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Business Law & Ethics Final Exam Review (Comm 315).pdf
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Business Law & Ethics Final Exam Review (Comm 315).pdf
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Business Law & Ethics Final ExamReview (Comm 315)
According to article 1525 of the Civil Code, an enterprise is –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? answer -
Sole Proprietorship
Partnership
Corporation
The Provincial Government has the right to regulate which kinds of Ownership? 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? answer -
Sole Proprietorship
,What is the definition of a sole proprietorship? 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? 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: answer - you used your personal name for the name of the
business
Can someone else use a registered name? - 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? answer - Anyone can check online
or in person in the "Declarations of Sole Proprietorship"
Can you transfer ownership of a Sole Proprietorship? - 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? answer - The owner has unlimited and personal
liability
When can a Sole Proprietorship be terminated? answer - Upon the death of the owner,
or when the owner ceases to do business
What are the advantages of a sole proprietorship? 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? - 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?" - 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? - 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? - 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? - All partnerships are required to register a
Partnership Declaration that identifies the partners, the location, and the type of
business
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