Text reading notes for Partnerships, Sole Proprietorships and Trusts (Ch 16 in 9th edition / Ch 17 om 8th edition)

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Management (MGS)
Professor Rybak

CH 17 LAW OF SOLE PROPRIETORSHIP AND PARTNERSHIP Sole Proprietorship - Simplest form of business org as far as the law is concerned - The sole proprietor, as the owner of the business, owns all of the assets, is entitled to all of the profits, and is responsible for all of the debts - Makes all of the decisions in the operation of the business and is directly responsible for its success or failure - Major disadvantage: limited ability to raise capital and management-skill limitations - Require registration or licensing of the business Provincial legislation governing professions (medicine, dentistry, law, architecture, etc), semi-professional and skilled trade activities Municipal skilled trades, the operation of taxis, and many other service-oriented business - Advantage: freedom in the operation makes it the most attractive form of business org for a new, small enterprise Partnership - Also a simple form of business org - Provides additional mgmt expertise in the operation and additional capital - Lending institutions are generally more willing to extend credit in larger amounts to a partnership than a sole proprietorship - Partners usually possess a greater interest in the success of the business than do employees - Overall advantage: intro of new proprietors may substantially increase the chances for growth and development of the enterprise - Risk: each partner individually, is responsible for the carelessness or poor judgement of each other partner in his or her conduct of partnership business Historical Develoment of Partnership - A partnership is a relationship that subsists bt two or more persons carrying on business in common with a view to profit Excludes all associations & org that are not carried on for profit (ex. Social clubs, charitable org, and amateur sports groups) Ex. The simple debtor-creditor relationship, ordinary joint ownership of property, profit-sharing schemes, the loan of money, & the sharing of gross receipts from a venture do not fall within the definition of a partnership - Two essential characteristics: informal + mutual trust and confidence - The Societe en Commandite was developed in Continental Europe after the discovery of distant markets and the New World in the 15 and 16 centuries. This form of org allowed the contribution of capital by investors of the profits from the venture, although no right to actively participate in the mgmt of the org. As a result, the investors were given limited liability for the debts of the org th - The concept in a modified version found favour in England in the 16 century in the form of the joint stock company a partnership in which the investors, as partners, delegated the authority to manage the org to a board of mgmt. However, unlike the Societe end Commandite, unlimited liability of the individual partners remained. - In 1879, Sir Frederick Pollock was asked to prepare a draft bill for the English Parliament that would codify the law of partnership (but did not come before Parliament until 10 years later). Retained rules of equity and common law relating to partnerships, except where the rules were inconsistent with the express provision of the Act - the Partnership Act was passed in England, then adopted with minor modifications in Canada and may other countries that were part of the British Commonwealth www.notesolution.com
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