Question 1

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 had authority,his 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 had authority,his authority would be apparent. 
D) If a third party justifiably believed the agent had authority,the agent's authority would be apparent.

Question 2

General agents:

Accepted Answer

A) have a limited range of implied authority than special agents. 
B) are authorized by the principal to do a specific act. 
C) are agents who do not possess the authority to contract on behalf of its principal. 
D) act for the principal in a number of transactions over a period of time. 
A) have a limited range of implied authority than special agents. 
B) are authorized by the principal to do a specific act. 
C) are agents who do not possess the authority to contract on behalf of its principal. 
D) act for the principal in a number of transactions over a period of time.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) the agency is partially disclosed. 
B) the third party knows that the agent is acting in excess of his authority. 
C) the entity has a legal existence. 
D) the act was undertaken with a good intent. 
A) the agency is partially disclosed. 
B) the third party knows that the agent is acting in excess of his authority. 
C) the entity has a legal existence. 
D) the act was undertaken with a good intent.

Question 5

An agent possesses implied authority when:

Accepted Answer

A) the principal has ratified past actions,leading third persons to believe authority exists. 
B) the principal gives greater authority to special agents than general agents. 
C) the agent is required to safeguard the property interests of the principal due to an emergency. 
D) the agent's powers are specifically described by the principal. 
A) the principal has ratified past actions,leading third persons to believe authority exists. 
B) the principal gives greater authority to special agents than general agents. 
C) the agent is required to safeguard the property interests of the principal due to an emergency. 
D) the agent's powers are specifically described by the principal.

Question 6

A person may have apparent authority even though she has never been appointed an agent by the principal.

Accepted Answer

A) True 
 B)False

Question 7

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 8

When the principal is undisclosed,the third party who deals with the agent believes the agent is acting personally and accordingly expects the agent to be a party to the contract.

Accepted Answer

A) True 
 B)False

Question 9

The test of an agent's express authority is:

Accepted Answer

A) the justifiable belief of the agent. 
B) the specific language the principal used in granting the authority. 
C) the technical label given to an agent. 
D) the surrounding circumstances such as the words and conduct of the parties. 
A) the justifiable belief of the agent. 
B) the specific language the principal used in granting the authority. 
C) the technical label given to an agent. 
D) the surrounding circumstances such as the words and conduct of the parties.

Question 10

Where an agent has taken an unauthorized action:

Accepted Answer

A) the principal may not ratify the action even if it would be beneficial to the principal to do so. 
B) the principal is free to ratify the beneficial part of the unauthorized action and deny any burdensome part of it. 
C) any ratification by the principal must be for the entire action,not merely the beneficial part. 
D) the principal may ratify the action only if the principal is a corporation. 
A) the principal may not ratify the action even if it would be beneficial to the principal to do so. 
B) the principal is free to ratify the beneficial part of the unauthorized action and deny any burdensome part of it. 
C) any ratification by the principal must be for the entire action,not merely the beneficial part. 
D) the principal may ratify the action only if the principal is a corporation.

Question 11

Which of the following is true for ratification?

Accepted Answer

A) It releases the principal from liability to the third person. 
B) It gives the agent the same right to compensation that he would have had if there had been prior authorization. 
C) It requires that the principal to have full understanding of the legal significance of all material facts. 
D) It is inferred by a court from the fact that the agent accepted the benefits of an unauthorized contract. 
A) It releases the principal from liability to the third person. 
B) It gives the agent the same right to compensation that he would have had if there had been prior authorization. 
C) It requires that the principal to have full understanding of the legal significance of all material facts. 
D) It is inferred by a court from the fact that the agent accepted the benefits of an unauthorized contract.

Question 12

An agent can limit the liability for the acts of a subagent to the principal by using:

Accepted Answer

A) express authority 
B) ministerial actions 
C) implied authority 
D) exculpatory clause 
A) express authority 
B) ministerial actions 
C) implied authority 
D) exculpatory clause

Question 13

Briefly describe the doctrine of respondeat superior.

Accepted Answer

Principals may be liable to third person

Question 14

Jacobsen contracted with Orr to purchase some of Orr's property.Jacobsen informed Orr that he (Jacobsen)was purchasing the property on behalf of another person,but Jacobsen did not reveal to Orr the name of the person for whom Jacobsen was making the purchase.The agency here is:

Accepted Answer

A) disclosed. 
B) undisclosed. 
C) partially disclosed. 
D) illegal. 
A) disclosed. 
B) undisclosed. 
C) partially disclosed. 
D) illegal.

Question 15

Explain the concept of apparent authority.

Accepted Answer

Apparent authority is created by the con

Question 16

Which of the following statements is true for a nonexistent or incompetent principal?

Accepted Answer

A) If the third person is unaware of the lack of capacity of the principal,the agent is protected. 
B) A minor is considered a nonexistent principal. 
C) The law imposes an apparent warranty by the agent that the principal has the capacity to be bound. 
D) A person judged insane is not considered to be nonexistent. 
A) If the third person is unaware of the lack of capacity of the principal,the agent is protected. 
B) A minor is considered a nonexistent principal. 
C) The law imposes an apparent warranty by the agent that the principal has the capacity to be bound. 
D) A person judged insane is not considered to be nonexistent.

Question 17

If the agent exceeds his or her authority,liability results-unless the principal ratifies the act or the third party has knowledge of the unauthorization.

Accepted Answer

A) True 
 B)False

Question 18

A sales manager for a corporation would probably have authority to hire sales agents for the corporation and such agents can also act as subagents.

Accepted Answer

A) True 
 B)False

Question 19

Agents may not delegate to employees acts that involve no judgment or discretion.

Accepted Answer

A) True 
 B)False

Question 20

Ratification may be inferred by a court:

Accepted Answer

A) from the fact that the principal accepted the benefits of an unauthorized contract. 
B) from the agent's failure to repudiate an unauthorized contract after becoming aware of it. 
C) from the third party's extent of knowledge about the contract. 
D) from the principal's failure to give express authority to the agent. 
A) from the fact that the principal accepted the benefits of an unauthorized contract. 
B) from the agent's failure to repudiate an unauthorized contract after becoming aware of it. 
C) from the third party's extent of knowledge about the contract. 
D) from the principal's failure to give express authority to the agent.

Exam 24: Liability of Principals and Agents to Third Parties

Which of the following statements is true about apparent authority?

General agents:

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

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

An agent possesses implied authority when:

A person may have apparent authority even though she has never been appointed an agent by the principal.

Ratification releases:

When the principal is undisclosed,the third party who deals with the agent believes the agent is acting personally and accordingly expects the agent to be a party to the contract.

The test of an agent's express authority is:

Where an agent has taken an unauthorized action:

Which of the following is true for ratification?

An agent can limit the liability for the acts of a subagent to the principal by using:

Briefly describe the doctrine of respondeat superior.

Jacobsen contracted with Orr to purchase some of Orr's property.Jacobsen informed Orr that he (Jacobsen)was purchasing the property on behalf of another person,but Jacobsen did not reveal to Orr the name of the person for whom Jacobsen was making the purchase.The agency here is:

Explain the concept of apparent authority.

Which of the following statements is true for a nonexistent or incompetent principal?

If the agent exceeds his or her authority,liability results-unless the principal ratifies the act or the third party has knowledge of the unauthorization.

A sales manager for a corporation would probably have authority to hire sales agents for the corporation and such agents can also act as subagents.

Agents may not delegate to employees acts that involve no judgment or discretion.

Ratification may be inferred by a court:

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 Property

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 Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Employment Laws

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 Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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