Question 1

For ratification to be effective:

Accepted Answer

A)  the agent cannot disclose the name of the principal. 
B)  the principal must have been in existence at the time of the agent's action. 
C)  the agent must have the capacity to complete the unauthorized act and ratify it. 
D)  the necessity of the principal should not be served by subagents. 
A)  the agent cannot disclose the name of the principal. 
B)  the principal must have been in existence at the time of the agent's action. 
C)  the agent must have the capacity to complete the unauthorized act and ratify it. 
D)  the necessity of the principal should not be served by subagents. B

Question 2

Marissa,the CEO of Carmine Laboratories,appointed Raphael as a marketing manager and gave him express authority to hire other people to help him carry out his duties.Raphael hired Dana as his secretary.Based on these facts,which of the following statements is true?

Accepted Answer

A)  Only Marissa is bound to a third party by Dana's actions. 
B)  Neither Marissa nor Raphael is bound to a third party by Dana's actions as an employee. 
C)  Between Marissa and Raphael, it is Raphael who is ultimately liable for Dana's actions as an employee. 
D)  Dana is solely bound to third parties for her actions as an employee. 
A)  Only Marissa is bound to a third party by Dana's actions. 
B)  Neither Marissa nor Raphael is bound to a third party by Dana's actions as an employee. 
C)  Between Marissa and Raphael, it is Raphael who is ultimately liable for Dana's actions as an employee. 
D)  Dana is solely bound to third parties for her actions as an employee. C

Question 3

Explain the concept of apparent authority.

Accepted Answer

Apparent authority is created by the conduct of the principal that causes a third person to reasonably believe that another has the authority to act for the principal.It may exist if a principal has intentionally or by want of ordinary care induced and permitted third persons to believe a person is her agent even though no actual authority had been conferred on the agent.The source of apparent authority is the principal.Words or acts of an agent alone cannot create apparent authority.The test used for determining the extent of an agent's apparent authority is the justifiable belief of a third party dealing with the agent.An agent's exercise of apparent authority,in the absence of actual authority,is a violation of the agent's duty to the principal.Apparent authority may arise from customs in the trade.It may also arise from the principal's failure to inform third persons that the relationship is not what it appears to be.It is therefore important that third parties ask whether the agent has the implied or apparent authority to make a particular agreement.

Question 4

Ralph and Aisha engaged Emma,a realtor,to sell their variety store.Emma represented to buyer Pavel that "this was a typical general store," selling gas,oil,hardware,beer,and groceries.She reported that the store had an annual gross income of over $1 million.Emma failed to inform Pavel that one-third of the store's profit was attributable to an accompanying lawn and garden equipment distributorship that Ralph and Aisha were not including in the sale.When Pavel visited the business,Emma directed him away from the garage area where the lawn and garden equipment was stored.Throughout all of these negotiations,Ralph and Aisha were unaware of Emma's misrepresentations.After purchasing the store,Pavel learned of the importance of the equipment sales from Ralph and Aisha.Are Ralph and Aisha liable for Emma's misrepresentation?

Accepted Answer

Yes,Ralph and Aisha are liable for Emma'

Question 5

When a corporation is made an agent,of necessity the principal is served by subagents.

Accepted Answer

A) True 
 B)False

Question 6

An attorney-in-fact:

Accepted Answer

A)  is the label given to an agent whose authority is in writing. 
B)  is the label given to an agent whose authority is implied. 
C)  is the label given to an agent whose authority is apparent. 
D)  is the label given to an agent whose authority is passed on after the demise of the principal. 
A)  is the label given to an agent whose authority is in writing. 
B)  is the label given to an agent whose authority is implied. 
C)  is the label given to an agent whose authority is apparent. 
D)  is the label given to an agent whose authority is passed on after the demise of the principal.

Question 7

If the agent exceeds his or her authority,liability results-unless the principal ratifies the act.

Accepted Answer

A) True 
 B)False

Question 8

When Nancy's aunt left for her annual Christmas vacation,she left Nancy in charge of her coffee shop.During this time,there was a riot in the city and the door of the café got damaged.Under such circumstances,Nancy can make necessary repairs if she cannot reach her aunt for further instructions because:

Accepted Answer

A)  she has apparent authority. 
B)  she has power of attorney. 
C)  she has express authority. 
D)  she has inherent agency power. 
A)  she has apparent authority. 
B)  she has power of attorney. 
C)  she has express authority. 
D)  she has inherent agency power.

Question 9

A general agent:

Accepted Answer

A)  has a limited range of implied authority than a special agent. 
B)  is authorized by the principal to do a specific act. 
C)  is an agent who does not possess the authority to contract on behalf of the principal. 
D)  acts for the principal in a number of transactions over a period of time. 
A)  has a limited range of implied authority than a special agent. 
B)  is authorized by the principal to do a specific act. 
C)  is an agent who does not possess the authority to contract on behalf of the principal. 
D)  acts for the principal in a number of transactions over a period of time.

Question 10

Apparent authority may exist:

Accepted Answer

A)  only if actual authority has been conferred on the agent. 
B)  if a principal has unintentionally permitted third persons to believe a person is him/her agent. 
C)  if the principal specifically describes the extent of the agent's powers in writing or orally and makes him/her a special agent. 
D)  when the conduct of the principal causes a third person reasonably to believe that another has the authority to act for the principal. 
A)  only if actual authority has been conferred on the agent. 
B)  if a principal has unintentionally permitted third persons to believe a person is him/her agent. 
C)  if the principal specifically describes the extent of the agent's powers in writing or orally and makes him/her a special agent. 
D)  when the conduct of the principal causes a third person reasonably to believe that another has the authority to act for the principal.

Question 11

A large and well-known corporation wants to acquire a plot of ground for a new plant.To avoid the extra cost,the corporation purchases the land through several agents,each purporting to be buying personally.In such cases,the corporation is a(n)_____.

Accepted Answer

A)  undisclosed principal 
B)  disclosed principal 
C)  partially disclosed principal 
D)  subagent 
A)  undisclosed principal 
B)  disclosed principal 
C)  partially disclosed principal 
D)  subagent

Question 12

When the agent colludes with a third party to withhold knowledge or money from the principal,the principal will be liable.

Accepted Answer

A) True 
 B)False

Question 13

An agent will be relieved from liability for representations in excess of the agent's authority if:

Accepted Answer

A)  the agent hired subagents to do some of his work. 
B)  the third party knows that the agent is acting in excess of his authority. 
C)  the principal does not ratify the act. 
D)  the act was undertaken with a good intent. 
A)  the agent hired subagents to do some of his work. 
B)  the third party knows that the agent is acting in excess of his authority. 
C)  the principal does not ratify the act. 
D)  the act was undertaken with a good intent.

Question 14

Ratification releases:

Accepted Answer

A)  the principal from liability. 
B)  the agent from liability. 
C)  the third party from liability for acts of the principal. 
D)  the principal and the third party from liability. 
A)  the principal from liability. 
B)  the agent from liability. 
C)  the third party from liability for acts of the principal. 
D)  the principal and the third party from liability.

Question 15

Is a principal liable for the acts committed by the employees of an agent? Discuss.

Accepted Answer

Agents may delegate to employees acts fo

Question 16

Which of the following statements is true about apparent authority?

Accepted Answer

A)  Only a general agent can have apparent authority. 
B)  Only a special agent can have apparent authority. 
C)  If the agent justifiably believed he or she had authority, this authority would be apparent. 
D)  If a third party justifiably believed the agent had authority, the agent's authority would be apparent. 
A)  Only a general agent can have apparent authority. 
B)  Only a special agent can have apparent authority. 
C)  If the agent justifiably believed he or she had authority, this authority would be apparent. 
D)  If a third party justifiably believed the agent had authority, the agent's authority would be apparent.

Question 17

Ratification does not give the principal full benefit of the contract.

Accepted Answer

A) True 
 B)False

Question 18

The test of an agent's express authority is:

Accepted Answer

A)  the justifiable belief of the agent. 
B)  the specific language used by the principal in granting the authority. 
C)  the appearance of authority in the agent created by the principal. 
D)  the deduction of the third party dealing with the agent. 
A)  the justifiable belief of the agent. 
B)  the specific language used by the principal in granting the authority. 
C)  the appearance of authority in the agent created by the principal. 
D)  the deduction of the third party dealing with the agent.

Question 19

Many courts allow a third person to rescind a sales contract when the person has relied on a misrepresentation by the agent even though the contract contains an exculpatory clause.

Accepted Answer

A) True 
 B)False

Question 20

The agent is held liable on contracts entered into on behalf of an undisclosed principal.

Accepted Answer

A) True 
 B)False

Exam 24: Liability of Principals and Agents to Third Parties

For ratification to be effective:

Marissa,the CEO of Carmine Laboratories,appointed Raphael as a marketing manager and gave him express authority to hire other people to help him carry out his duties.Raphael hired Dana as his secretary.Based on these facts,which of the following statements is true?

Explain the concept of apparent authority.

When a corporation is made an agent,of necessity the principal is served by subagents.

An attorney-in-fact:

If the agent exceeds his or her authority,liability results-unless the principal ratifies the act.

A general agent:

Apparent authority may exist:

A large and well-known corporation wants to acquire a plot of ground for a new plant.To avoid the extra cost,the corporation purchases the land through several agents,each purporting to be buying personally.In such cases,the corporation is a(n)_____.

When the agent colludes with a third party to withhold knowledge or money from the principal,the principal will be liable.

An agent will be relieved from liability for representations in excess of the agent's authority if:

Ratification releases:

Is a principal liable for the acts committed by the employees of an agent? Discuss.

Which of the following statements is true about apparent authority?

Ratification does not give the principal full benefit of the contract.

The test of an agent's express authority is:

Many courts allow a third person to rescind a sales contract when the person has relied on a misrepresentation by the agent even though the contract contains an exculpatory clause.

The agent is held liable on contracts entered into on behalf of an undisclosed principal.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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