Business Structures & Sales of Goods Act Flashcards
5 types of business structures
- sole proprietorship
- general partnership
- limited partnership
- limited liability partnership
- incorporation
general partnership
- full liability -joint and several liability
- partners are agents of the partnership
- vicarious liability for torts
- majority rules
^ no costs -profits and losses in that year
Partnership Act
- business activity of two or more parties where there is a sharing of risk -profit/loss
- mere joint ownership of an asset does not create a partnership
- partnership agreement in writing
window of liability
- liability from the moment you commence as a partner until you cease as partner
termination of a partnership interest happens via ___
- death, bankruptcy, mental incompetency
- expiry of a preset time
- completion of a project
- court order
- resignation with notice
8 default rules (Partnership Act)
(can be overridden by contract aka partnership agreement)
- partners have an equal obligation to contribute capital
- no interest payable on capital
- no remuneration for partners
- partners have entitlement to profits and losses
- all partners have equal access to financial records
- all ordinary business, majority rules
- all extraordinary business, must be unanimous
- ——-admitting new partner
- ——–expelling existing partner
- indemnification (reimbursement) for disproportionate contribution
limited partnership
limited partner has limited liability (LP)
- registered with the provincial government
- there must be at least one general partner and at least one limited partnership
- LP has no say in management
- name of LP cannot be in the firm name
limited liability partnership
- professional partnership
- no vicarious liability for partnership torts
incorporation
- creates a legal person
- companies have limited liability
- ———–income tax -preferred rate -deferral
- control-flexibility
- transfer tax
- reserve a name with approval (can’t be similar to others, good taste)
- Notice of Articles (rules)
- Incorporation Agreement
- Notice of Offices
- Certificate of Incorporation
/Officers\
/Directors\
/Shareholders\
shareholders
- owners
- limited liability
- common shares -basic equity shares (voting)
- preferred shares -priority to dividends -priority to return on capital (nonvoting)
directors
- decision makers
- limited liability
- —–exceptions… -fraud, -statutory exceptions: gst, pst, employer remittances, WCB/wages
officers
- president, secretary
- implement director’s decisions
- official signatories
Limited Liability
———-exceptions… -fraud, -statutory exceptions: gst, pst, employer remittances, WCB/wages
duties of directors
Fiduciary Duty -obligation of one party to act in the best interest of another
- conflict of interest
- insider trading
Doctrine of Corporate Opportunity
doctrine of corporate opportunity
- principle providing that directors, officers, and controlling shareholders of a corporation must not take for themselves any business opportunity that could benefit the corporation
agency
- the capacity of an actor to act in a given environment
- agent binds principal in a contract (whether the principal likes it or not)`
principal’s duty (to an agent)
- pay
- reimburse expenses (disbursements)
agent’s 8 duties (to a principal)
utmost good faith contract
- obligation to disclose all material facts
- fiduciary duty
- ongoing communication
- obey lawful instructions
- duty of confidentiality
- duty to account for funds
- duty to maintain professional standard
- duty not to delegate without consent
are they your agent?
- only if you pay them (insurance broker vs stock broker)
agency by express agreement
- created by written or oral agreement between the principal and the agent.
agency by conduct
- where the principal’s words or conduct would lead a reasonable person in the third party’s position to believe that the agent was authorized to act
- principal causes confusion
agency by necessity
- created by an emergency arising from a situation making it necessary or proper for the agent to act without receiving the sanction or authorization of the principal
- perishable goods only
- unable to contact the principal
agency by ratification
- a situation in which a person or company inaccurately claims to be an agent for another person or company and conducts some act in that capacity, but which the principal (who is not actually a principal) later accepts and recognizes
- retroactively
Employee Standards Act (8)
- legislation enacted by the provincial government of British Columbia to protect the rights of working people
- minimum wage
- statutory holidays (15 of previous 30 days)
- vacation pay
>5 days - 4% - 2 weeks
>5 years - 6% - 3 weeks - overtime
>40 hours - 1.5x - banking
48 hours - 2x - no waiving rights
- paid at least twice per month
- employer may only deduct authorized deductions
- special clothing (employer provides and cleans at no cost)
leave (employee standards act)
- jury
- maternity - 17 weeks
- parental - 35 weeks
- family leave (medical and educational) - 5 days per year
- bereavement - 3 days
termination for cause (firing)
- pay current
- no severance
[1] Misconduct or Dishonesty
- one significant provable incident
[2] Disobedience
- repetition - documentation
[3] Incompetence
- repetition - documentation - remediation
[4] Sickness (unable to work)
- employer has duty of accomodation
termination without cause (layoff)
notice or pay in lieu of notice - severance pay
< 3 months - no notice > 3 months –> 1 year - 1 weeks' notice 1 year –> < 3 years - 2 weeks' notice 3 years - 3 weeks' notice 4 years - 4 weeks' notice 8+ years - 8 weeks' notice
bailment
- an act of delivering goods to a bailee for a particular purpose, without transfer of ownership
bailor = owner bailee = possessor
gratuitous bailment for the benefit of the bailor
- level of care that a reasonable person takes of their own goods
bailment for reward / bailment for value
- industrial standard
gratuitous bailment for the benefit of the bailee
- all reasonable precaution
vendor’s lien
- retains, prevents possession
how do you identify if someone is an employee
- if they under the direction and control of an employer
Sales of Goods Act - Rule 1
- unconditional contract for the sale of specific goods in a deliverable state
unconditional contract for the sale of specific goods in a deliverable state
- title transfers at contract
Sales of Goods Act - Rule 2
- unconditional contract for the sale of specific goods NOT
in deliverable state
unconditional contract for the sale of specific goods NOT
in deliverable state
- title transfers when put in a deliverable state and buyer is notified
Sales of Goods Act - Rule 3
-unconditional contract, sale of specific goods requires weighing, grading, or testing
unconditional contract, sale of specific goods requires weighing, grading, or testing
- title transfers when done and buyer is notified
Sales of Goods Act - Rule 4
- goods on approval
goods on approval
- title transfers, when:
a) when the buyer approves
b) when a preset or reasonable time elapses
Sales of Goods Act - Rule 5
- unascertained and future goods
unascertained and future goods
- title transfers:
1) when good is allocated or set aside (identified)
and
2) a) buyer assents (agrees)
b) good is delivered to third party courier
caveat emptor
- “let the buyer beware”
- obligation on buyer to investigate
conditions
- essential term in a contract
if breached, entitled to DISCHARGE and DAMAGES
warranties
- a non-essential term in a contract
if breached, entitled to DAMAGES
implied conditions (5)
- goods sold by sample will comply with sample
- goods sold by description will comply with the description and be of merchantable quality
- fitness for purposes
- ——–buyer identifies needs to seller then relies on sellers advice
- time for delivery
- right to sell (if you own it)
payment must be a __________
warranty
Personal Property Security Act (PPSA)
- governs whenever you have loans on personal items
Online registry: Personal Property Security Registry (PPSR)
Specific Security Agreement
- documents where someone who owes money pledges
- specific listed assets
- traceable
General Security Agreement
- pledge of all assets
DEMAND- Crystallization of what is owned by the debtor on the day of DEMAND
Realizing Security (5 steps)
#1: Notice of Intention Realize Security #2: Seizure by Bailiff #3: 21 day redemption period #4: Bailiff’s sale - cost debets, interest, surplus to owner, shortfall = the owner is responsible #5: Exception: seize or sue rule - consumer items only
