Question 1) How are a sole proprietorship and a partnership similar?

a. Neither is a legal entity

b. Both require special steps to create

c. There is no legislation affecting either type of business

Question 2) To succeed in an action for negligence against a professional, the plaintiff must prove that the professional breached the standard of care. What is the standard of care imposed on a professional?

a. That the professional acts to the best of his or her ability

b. That the professional acts sincerely and with goodwill

c. That the professional acts as a reasonably competent professional

d. That the professional acts in accordance with the standard contracted for by the client

Question 3) James Tall, Jane Short and Joel Longe are lawyers. They formed a partnership called Tall Short & Longe LLP (limited liability partnership). Tall was hired by Phillip Almott, a wealthy and well-known investor. Tall was negligent in several transactions which breached the Income Tax Act and caused millions of dollars in losses to Almott. Almott brought a legal action against the law firm and each partner individually. Which of the following statements is correct?

a. Short and Longe are personally liable for Tall's negligence

b. None of the partners are liable

c. The law firm is liable for Tall's negligence

d. Only Tall is liable for his negligence

Question 4) Andy incorporated his business and put $20,000.00 into the corporation. The corporation manufactured furniture. An employee of the company delivered a couch to a customer who complained about the colour. The employee became so angry that he shoved the customer, who fell and suffered physical harm. On these facts, which of the following is false?

a. The employee is liable for his tort and his employer is also liable

b. Andy himself is vicariously liable for the damage caused by the employee

c. The employee is liable for the tort of battery

d. If the corporation went bankrupt, Andy would not be personally liable for any debts

Question 5) What is strict liability?

a. Strict liability is when an insurance company pays for the liability.

b. Strict liability is when a person is liable regardless of fault.

c. Strict liability is when liability is strictly enforced.

d. Strict liability is when compensation for loss is dependent upon fault.

Question 6) Phillipe and Cheri form a 50-50 partnership to run a hair salon called Bon Style. In addition to hair styling, Phillipe is in charge of customer appointments and Cheri is in charge of ordering supplies for the salon. Business goes poorly and the hair salon must close, but one of the suppliers comes to Bon Style to try to collect $10,000 owing on an order of shampoos, colour and other supplies that were shipped to Bon Style, but never paid. Cheri has moved out of Canada and no one knows how to contact her. Which of the following are true:

a. Cheri was in charge of ordering so only she can be sued for the $10,000

b. The supplier can sue Phillipe and Cheri for $10,000

c. The supplier can recover $10,000 from Phillipe alone

d. b&c

e. None of the above