BUSINESS LAW AND ETHICS FINAL
EXAM REVIEW (COMM 315)
According to article 1525 of the Civil Code, an enterprise is - correct answer<<<<<<<💖💖💖✔The
carrying on by one or more persons of an organized economic activity, whether or not it is commercial
in nature, consisting of producing, administering or alienating property, or providing a service,
constitutes the carrying on of an enterprise
What are the forms of business ownership most frequently used in Canada? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship
Partnership
Corporation
The Provincial Government has the right to regulate which kinds of Ownership? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship & Partnership because the owners are considered to
have personally undertaken the risk and keep the profits, either alone or together
Which is the most common and least complex form of business for start-ups? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship
What is the definition of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔It encompasses
any and all enterprise undertaken by one single individual, who remains the sole owner and retains full
authority to manage the administration of the enterprise
Can a minor use the defense of lesion (claiming they were unfairly taken advantage of due to their age)
to escape their responsibilities under contracts entered for the purpose of their business? - correct
answer<<<<<<<💖💖💖✔No! They are considered to be of full age when it comes to transactions
related to their business
The exception to having to register your business (sole proprietorship) to the QC government is when: -
correct answer<<<<<<<💖💖💖✔you used your personal name for the name of the business
,Can someone else use a registered name? - correct answer<<<<<<<💖💖💖✔No, registering your
company name gives you permanent rights to its use and prevents anyone else from using it
Where can you check registered company names? - correct answer<<<<<<<💖💖💖✔Anyone can
check online or in person in the "Declarations of Sole Proprietorship"
Can you transfer ownership of a Sole Proprietorship? - correct answer<<<<<<<💖💖💖✔No, since
the sole proprietor and the enterprise are seen as one in the same in the eyes of the law
Who is Liable in a Sole Proprietorship? - correct answer<<<<<<<💖💖💖✔The owner has unlimited
and personal liability
When can a Sole Proprietorship be terminated? - correct answer<<<<<<<💖💖💖✔Upon the death
of the owner, or when the owner ceases to do business
What are the advantages of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔Simple
Registration - easily done by owner
Inexpensive to start - costs under $50 to register
All profits belong to the owner
All decisions made by the owner
Flexibility
Simple to dissolve
Enjoyment and challenge of personal involvement
Operations and Results can be kept secret
What are the disadvantages of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔- Owner is
personally liable for all debts (unlimited liability)
- Difficult to obtain outside financing (capital)
- Depend only on skills of owner (might be too specialized)
- Lack of Continuity
- No legal distinction between owner and business
,- Restrictions on hiring members of owner's family including spouse and children under 19, under
income tax regulations
- May be difficult to sell "goodwill" if reputation depends heavily on the personality of the owner
- All profits are considered to be earned by the sole proprietor personally and are taxed at full personal
income tax rates
What is the definition of "Good will?" - correct answer<<<<<<<💖💖💖✔The Value of the reputation,
credibility, and reliability that a business has built up over a period of time. It is an intangible factor, and
thus it is often very difficult to assign a financial value to it
What is a partnership? - correct answer<<<<<<<💖💖💖✔When two or more people agree to
operate a business together, this agreement forms a contract between them known as the Contract of
Partnership
What is a Partnership Agreement? - correct answer<<<<<<<💖💖💖✔Not required by law, it is a
written contract that reduces any potential future disagreements since the owners wrote down the
details of their business relationship here.
How do you start up a Partnership? - correct answer<<<<<<<💖💖💖✔All partnerships are required
to register a Partnership Declaration that identifies the partners, the location, and the type of business
Is transfer of ownership possible in Partnerships? - correct answer<<<<<<<💖💖💖✔Yes, within
limits: either when one partner dies or wishes to cease doing business
T/F: Each partner has unlimited, personal liability for the debts of their enterprise. - correct
answer<<<<<<<💖💖💖✔True, partners are solidarily liable for the partnership debts (any one or
more of the partners may be required to pay all or part of any debt owed)
What should be included regarding the management of the enterprise in the Partnership Agreement? -
correct answer<<<<<<<💖💖💖✔- How much time each partner will devote to the business
- What responsibilities each partner will have
- What happens if one of the partners becomes too ill to work in the business
, What is the one arrangement of profits in a Partnership not allowable under the QCC? - correct
answer<<<<<<<💖💖💖✔One which excludes a person from any share of the profits (a partner must
have some share in the profits, no matter how small)
In a Sole Proprietorship or Partnership, are you taxed on earnings reinvested into the enterprise? -
correct answer<<<<<<<💖💖💖✔Yes, it is still considered personal earnings
How can a Partnership be terminated? - correct answer<<<<<<<💖💖💖✔Being a relatively fragile
form of business:
- By the agreement of the partners
- By the bankruptcy of the business
- Upon the accomplishment of its objective
- Some by the death/bankruptcy of 1 partner
How does a limited partnership differ from a general partnership? - correct
answer<<<<<<<💖💖💖✔It differs in the liability for debts and in the right to participate in the
management of the business. The special partners are liable for the debts only to the extent of a
stipulated amount they contributed, as stated in the partnership declaration. If not stated, they are
soldarily liable, just like the general partners.
How can a special partner check on the business? - correct answer<<<<<<<💖💖💖✔They can meet
periodically with their partners to discuss the business, but cannot partake in any day-to-day operations
What are the advantages of a partnership? - correct answer<<<<<<<💖💖💖✔- Simple registration
- Inexpensive to start - under $50
- Profits shared only between partners
- Partners able to assist each other
- Partners pool their talents
- Quite flexible
- Simple to dissolve
- More scope for specialization
- Enjoyment of personal involvement
EXAM REVIEW (COMM 315)
According to article 1525 of the Civil Code, an enterprise is - correct answer<<<<<<<💖💖💖✔The
carrying on by one or more persons of an organized economic activity, whether or not it is commercial
in nature, consisting of producing, administering or alienating property, or providing a service,
constitutes the carrying on of an enterprise
What are the forms of business ownership most frequently used in Canada? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship
Partnership
Corporation
The Provincial Government has the right to regulate which kinds of Ownership? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship & Partnership because the owners are considered to
have personally undertaken the risk and keep the profits, either alone or together
Which is the most common and least complex form of business for start-ups? - correct
answer<<<<<<<💖💖💖✔Sole Proprietorship
What is the definition of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔It encompasses
any and all enterprise undertaken by one single individual, who remains the sole owner and retains full
authority to manage the administration of the enterprise
Can a minor use the defense of lesion (claiming they were unfairly taken advantage of due to their age)
to escape their responsibilities under contracts entered for the purpose of their business? - correct
answer<<<<<<<💖💖💖✔No! They are considered to be of full age when it comes to transactions
related to their business
The exception to having to register your business (sole proprietorship) to the QC government is when: -
correct answer<<<<<<<💖💖💖✔you used your personal name for the name of the business
,Can someone else use a registered name? - correct answer<<<<<<<💖💖💖✔No, registering your
company name gives you permanent rights to its use and prevents anyone else from using it
Where can you check registered company names? - correct answer<<<<<<<💖💖💖✔Anyone can
check online or in person in the "Declarations of Sole Proprietorship"
Can you transfer ownership of a Sole Proprietorship? - correct answer<<<<<<<💖💖💖✔No, since
the sole proprietor and the enterprise are seen as one in the same in the eyes of the law
Who is Liable in a Sole Proprietorship? - correct answer<<<<<<<💖💖💖✔The owner has unlimited
and personal liability
When can a Sole Proprietorship be terminated? - correct answer<<<<<<<💖💖💖✔Upon the death
of the owner, or when the owner ceases to do business
What are the advantages of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔Simple
Registration - easily done by owner
Inexpensive to start - costs under $50 to register
All profits belong to the owner
All decisions made by the owner
Flexibility
Simple to dissolve
Enjoyment and challenge of personal involvement
Operations and Results can be kept secret
What are the disadvantages of a sole proprietorship? - correct answer<<<<<<<💖💖💖✔- Owner is
personally liable for all debts (unlimited liability)
- Difficult to obtain outside financing (capital)
- Depend only on skills of owner (might be too specialized)
- Lack of Continuity
- No legal distinction between owner and business
,- Restrictions on hiring members of owner's family including spouse and children under 19, under
income tax regulations
- May be difficult to sell "goodwill" if reputation depends heavily on the personality of the owner
- All profits are considered to be earned by the sole proprietor personally and are taxed at full personal
income tax rates
What is the definition of "Good will?" - correct answer<<<<<<<💖💖💖✔The Value of the reputation,
credibility, and reliability that a business has built up over a period of time. It is an intangible factor, and
thus it is often very difficult to assign a financial value to it
What is a partnership? - correct answer<<<<<<<💖💖💖✔When two or more people agree to
operate a business together, this agreement forms a contract between them known as the Contract of
Partnership
What is a Partnership Agreement? - correct answer<<<<<<<💖💖💖✔Not required by law, it is a
written contract that reduces any potential future disagreements since the owners wrote down the
details of their business relationship here.
How do you start up a Partnership? - correct answer<<<<<<<💖💖💖✔All partnerships are required
to register a Partnership Declaration that identifies the partners, the location, and the type of business
Is transfer of ownership possible in Partnerships? - correct answer<<<<<<<💖💖💖✔Yes, within
limits: either when one partner dies or wishes to cease doing business
T/F: Each partner has unlimited, personal liability for the debts of their enterprise. - correct
answer<<<<<<<💖💖💖✔True, partners are solidarily liable for the partnership debts (any one or
more of the partners may be required to pay all or part of any debt owed)
What should be included regarding the management of the enterprise in the Partnership Agreement? -
correct answer<<<<<<<💖💖💖✔- How much time each partner will devote to the business
- What responsibilities each partner will have
- What happens if one of the partners becomes too ill to work in the business
, What is the one arrangement of profits in a Partnership not allowable under the QCC? - correct
answer<<<<<<<💖💖💖✔One which excludes a person from any share of the profits (a partner must
have some share in the profits, no matter how small)
In a Sole Proprietorship or Partnership, are you taxed on earnings reinvested into the enterprise? -
correct answer<<<<<<<💖💖💖✔Yes, it is still considered personal earnings
How can a Partnership be terminated? - correct answer<<<<<<<💖💖💖✔Being a relatively fragile
form of business:
- By the agreement of the partners
- By the bankruptcy of the business
- Upon the accomplishment of its objective
- Some by the death/bankruptcy of 1 partner
How does a limited partnership differ from a general partnership? - correct
answer<<<<<<<💖💖💖✔It differs in the liability for debts and in the right to participate in the
management of the business. The special partners are liable for the debts only to the extent of a
stipulated amount they contributed, as stated in the partnership declaration. If not stated, they are
soldarily liable, just like the general partners.
How can a special partner check on the business? - correct answer<<<<<<<💖💖💖✔They can meet
periodically with their partners to discuss the business, but cannot partake in any day-to-day operations
What are the advantages of a partnership? - correct answer<<<<<<<💖💖💖✔- Simple registration
- Inexpensive to start - under $50
- Profits shared only between partners
- Partners able to assist each other
- Partners pool their talents
- Quite flexible
- Simple to dissolve
- More scope for specialization
- Enjoyment of personal involvement
