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45 Cards in this Set
- Front
- Back
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What are the three basic types of partnerships? Compare and contrast each. |
General Partnership -unlimited personal liability -no registration needed for creation -less expensive than incorporation -vicarious liability for employees and partners Limited Partnerships -created by registration -two or more, must have at least one general partner -unlimited liability for general partner only. -vicarious liability for employees and other general partners Limited Liability Partnership -no vicarious liability, except for those supervised -not a separate legal entity -has to have two or more members of eligible profession -created by registration |
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Why are limited partnerships considered to be a good alternative to incorporation? |
-Allows the partners to invest money in a partnership but avoid the liability that comes with being a general partner -Limited partners can only lose their original investment -cheaper than incorporation -no unlimited liability -easy to change the nature of the partnership via the partnership agreement -not responsible to shareholders |
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What governs the formation and operation of partnerships in alberta? |
The partnership act (1890) |
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How is a partnership formed? |
When two or more people pool their resources together with the object, or the view towards, making a profit |
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If two or more people do business together but lose money, do they have a partnership? |
Yes they do. A partnership is when two or more people carry on business with a view towards profits. The profit does not have to be made, but the objective of the business is to make the profit. Sharing the net proceeds after expenses are deducted is what makes a partnership, not sharing revenues from a business activity. |
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How are the concepts of "agency" and "partnership" related? |
Partners are agents of one another and they act on the behalf of each other. The actions of one can bind the other. Agents are not necessarily partners, but agents negotiate on someone else's behalf and can bind someone to a contract. |
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Does the sharing of profits evidence partnership? How is this concept different than sharing revenues? |
Yes,it does. It is the sharing of net proceeds after expenses have been deducted(the profits) from the enterprise that gives rise to the presumption ofpartnership, not the sharing of gross returns from a business activity. Thisconcept is different than the sharing of revenues because sharing the returnsfrom a business activity does not make a partnership. A partnership is formedwhen two or more people work towards profits, which occurs when expenses aresubtracted from revenues. This is when there is an intention to share expenses,profits, or losses. You have to share expenses as well.11755/\ |
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What is the main purpose of a partnership agreement? How does the existence of such an agreement affect the right of third party outsiders? |
To outline what everyone brings in, isresponsible for, how it is dissolved, how profits are distributed, etc.Documenting the expectations up front. A partnership agreement sets out andmodifies the rights between partners. It states the exact nature of therelationship between them. Should deal with all matters of importance to thepartnership (duties, contribution, time commitment, profit share and capitaldistribution, limitations of power and authority, methods for resolvingdisputes, circumstances for dissolution). The existence of the partnershipagreement does not affect the rights of outsiders because outsiders’ rights aredetermined by the provision of the partnerships act and partnership lawgenerally. Provisions of limited liability for partners in the partnershipagreement does not limit the ability of the outsider to collect form a limitedpartner and can collect what is owed to them from any partner.=/AS |
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How is each form of partnership dissolved? |
Partnership: requires only that notice to the effect is given by one of the partners |
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What happens at dissolution of there aren't enough assets to cover liabilities? Does the situation differ depending on the type of partnership? |
Ifthere are not enough assets to cover liabilities, the capital that the partnersoriginally invested will be used. If that is still not enough, then thecreditors can turn to the partners themselves who are liable in the proportionin which they were entitled to share profits. I believe that it does. In limited partnerships and limited liabilitypartnerships, the most that the limited partners can lose is their originalinvestment. go/' |
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Are new and retiring partners liable in a partnership? |
Aretiring partner remains liable for any wrongs committed or liability incurredduring the partnership period. Also continues for acts committed after thedissolution of the partnership or the retirement of the partner, unless thethird party has been given notice that the retiring party has left the firm.The remaining partners or a new partner coming in can agree to take over theseobligations in the partnership agreement, but the new partner is notautomatically liable for them. New partners become liable after they come intothe partnership.prot/R |
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An equitable remedy that stops a party from trying to establish a position ordeny something that, if allowed, would create an injustice. |
Estoppel |
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aduty to act in the best interests of another; such duty may arise betweendirectors and officers and the corporation they serve, between businessassociates including senior employees and their employer, between agents andtheir principals, and between partners
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fiduciary duty |
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majorityagrees with terms of collective bargain; principal confirms a contract enteredinto by his or her agent
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ratification |
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liabilityof an employer for injuries caused by employees while carrying out theiremployment duties
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vicarious liability |
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Whatgoverns the formation and operation of corporations in Alberta?
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TheBusiness Corporations Act
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Advantages and Disadvantages of a Corporation |
LessLibility for shareholders to businesses
Taxadvantages gained through incorporation Corporation does not die Shares can be freely transferred Corporation is not always best method to carry on business Incorporating doctrines are hard to change weak position of minority shareholders if you borrow money, you may still have to personally guarantee it most expensive way to operate a business |
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How does the law view corporations? Are there any exceptions to this rule? |
1. The law views corporations as a separate legalentity and has a separate legal personality from the people who own shares init. There are exceptions: when the object of incorporation is to get aroundsome government regulation, or commit a fraud. Then the Courts will lift thecorporate veil to get at the people committing the fraud. Deceit, dishonesty,fraud, bad faith. |
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Compare and contrast corporations and societies |
1. Societies are incorporated non-profit bodies ornon-share capital corporations. Primarily cultural, social, charitable, orreligious organizations. There is a non-profit nature in their activities.Their legal obligations and technicalities are more simple and straightforwardthan other corporations generally. In contrast, corporations are operating withthe aim of profit. Basic difference is societies are non-profit, it still hasto be incorporated but it is a non-profit entity, does not pay taxes becausethey are not making an income. |
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How is a shareholder's liability limited in a corporation? |
Theshareholder is only liable for their original investment. The people who maysue the corporation may only sue the corporation and the assets in thecorporation, they cannot pursue the shareholders and the shareholders’ personalassets. Therefore, shareholders liability is limited in respect to how much thesuing party has a right to their assets. The shareholders are the owners of aseparate legal entity and unless there is wrong doing on the side of theshareholders, they are typically not liable.
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What does it mean to lift the corporate veil? |
castingaside the aspect of the law governing corporations to get at the principles ofthe corporation, the directors, the shareholders, or the officers committingthe fraud. The courts ignoring separate legal identity.
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What is the director of a corporation? |
Directorsare the managers of the corporation and are elected by the shareholders. 25% ofdirectors has to be Canadian citizens in alberta. A director must be an adultof sound mind, not bankrupt, not have been convicted of a crime involvingfraud, and may not need to be a shareholder. Director owes duty not to benegligent, fiduciary duty to corporation, not to shareholders
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Compare and contrast the basic roles, responsibilities, and any liability of shareholders and directors. |
Shareholders: Do not have any legal roles or responsibilities aside from participating in stockholder meetings. Elect directors. Few obligations are owed by shareholders to the corporation. And liability is limited to amount invested. Directors: Responsible formanagement of corporation. Ifdirectors want to sell business, they have to get permission from theshareholders. Directors owe duties to Corporation includingfiduciary duty. Personal Liability if Duties are breached. Duediligence is sometimes a difference. |
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What is a dividend? Who gets one? |
Adividend is a sum of money paid regularly (typically quarterly) by a company toits shareholders out of its profits (or reserves). It is a payment toshareholders in the form of a dividend. Both the common shareholders and thepreferred shareholders gets one but the preferred shareholders have thepreference when the dividends are declared. Usually the rule is thatshareholders get the dividend of the class of shares that (for tax advantage)
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How are common shares different from preferred shares? |
Commonshares – voting shares |
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What is a shareholder's agreement and why is it important? |
1. Agreement between shareholders setting outrights and obligations to each other. What happens if shareholder wants toleave, what if they die, divorce, etc. It sets out what happens if someonewants or needs to be out of the corporation. |
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Why is the transfer of shares often limited by the shareholder's agreement? |
Inclosely held corporations, the free transferability of shares is restricted,either through shareholder agreements of by limitations placed in theincorporating document. Often, the seller has to get approval of the sale or tofirst offer their shares to the other shareholders. The reason for this may bebecause the shareholder brings individual skills into the corporation and areususally an employee as well and their contribution may be vital to theorganizations success. Thus, free transferability of shares in suchcircumstances may be a significant threat to the corporation, especially if theshareholder withdraws her services when the shares are sold.
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What is a personal guarantee and how does it impact the liability aspect of a shareholder? |
1. Personal guarantee causes shareholders to becomeliable for the debt along with the corporation. This causes the advantage oflimited liability to be lost by a large extent. |
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How is a corporation ended voluntarily? Involuntarily? |
Voluntarily:following the winding up procedure foundin the corporate law statutes, or in some jurisdictions, in a separate winding up act.
Involuntarily: Occasionally, court will order a corporationto be dissolved when a minority shareholder has been unfairly treated. Anotherway is to simply neglect to file the annual return within 60 days of the end ofthe corporation’s taxation year. If it fails to do so, a certificate ofdissolution may be issued for it one year later. If you miss three annualreturns, you are done and no longer exist. Involuntary. |
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passingthe right to vote to someone else: the person who is voting for you is voting by ___________
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Proxy |
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committedthrough any act of cruelty, severity, unlawful exaction, or excessive use ofauthority.
Ashareholder can bring oppressive action and seek relief from the court on thebasis of oppression or unfair prejudice. |
Oppression |
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whenpeople organize themselves into small, closely held corporations because of theindividual skills each shareholder brings to the corporation. The shareholdersare usually employees as well and their contribution is often vital to thesuccess of their business
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closely held |
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What are three basic forms of employment? |
Employees(master servant relationship), agents (acting as a go-between), and independentcontractors (work for themselves and act independently, providing a specificservice for the person they contract with)
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What are the basic advantages and disadvantages of the forms of employment? |
Employees: Employer has a great deal of control and can specify what and how the person is to do the job. They are liable for the actions of those who are working under their direction. Agents: Can be either independent contractors or employees. Employer can find himself liable or bound by a contract that the agent negotiated on his behalf. Independent Contractors: Employer is not liable for their acts and does not have to worry about submitting payroll and GST. They have no control over how the job is done. |
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How have canadian courts differentiated between employees and independent contractors? |
Who provides the equipment, decides how the job is done, bears the financial risk, and negotiates the rate of pay. If a person is using someone else's equipment, doing what the other person says, and is not bearing financial risk, they are probably an employee. Also if they bear a foundational role in the organization, they are also probably employees. Control test. |
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Why might this be an important distinction for an employer? |
Itdetermines whether the employer has liability when there is injury or loss. Ifthe person is an employee, they are acting under the employer’s guidance andthat makes the employer responsible for their actions.
If the person is acontractor, they are acting on their own and bear their own liability if thingsgo wrong. Also, important for taxes to be filed correctly. |
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What basic obligations do employers and employees have to one another? |
Employer:payment of wages or salary, safe working conditions (both physical and mental)
Employee: competent work, honesty and loyalty, punctuality, action inemployer’s best interests, fiduciary obligations in some cases. |
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What is a restrictive covenant? What factors determine whether a court is likely to enforce it or not? |
A segment in the original contract that commits the employee to not work in a particular geographic area or industry after they leave the position, specifying a reasonable time and area. If they are too broad, the covenants will not be enforced. It has to be reasonable. It is part of a non-competition agreement. |
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What legislation governs employment relationships? |
The Employment Standards Code |
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What is a notice period and how is it calculated? |
Givingnotice of your intent to leave a job in order to give time for the company tomake provisions. Courts consider the length of service, they type of job, theage of the employee, qualifications, availability of similar employment, andbad-faith conduct. Typically comes up in terms of wrongful dismissal. If theemployee goes to court, the court will say the standard is a mandatory minimum,so the basic rule is for every year you’ve worked, you’re entitled to one monthof severance pay. Biggest reward is capped at 26months.
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Is it enough, from a legal perspective to abide by the notice period requirements set out in legislation? |
It may not be. There may be other factors that will extend the length of the required notice. Canada has lengthy notice requirements for termination and it is vital to not make the contracted notice period less than the legislated minimum or the contract clause may be void and the employer may be required to pay a much higher amount. A lawyer should be consulted. |
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Define termination for cause. What legal factors must be satisfied for a court to uphold this type of termination? |
Terminatingthe employment because there is a just cause as to why the employee can nolonger work for them, notice is not required. Includes things like seriousabsenteeism, consistent tardiness, open disobedience, habitual negligence,incompetence, harassing other employees, drinking on the job, or immoralconduct on or off the job that reflects badly on the employer, or dishonesty.In order to uphold termination for dishonesty, the accusations must be ensuredto be accurate and have firm evidence (document and verify evidence).Underlying reasons for termination cannot veil discrimination. The punishment must be proportionate to thecrime. Cannot discriminate against disability.
1. There has to be a system of progressivediscipline, a write up system, you have to identity the issues, tell them whatthey have to do, wait for a while to see if it is dealt with, and if they don’tthen you terminate them, all the while making clear that if you do not do ityou will be terminated. Stealing does not have to be notified. Just pay theemployee to leave and you don’t have to litigate. |
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What is constructive dismissal? |
Employer breaks the contract when the nature ofthe job is changed without consent. Such as when an employer demotes theemployee or otherwise unilaterally changes the nature of the job. When there isconstructive dismissal, the employee has an obligation to mitigate, possibly tothe extent of accepting a new position offered by the employer. |
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What is wrongful dismissal? In an action for this, what remedies will a court consider? |
Whenan employee is dismissed and they should not have been. Damages are usuallybased on what they employee would have received had proper notice been given.If he was only given one month and he should have gotten 5, he will be awardedthe difference as well as any benefits and pension rights to which he wouldhave been entitled. The employee must also try to find another job.
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How does human rights legislation affect employment law? |
1. The protection of employee rights is becoming amore significant part in employment law. The passage of the Charter of Rightsand Freedoms, as well as federal and provincial human rights legislation,employers are required not only to ensure they do not discriminate in their hiringand employment practices, but that they take active steps to ensure that thesebasic rights are protected. It has an impact on employment by prohibitingdiscrimination based on race, national or ethnic origin, color, religion,gender, sexual orientation, and in some cases, age, marital status, familystatus, physical or mental disability, and pardoned criminal convictions.Restricts questions asked on applications and at interviews. And coversharassment as well. Employer has a duty to accommodate. Rules have to bereviewed in light of human rights. Key here, an institution that is faithbased, usually for their employees, they have a certain standard of conductthat is demanded, but sometimes their requirements do not jive with the humanrights legislation. You can determine what you want your employees to uphold aslong as it is a bona fide occupational requirement. An important part of whoyou are as a belief system for an institution. |
