Commercial law

Commercial law

Question 1

In a partnership relationship, each partner should act in the best interests of the other partners. All partners must be accountable for all the incurred profits as well as the use of the property. Consequently, any partner who decides to use the property belonging to the business for their benefits must pay for all incurred profits and refund in case of damages. Similarly, a partner who runs an identical business without consent will forward all the profits, which will be, in turn, distributed among the partners. However, they will not be refunded in case of losses.

For instance, if Gilbert, a partner in a boutique in Toronto, were to open a similar boutique in Ottawa without consent, any profits made from the Ottawa business will be paid over to the Toronto partnership. The profits will be distributed equally among the partners. Additionally, the principle provides that there must be a disclosure of information among partners for the benefit of the business. For example, if Gilbert comes across a deal to become a partner in another boutique, he must inform the other partners about this opportunity.

Question 2

1. All the partners are equally liable for the loss of the clients. This is because, Shah being one of the partners, had witnessed the firm investing funds on behalf of clients in the past. Although he owes the other partners a duty of disclosure, all the partners must share the incurred losses equally according to the Partnership Act. Again, the Act provides that outside third parties (clients) will not be affected by the partners’ agreements and should recover their losses from any partners who have assets.
2. To prevent such an occurrence, the partners should have made a unanimous agreement that no partner should make investments on behalf of clients without engaging the others. Any investments made should have the consent of all the partners. From such an agreement, Shah would not have committed such a loss-making decision since he would have looked after each partner’s interest.

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Question 3

1. Insolvency is defined as the inability of a person to pay their debts as they become due. On the other hand, bankruptcy refers to the process through which an insolvent individual transfers their assets to a trustee for distribution to creditors, either voluntarily or involuntarily. The trustee deals with the assets for the benefits of the creditors. A voluntary transfer of assets by the debtor is referred to as assignment in bankruptcy.
2. Secured creditors have priority in connection to any secured assets that they may claim. In some situations, a debtor may have limited resources with which to settle debts. Therefore, they may declare themselves bankrupt or may be forced to make a declaration. According to section 136 of the BIA, preferred creditors are those who are granted preferential status during an insolvent liquidation. They have a right to first payment, and examples include employees who are entitled to salary arrears and municipal taxes. Unsecured creditors are paid after all other obligations have been met. They have all the required remedies when a debtor breaches a legal agreement. They have a right to sue the debtor and may also seize the debtor’s assets and sell them to recover their money. Examples of such creditors are customers, suppliers, and contractors.

Question 4

Legally, there is nothing wrong with O’Brien’s practice of selling poultry alongside meatballs. In this case, he is selling his products using the combined product offering strategy. This strategy is utilized by many companies to boost their profits, balance cash flows, and revenue. Besides, O’Brien can attract new clients as well as increasing demand among the loyal clientele.

Question 5

1. People can own property together either in common or joint tenancy. In a common tenancy, all parties have an undivided interest in the land such that neither can refer to the property as theirs. They share the ownership, and in case of death of either party, their heir will inherit the interest.

In a joint tenancy, when one party dies, all the property interests will belong to the co-owner. When joint tenants own the property outright, the survivors continue to hold the entire property in case one party dies. Joint ownership creates a right to property survivorship through severance.

1. In this case, the joint tenancy would be advisable, mainly due to severance. If one of the parties does not want the other to inherit all the interests, it is possible to sever the joint ownership. However, severance must take place before the death of the individual seeking it and should be done by the party, inconsistently acting towards the property.

Question 6

An easement provides an individual with a right to utilize a portion of another person’s land for a particular purpose. It gives a person the right to use the land but not to own it. An easement is also referred to as lesser interests inland because it does not convey the right to exclusive possession of the property. Examples include the use of private paths and the use of landowner’s property to lay electric wires.