QUIZ 5 BLER

What is a legal consequence for a sole trader when the business suffers losses?

• The government covers all losses.

• Losses are shared with employees.

• The sole trader suffers all the losses and liabilities.

• Creditors forgive the business losses.

Which advantage of a General Partnership relates to financial benefits?

• Potentially more money can be earned

• Easier business dissolution

• Decreased operational flexibility

• Reduced personal control

What is the primary purpose of entering into a partnership agreement in a general partnership?

• To legally overthrow the agency principle

• To reduce the financial risk to zero

• To contractually agree and control how the partnership will operate

• To change the fundamental laws of business

Which principle in company law cannot be overthrown by a partnership agreement?

• The equity principle

• The agency principle

• The liability principle

• The profitability principle

In the case of Mercantile Credit Ltd v Garrod 1962, why was Mr. Garrod found liable when a car was sold to Mercantile Credit without his knowledge?

• Because he was not a partner in the business

• Because the car was defective

• Because trading in cars was sufficiently connected to the business's operations as a garage

• Because he personally approved the transaction

What should partners ideally do when entering into a general partnership?

• Avoid any formal agreements

• Enter into a partnership agreement to control operations

• Consult the Partnership Act 1890 only

• Operate independently without agreements

In the absence of a partnership agreement, which act governs general partnerships?

• Companies Act 2006

• Sole Proprietorship Act 1984

• Partnership Act 1890

• Business Operations Act 1991

What does the Partnership Act 1890 allow in terms of partnership formation?

• Requires a formal declaration before trading

• Allows partnerships only after trading begins

• Allows being in a general partnership without any formal declaration

• Prohibits general partnerships without formal agreements

What was the primary business proposed in the case of Khan v Miah 2001?

• Technology startup

• Restaurant business

• Clothing retail

• Bookstore

How many people were involved in the partnership discussed in Khan v Miah 2001?

• Two

• Three

• Four

• Five