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1 RUNNINGHEAD: LAW1000-BUSINESS LAW-CLASS ASSIGNMENT

LAW1000-BUSINESS LAW-CLASS ASSIGNMENT Prepared for: Daniel Tsai Prepared by: Van Anh Vu (N01291568) Van Truong (N01330286) Humber Institute of Advanced Technology and Learning

2 LAW1000-BUSINESS LAW-CLASS ASSIGNMENT For this assignment, we would like to set up a financial broker (Forex) company named “FX24 Inc.” which offers a forex trading platform for our customers and our company acts as an agency that provides a platform for customers to make transactions and exchange foreign currencies. FX24 provides 24/7 services on behalf of our clients while charging them information and accesses that we offered. There are many forms of business that people can choose to set up a company. For this assignment, we are going to describe the features as well as the differences among sole proprietorship, partnership, agency, franchises and corporation. First, sole proprietorship is a simple way to set up a business for one person. If the owners choose their name as a business name, they can choose not to register it. However, if the owners pick another name, they have to register their business to the provincial government office. The sole proprietorship business needs to be renewed every 5 years. Even though it is easy to register, that form of business has the higher risk in terms of lacking skills and hard to raise funds due to the bank is often unwilling to lend. Moreover, the owners have unlimited liability, which means if the business fails, owners will lose all their assets including their personal assets. Even if it is a profitable business, the tax for the sole proprietorship is higher than other forms of business. Second, partnership is a business for two or more people with the same view of profit. Usually, people want to collaborate because they can share their knowledge and resources. A partnership can be formed by oral or written forms. Nevertheless, it is better to sign a written contract in order to clarify terms that they all agreed such as percentage share and liabilities. Beside its advantages, partnership also has some disadvantages. For instance, people may choose the wrong partners who are untrustworthy or have different view in running a business . Similar to the sole proprietorship, owners of partnership have unlimited liability and they have to pay tax in terms of personal income. The owners of partnership also have the fiduciary duty toward each other and if one partner signs a contract, all members involved in the agreement.

3 LAW1000-BUSINESS LAW-CLASS ASSIGNMENT Third, agency is a form of business relationship in which “one party represents another party in the formation of legal relations” (Weir, Smyth, 2014, p.359). An agent legally acts on behalf of another, which is known as a principal. An agent has the responsibility to set up a contract for the principal and a third party. They are not liable for any dispute between the third party and the principal. When the principal gives the agency the authority to make a contract on behalf of them, the agency relationship is formed. The agent has a fiduciary duty to the principal and has to act within their principal's scope. Also, agent is responsible to inform, follow the requirements and instructions as well as keep their principle up to date. The principal has a duty to pay the agent for the work. If the principal doesn’t want to use the agent on behalf of them anymore, it’s their responsibility to inform the third party about the change. Fourth, “franchise is an agreement that grants the right to use a name, trademark & business system for a product or service” (Weir, Smyth,2014, p.364). Founding company-franchisor-and the businessfranchisees have an agreement to claim all the terms and responsibilities for both parties. The franchises don’t need to come up with new ideas and can use the name, images that customers had already known about. However, the franchises’ fee is usually high and the terms are very tie and strict for franchisees as well. Finally, corporation is a business that consists of one or a group of people but act as a person. Founders have limited liability the tax rate is low compared to other forms and easy to raise fund through issue shares, and the public corporation has a responsibility to provide a prospectus for investors and the public. The private corporation only has to give investors the prospectus. For the business that we set up, the corporate is the most suitable one because a financial company needs a strong capital. Therefore, after going public, we can raise money through stocks and bond market. Additionally, limited liability is another advantage for the company because we act as an agency and the risk is lower since we don’t need to use our personal assets for company’s debts.

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Reference Scott, G. (2019, Jun 25). Forex Broker. Investopedia. Retrieved June 27, 2019 from https://www.investopedia.com/terms/forex/c/currency-trading-forex-brokers.asp Weir, J. D., Smyth, F. (2014). Critical Concepts of Canadian Business Law, 6 th edition. Ontario, Canada. Pearson Custom Publishing....