Chapter 10

Question 1

a business operated for a profit by one individual who is responsible for the debts and liabilities

Answer 1

Sole Proprietorship

Question 2

A legal relationship between two or more persons carrying on a business for the purpose of earning a profit

Answer 2

Partnership

Question 3

A business activity, usually for a specific project or time period, carried on by two or more parties according to terms and conditions set out in a contract

Answer 3

Joint Venture

Question 4

A legal entity created by government legislation that has a separate existence from its owners

Answer 4

Corporation

Question 5

an agreement among all the partners in which such issues as management and procedures for carrying on the business, the division of profits and contributions, and dispute resolution are addressed

Answer 5

Partnership Agreement

Question 6

consists of at least one general partner that is liable for the debts and obligations of the partnership to an unlimited degree and at least one limited partner whose liability is limited to the amount contributed to the partnership business

Answer 6

Limited Partnership

Question 7

Percentage interests in a corporation

Answer 7

Shares

Question 8

Have the right to vote on certain corporate matters and to receive a percentage share of the residual property of the corporation on it’s dissolution

Answer 8

Common Shares

Question 9

Have a priority over other classes of shares in terms of certain corporate actions, such as the payment of dividends

Answer 9

Preferred Shares

Question 10

an obligation to act honestly, in good faith and in the best interests of the corporation

Answer 10

fiduciary duty

Question 11

the obligation for corporate directors to ensure proper measures have been taken to comply with legal duties

Answer 11

due diligence

Question 12

a written agreement among all the shareholders of a corporation that restricts in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of the corporation

Answer 12

Unanimous Shareholders Agreement

Question 13

sells shares to the public through a recognized stock exchange in compliance with provincial or territorial securities regulations

Answer 13

public corporation

Question 14

a business arrangement formed by a written agreement in which a business grants the right to use its trade name, trademark, and operating procedures to operate a similar business

Answer 14

franchise

Question 15

the person granting the rights under the franchise agreement

Answer 15

franchisor

Question 16

the person receiving the rights from the franchisor under the franchise agreement

Answer 16

Franchisee