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Flashcards in Chapter 4 Deck (40)
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What is an agency?

Relationship where one person has authority over the actions of another


Who is the principal?

The person being represented


Who is the agent

Person who is authorized to act on their behalf


What is express authority

Oral or written contract appoints the agent and gives them authority to act on the principal's behalf


What is apparent authority

When a third party would reasonably believe that another person is acting on their behalf


What is Ratification

No contract but was negotiated on his behalf with or without their authority


When is an agent held liable when they act on behalf of someone else?

Acting on behalf of an undisclosed principal


What is it called when an agent acts on behalf when they were unauthorized to?

Breach of warranty of authority.


What is the agent's responsibility of personal performance

Cannot delegate authority without the principal's approval.


What are the responsibilities of the principal to the agent

To pay for expenses and for their actions.


What is liability level of a sole proprietorship?

Unlimited liability


What is a general partnership?

Relation which subsists between persons carrying on a business in common with a view of profits.


In a general partnership, who is on the hook for debts and negligent and torts?

Both are personally liable.


To what extent are general partners liable to creditors?

To the extent of their personal assets.


When is a partner not liable for debts?

PArtners are only liable for debts while they are a member of the partnership.


In a partnership agreement, when is a partner entitled to interest? When are they not?

Entitled to interest on loans, not on capital contributions.


What are the steps of a dissolution to a partnership?

1. Assets to pay off debts
2. Repay debts to partners
3. Return capital investment
4. Payout as profit share arrangements.


What must there be one of in a limited partnership?

One general partner whose liability is unlimited.


What are limited partners allowed to do?

Allowed to be an employee, and give management advice but cannot take part in management.


What is a limited liability partnership?

Each partner is only liable for themselves or the people they manage.


Incorporation is accomplished by filling what document?

Signed article of incorporation.


What two provinces is private corporation permitted in?

Nova Scotia and P.E.I


What is the difference between widely held corps and closely held corps?

Widely held are usually listed on stock exchange. Closely held restrict the transfer of their shares and do not issue shares to the public.


What is the difference between equity financing and taking on debt?

Equity financing they get shares, while debt consists of loans made to the corporation.


What is authorized capital?

The maximum number of shares a corporation can issue.


What is referred to as The Affairs by the Canadian Business Corporation Act

The internal arrangements among those responsible for running a corp.


What is referred to as The Business by the Canadian Business Corp Act

The external relations between a corporation and those who deal with it as a business enterprise.


What is the role of directors?

To delegate and appoint officers.


Who may be personally liable for their actions in relation to a corporation?

Directors and officers may be liable under tort, contract, regulatory, and criminal law.


What are the three basic rights of shareholders?

1. To vote at any shareholder meeting
2. Receive divideend payments declared.
3. Receive the remaining property after debt payments are paid.