Quiz 1 Flashcards
- Commercial Law
- Financing of transactions:
- Sale and distribution of goods:
- Created through contracts and obligations, obligations are what stems through the contacts.
Financing of transactions: Are in need of funding for projects, have to find the funding for the clients. Could be done on national and International level.
Sale and distribution of goods: Buying and Selling, contracts and buying certain items. Local and international.
Business Law
- Mergers
- Forming a company
- Acquisitions
Mergers: One company merges with another. A merger doesn’t make a monopoly, but makes it stronger. Become one.
Forming a company: incorporation, share holders, directors. Shareholders and directors are for a company, how the company is ran. If you are incorporated, need to have at least one shareholder and one director. Companies are incorporated, businesses are not necessarily incorporated.
Acquisitions: Buying out competition, companies. Rather than having a competition against you, buy them out in order to make the most money by having the least competition against you. Become the owner of the company, but can chose to keep the company as it is and take the profits.
Very important to know Tax Law.
Corporate Law:
Corporations, adding incorporations (Inc.) Have to let companies know what you’re incorporated so that there’s a different entity. Is divided from your personal self and belongings (house, car, rips, investments) and is divided from your business. Corporations and taxable entities, have to pay corporate taxes, separate from personal taxes.
Sole proprietorship
Article 1525 para 3 CCQ
You are running your own business, are self-employed. Are not incorporated. As you are not incorporated, there is no separation as your business is under your personal entity, you are therefore taxed on your income, whether it is person or from your business.
Expenses; can expense clients and restaurants, as well as supplies, parking… Can reduce your declared income as you spent money within your incorporation, get taxed less as you spent money on your business, declare less income.
If business is under $30 000, do not need to charge GST and PST
Advantages
Being your own boss Self-Independence Simple operation Profits Low start up and operating costs Can work from their house Certain tax advantages Simplest legal structure to set up a business
Disadvantages
Not entitles to benefits that other workers would receive (health insurance)
Retirement, if you don’t put the money aside, a company will not provide for you. Ex, companies can make private retirement plans.
Run your business alone, have no help, make more mistakes.
Financing is harder
Taxes are higher due to higher income
Personally responsible because not incorporated, something happens and they can sue you personally
Risks in the event of bankruptcy, is a personal bankruptcy
Business ends at the death of the owner
Contracts:
Can be verbal and written
An agreement of wills; at least 2 people to a contract
Good faith within contrats, found in article 1375 CcQ
Respect agreement
Good intentions
Disclosing
Pertinent information
For a contract to be valid, you need:
Consent: free (not forced) and enlightened (all info has been disclosed)
Cause: reason as to why you got into contract is legal (reason—legal)
Object: goal needs to be legal (goal — legal)
-Written contracts are ideal
Verbal agreement are:
Consequences
Consequences with verbal contracts are that it is hard to prove, especially if there are damages that has happened.
Need a witness to prove verbal contracts (sometimes not reliable)
Can prove with recordings (need approval/consent from person a part of conversation)
Anything that talks about it, through text or email.
Partnership
Formed by a contract (need a written contract)
2186-2197 of CcQ
No intervention of the government
Two partners must decide that they are forming a partnership, must give consent
Partners will have mutual obligations for conditions (1385 CcQ)
Essential elements to form of a partnership
Contribution; usually not the same from each partner as they will contribute differently. Will have different skills, money to fund, connections or clientele, experience…
Participation in profits/losses; if business isn’t incorporated, debts may be divided between all partners equally.
Intention of the parties Intention has to be clear that you want to get into the partnership agreement. Needs to be clear that everyone wants to form this partnership.
General Partnership
Requires a name to be registered. (G.P. or S.E.N.C.)
For tax purposes
Lease agreements
Partnerships can take legal action and can be sued
Profits are usually shared on a percentage basis
Disadvantages of General Partnership
Need a contract (sometimes can make wrong contracts with mistakes)
Obligations to register in registraire des entreprises
French version of name…that is accepted
Can get into conflict and disagreements with partners
Partners are personally liable
More taxes the more money you make
Adv of gen partnerships
Need contract
Some tax advantages
Less costly than an incorporation
Can expense (same way as a sole proprietorship)
Share of resources amongst partners (expertise, skills, etc)
Have partners to talk to, see other point of view
Incorporations to general partnerships
Have the decision to make an incorporation, go from general partnership to incorporations where you will have shares
