A Lawyer Who Enters into a Business Transaction with a Client

question 13

Multiple Choice

A lawyer who enters into a business transaction with a client, and neglects to inform the client that his credit rating is poor may be found to be

• A) in breach of his or her fiduciary duty.
• B) in breach of the law that governs lawyers.
• C) in breach of contract.
• D) in breach of his or her duty to inform the client.
• E) in breach of the common law.

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Definitions:

Management Fees

Fees paid to managers for operating investment funds or managing assets.

Unrealised Profit

Profit that has been earned but not yet received in cash or recorded in the financial statements, often resulting from intra-company transactions.

Mark-up

The amount added to the cost price of goods to cover overhead and profit, determining the selling price.

Deferred Tax Asset

Financial accounting that recognizes reduced income tax in the future due to deductible temporary differences and carryforwards.