-party did not know the partner was in fact a partner.
- CThe third party knew the person had no authority and was not a partner.
13Section 13 if a partner well acting in the ordinary course of the firm's business with the current partners authority causes a loss or injury to a third party or incurs a penalty, The firm [blank_start]will be liable.[blank_end]
- Awill be liable
14Are the partners liable?
- AMinor negligence acts that occur because lack of partnership skill or experience in the areas
- BGross negligence
15Technical dissolution:
- APartner dies or retires.
- BPartner becomes bankrupt or becomes illegal
- CExpiry of time, completion of a single adventure, or by agreement
16Dissolution of partnership:
Expulsion of a partner, how?- AWith express power, have to give chance to explain themselves
- BNo longer trust the partner
17Partnerships assets distributed:
1. Pay creditors.
2. Pay [blank_start]partners advances[blank_end].
3. Distributing anything that is left after this to the partners in the same proportions as they were entitled to share profits- Apartners advances
18If insufficient partnership asset to meet creditor’s claims losses made by:
- Aprofits from the partnership.
- BCapital of partnership.
- CPartner shares from profits.
- DTrust accounts that partners assets are in.
- EFrom partners spouses and or family.
19Woods V fresher foods Ltd
Facts:
• Woods ceased working in the partnership of Chapman enterprises towards end of March 1999 but the partnership was not dissolved until 1 April 2001.
• From April, Williams carried on the business for themselves fresher foods continue to supply the business with product and credit by December the debt has risen to over $80,000.
• Fresher food sued all members of the partnership for that sum.
• Woods apposed fresher foods claim on the basis that they have retired from the partnership on March 2001 and should not be liable for partnership debt which had been incurred after that date.
• Fresher foods did not have the notice of the woods retirement from the partnership so that the woods remained liable. The Woods appealed that decision.
• Woods give sufficient notice of retirement from the partnership?- ATrue
- BFalse
20If the business went into liquidation and the business is a limited liability one the creditors who the company owes money to can only claim...
- Aup to the extent of your share capital that you haven’t paid.
- BAll share capital paid and can claim on owners personal assets.
21Because liabilities incurred in running the enterprise of the company own and not the participants, the participants will not be required to provide any more than the [blank_start]individual contribution[blank_end] to the company to meet those liabilities.
- Aindividual contribution
22Limited liability, 3 things to check:
- AHavent paid share capital, liability to pay.
- BDo not have any personal guarantees
- CReal liability, breaches of directors duties.
- DHave to take drawings
- Ehave liability
23Salomon V Salomon & Co Ltd (1897)
Facts
• Comapany had 20,007 shares.
• 20,001 where Mr Salamons and purchased with the purchase money of the business he paid.
• The shares gave the vendors the power of outloading the other six shareholders.
• The vendor was appointed managing director, bad times came, the company was wound up, and after satisfying the debentures there was not enough to pay the ordinary creditors.
Issue:
Was Mr Salomon liable to pay creditors?- ATrue
- BFalse
24The Salomon principle provides that a company is essentially regarded as a [blank_start]legal person[blank_end] separate from its directors, shareholders, employees and agents. This means as a separate legal entity, a company can be sued in its own name and own assets separately from its shareholders
- Alegal person
- BLegal entity
- Clegal partnership
25Lee v Lee’s Air Farming Ltd (1960)
Facts:
• Lee held 2999 of 3000 shares.
• Lee controlling shareholder, sole director and chief pilot of company.
• Was also employee.
• He was killed in a plane crash. Mrs Lee wished to claim damages of 2,430 pounds under the Workers’ Compensation Act 1922 for the death of her husband
Issue:
Could Mr Lee be both controller of a company and its employee?- ANo, cannot run company and work for wages under it.
- Byes, therefore company separate legal entity.
26Lee v Lee’s Air Farming Ltd (1960)
• The Court ruled that although Lee was the controlling shareholder, sole director and chief pilot of Lee’s Air Farming Ltd, he was also considered an employee of the company and thus the company was a separate legal entity, even though Lee’s Air Farming Ltd was essentially a [blank_start]‘one-man entity’.[blank_end]- A‘one-man entity’.
27How did this make a difference to company law?
This ruling created the opportunity for the corporate veil to be [blank_start]misused[blank_end] and has since been regulated against by imposing reckless trading provisions.- Amisused
28Corporate veil
Courts are sometimes asked to lift the corporate veil and ignore the [blank_start]seperate personality[blank_end] of the company.- Aseperate personality
- BLimited liability
- CPartnership
- Dliability
29Corporate veil
Request cannot come from a creditor of the company who wants a participant such as a major shareholder or director to be held liable for the companies debt.- ATrue
- BFalse
30Some cases the courts have been prepared to pierce the corporate veil and treat the company and one or more of its participants effectively is the [blank_start]same person.[blank_end]
- Asame person.
31Gilford Motor Co Ltd v Horne (1993)
Facts:
• Mr Horne had been employed as a managing director of Guilford motors.
• Mr Horne agreed to a non-compete clause in employment contract.
• Have to resign Mr Horne set up a business in competition of Gilford motors.
Issue:
Was Mr Horne breaching the non-compete clause in contract because he was the person behind the new company competing?- A• Guilford motor argue that the court should pierce the corporate veil to recognise that the person behind the new company was Mr Horne.
- B• To treat the company along with Mr Horne as being bound by the non-compete clause in the contract.
- C• Found that the company had been formed for the sole purpose of avoiding the non-compete clause.
- D• Court prepared to treat the company along with Mr Horne as being bound by it.
32Why the corporate veil pierced?
Cause a corporate form was used to avoid an [blank_start]existing legal duty[blank_end].- Aexisting legal duty
33Pre-registration contract
maybe particular circumstances of a transaction that require a certain agreement or arrangement to be entered into on [blank_start]behalf[blank_end] of the company prior to the time at which comes into existence- Abehalf
34Pre-registration contract
When a person enters into a contract on behalf, or for the benefit of the company before it’s registered, the company can by ratifying that contract become bound by it and entitled to the benefit of it after registration.- ATrue
- BFalse
35Pre-registration contract
If the company is not registered the person who made the contract may [blank_start]become liable[blank_end] to pay damages to the other party.- Abecome liable
36Pre-registration contract
Where promotion of the company involves the promoted selling assets to the business and it is planned to invite outside investors to participate in the company the promoters can be subject to [blank_start]special duties[blank_end] to the company.- Aspecial duties
37Pre-registration contract
These include duties of disclosure to the company about profits they are making and duties of disclosure to potential investors.- ATrue
- BFalse
Information
- Description
- Quiz on Law , created by Eden van Leeuwen on 09/04/2019.
- Author
- Eden van Leeuwen
- Language
- English
- Views
- 0
- Rating
- No ratings yet Rate this quiz