Explaining the principle of fiduciary duty in a partnership relationship
1. Explain how the principle of fiduciary duty works in a partnership relationship.
2. Singh, Shah, Amaro and Brown in an accounting firm. Singh gave the other partners written notice that he was leaving the partnership on March 31. The other partners purchased Singh’s interest and agreed that he would not be liable for any future partnership debts. At the end of May, it was discovered that Shah had, during the previous month, made various investments on behalf of a couple of clients. The investments were unsecured and the clients lost over $250 000. None of the other partners were aware of Shah’s activities although the firm had occasionally invested funds on behalf of clients in the past.
i. Who is responsible for the clients’ losses?
ii. What precautions could the partners have taken to prevent this situation?]
3. Srini Nair owns and operates a grocery store in Fort McMurray. He has a number of employees including Ragini Sharma who is his assistant manager. Ragini has very limited authority to act on Srini’s behalf. One day while Srini was out of town, a distributor of produce offers Ragini a great deal on fiddleheads, a delicacy from New Brunswick. Due to the perishable nature of fiddleheads, the deal is only available for one day. As Srini’s grocery store caters to many transplanted New Brunswickers, Ragini places an order. When Srini returns the next day and the fiddleheads arrive, he rejects them on the basis that he has never heard of anyone ever eating fiddleheads.
i. Is Srini bound to accept and pay for the fiddleheads?
ii. How should businesses like Srini’s deal with the risk of employees exceeding their authority to act on behalf of the business?
4. Suzanne owns a small restaurant. Robert, the restaurant’s chef, is an excellent cook but he is very temperamental; he becomes angry and abusive with the other kitchen staff and waiters over the slightest mistake. It has reached the point that many members of staff dread working with him. Suzanne has spoken to Robert about this issue many times over the years but if anything, it is getting worse. Robert simply tells her that he cannot tolerate “incompetence” among the staff and that shouting and yelling at them is just his way of coping with stress. Suzanne has decided that enough is enough—she is going to terminate Robert’s employment. (Robert is 39 years old and has worked for the restaurant for seven and a half years. He earns $1,000 per week, including vacation pay. The restaurant’s annual payroll is $850,000.)
Answer the following questions related to this fact situation.
a. Under Ontario’s employment standards legislation, how many weeks’ notice, or pay in lieu of notice, is owing to someone with Robert’s length of service who is terminated?
b. Is it possible that Suzanne’s restaurant could be liable to Robert for statutory severance pay in these circumstances? Explain your answer.
c. In your opinion, is it likely that a court would find that Suzanne had just cause under the common law to terminate Robert’s employment? Explain your answer.
d. Suzanne wants to avoid a lawsuit, so she decides that she will offer Robert a package. In your opinion, what would be a reasonable offer in these circumstances? Explain your answer by identifying at least three factors that a court takes into consideration in determining the appropriate amount of reasonable notice of termination (or pay in lieu) required under the common law.
5) Miss Kachur is a training consultant who owns her own business and offers services to public and private organizations. Fortunately, as a result of her effective work, Sigma Corporation contracted with her to develop and provide training at its facilities throughout Canada. What began as a short-term consulting contract was extended for a period of years. Which of the following statements is true? Provide an explanation to support your choice and demonstrate the impact on Miss Kachur.
a. Due to her ongoing relationship with Sigma Corporation, Miss Kachur would likely be considered an employee of the corporation.
b. Because Miss Kachur operates her own business, she is likely an independent contractor in relation to Sigma Corporation.
c. Miss Kachur would be considered an agent of Sigma Corporation.
d. Although Miss Kachur operates her own business, she is likely a dependent contractor in relation to Sigma Corporation.
e. If Sigma Corporation decided to terminate the contract with Miss Kachur, she would be entitled to employment insurance benefits.