Sample Practice Questions
Business Law
John serves as a director of a private corporation but decides to resign due to internal financial issues within the company. After submitting his resignation letter, he discovers that the corporation owes unpaid taxes to the CRA from before his resignation. What are John’s obligations regarding these tax liabilities?
A) John may still be held liable for corporate tax debts if they arose while he was a director.
B) John has no liability once his resignation is submitted.
C) John is personally responsible for all company debts after resignation.
D) Resigning prevents any potential liability for unpaid corporate obligations.
Estate Planning
Emma, a single mother, names her brother, Jack, as the guardian of her minor daughter, Lily, in her will. Emma's will also specifies that Jack should manage Lily's inheritance until she reaches the age of 21. After Emma's unexpected death, Jack steps in as Lily's guardian. Under the Children’s Law Reform Act (CLRA), what must Jack do to legally manage Lily's inheritance?
A) Jack automatically becomes the guardian of Lily’s property because he is her appointed guardian.
B) Jack must apply to the court for a guardianship order to manage Lily’s inheritance.
C) Jack can manage the inheritance without court involvement since it was specified in the will.
D) Jack needs to provide an annual accounting of the inheritance to the Office of the Children's Lawyer.
Real Estate
Mark is purchasing a residential property, and during the title search, his lawyer discovers a restrictive covenant registered against the property, prohibiting any construction that exceeds two stories. Mark plans to build a three-story home on the property. What should Mark’s lawyer advise him to do?
A) Proceed with the purchase and challenge the restrictive covenant in court.
B) Request that the vendor remove the restrictive covenant before closing.
C) Inform Mark that the restrictive covenant is binding and may limit his construction plans.
D) Ignore the restrictive covenant, as they are rarely enforced.
Professional Responsibility
Emily, a real estate lawyer, is meeting with her client, Michael, to discuss the sale of a commercial property. Michael brings his business partner and his real estate agent to the meeting, asking them to stay and assist in decision-making. How should Emily handle this situation?
A) Allow both the business partner and real estate agent to stay, as long as Michael consents.
B) Proceed with the meeting but warn Michael that their presence may waive confidentiality.
C) Refuse to proceed unless Michael removes all third parties.
D) Allow the business partner to stay but ask the real estate agent to leave.
ANSWERS
Business Law
John serves as a director of a private corporation but decides to resign due to internal financial issues within the company. After submitting his resignation letter, he discovers that the corporation owes unpaid taxes to the CRA from before his resignation. What are John’s obligations regarding these tax liabilities?
A) John may still be held liable for corporate tax debts if they arose while he was a director.
B) John has no liability once his resignation is submitted.
C) John is personally responsible for all company debts after resignation.
D) Resigning prevents any potential liability for unpaid corporate obligations.
Answer:
A) John may still be held liable for corporate tax debts if they arose while he was a director.
Explanation:
Under CBCA s. 227.1 and OBCA s. 121(1), directors may be personally liable for certain unpaid corporate obligations, including unremitted payroll taxes, if they accrued during their tenure.
Estate Planning
Emma, a single mother, names her brother, Jack, as the guardian of her minor daughter, Lily, in her will. Emma's will also specifies that Jack should manage Lily's inheritance until she reaches the age of 21. After Emma's unexpected death, Jack steps in as Lily's guardian. Under the Children’s Law Reform Act (CLRA), what must Jack do to legally manage Lily's inheritance?
A) Jack automatically becomes the guardian of Lily’s property because he is her appointed guardian.
B) Jack must apply to the court for a guardianship order to manage Lily’s inheritance.
C) Jack can manage the inheritance without court involvement since it was specified in the will.
D) Jack needs to provide an annual accounting of the inheritance to the Office of the Children's Lawyer.
Answer:
B) Jack must apply to the court for a guardianship order to manage Lily’s inheritance.
Explanation:
Under Section 47 of the CLRA, a guardian of a minor’s property must be appointed by the court unless the will explicitly grants authority to retain and manage the child’s inheritance. In the absence of such an explicit grant, Jack must apply to the court for a guardianship order to manage Lily's inheritance legally.
Real Estate
Mark is purchasing a residential property, and during the title search, his lawyer discovers a restrictive covenant registered against the property, prohibiting any construction that exceeds two stories. Mark plans to build a three-story home on the property. What should Mark’s lawyer advise him to do?
A) Proceed with the purchase and challenge the restrictive covenant in court.
B) Request that the vendor remove the restrictive covenant before closing.
C) Inform Mark that the restrictive covenant is binding and may limit his construction plans.
D) Ignore the restrictive covenant, as they are rarely enforced.
Answer:
C) Inform Mark that the restrictive covenant is binding and may limit his construction plans.
Explanation:
Restrictive covenants are legally binding agreements that run with the land and restrict the use or development of the property. Mark's lawyer must inform him that the covenant is enforceable and could limit his ability to build a three-story home. If Mark wishes to proceed with the purchase, he may need to seek a modification or removal of the covenant through legal means, but this process can be complex and uncertain.
Professional Responsibility
Emily, a real estate lawyer, is meeting with her client, Michael, to discuss the sale of a commercial property. Michael brings his business partner and his real estate agent to the meeting, asking them to stay and assist in decision-making. How should Emily handle this situation?
A) Allow both the business partner and real estate agent to stay, as long as Michael consents.
B) Proceed with the meeting but warn Michael that their presence may waive confidentiality.
C) Refuse to proceed unless Michael removes all third parties.
D) Allow the business partner to stay but ask the real estate agent to leave.
Answer:
B) Proceed with the meeting but warn Michael that their presence may waive confidentiality.
Explanation:
Under Rule 3.3-1, a lawyer must protect client confidentiality. If third parties are present, privilege may be waived, meaning confidential discussions could later be disclosed in court. The lawyer must warn the client about these risks.