WEEK 2

Question 1

Registration for a sole proprietorship

Answer 1

• No formal registration required if under own name
• Under another name, must be registered under the business name act
• Possible government and professional licenses required

Question 2

Definition of a partnership

Answer 2

Relation, carrying business in common, view to profit

Question 3

Elements of a Partnership

Answer 3

• relation between persons or corporation
• business in common
• view to profit

Question 4

Test to determine if a partnership is present

Answer 4

Substance over form

Question 5

Does a partnership need a contract?

Answer 5

No, can be both formal or informal

Question 6

Life of a partnership

Answer 6

Dissolves upon death of a partner unless stated otherwise in partnership agreement

Question 7

Liability in partnership

Answer 7

Joint and several personal liability of partners

Question 8

Can a retired partner still have a liability?

Answer 8

Yes, which is why the need to give adequate notice of retirement

Question 9

Estoppel Principle

Answer 9

You can be sued as a partner if you represent yourself as one when you’re not. Having a partnership agreement gives you the right to sue for indemnification

Question 10

Mitigating a partnership liability

Answer 10

• insurance
• partnership agreement (control)
• bullet-proofing assets
• LP AND LLP

Question 11

What is a limited partnership

Answer 11

• Registered under limited partnership act
• Limited liability, only up to the amount that you invest in
• LP cannot play active role in management
• General partners has unlimited liability (at least one present)

Question 12

What is a Limited Liability Partnership

Answer 12

• Can only be used for carrying on a profession
• They are not liable for negligence of fellow partners where they had nothing to do with it
• Must be formed by written agreement that designates the partnership as an LLP and states that partnership act governs the agreement

Question 13

Requirements on Fiduciary Duty

Answer 13

• Honesty (true accounts)
• No secret benefits
• No competition (conflict of interest)

Question 14

When does a partnership Winding-up and Dissolve

Answer 14

• Upon expiry
• Upon notice
• Upon agreement
• Upon dissolution by law

Question 15

Order of distribution of partnership property on dissolution

Answer 15

• non-partner creditors for debts of the firm
• partnership loans to partners
• capital to partners
• sharing of profits among partners (whatever is left-over)