Jacqui and Penny Decided to Go into Partnership in a Small

question 16

Multiple Choice

Jacqui and Penny decided to go into partnership in a small baseball equipment manufacturing firm.Jacqui raised $250,000 start-up funds,in large part on the basis of documents which she forged.These documents purported to show that they owned their factory,when in fact,they merely leased it.Jacqui spent all of the money on herself,and she now has no assets and has been jailed for 10 years.The creditors have contacted Penny and told her they will hold her liable for the loss.

• A)Since she was unaware of Jacqui's fraudulent actions,Penny cannot be successfully sued by the creditors.
• B)Since Penny is Jacqui's partner,she is vicariously liable for this fraud.
• C)Penny is both civilly and criminally liable for Jacqui's behaviour.
• D)Since they should have verified independently everything that they were told by Jacqui,the creditors must bear their own losses.
• E)Penny can successfully argue volenti non fit injuria in her own defence.

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Definitions:

Free Range Eggs

Eggs that come from chickens that have been given the freedom to roam outdoors, rather than being confined in small cages.

Cartons

Containers usually made of paperboard or cardboard used for storing and transporting goods.

Income Elasticity

The degree to which consumer demand for a product shifts following alterations in their financial earnings.

Inferior

A type of good for which demand decreases as the income of consumers increases.