Question 1

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. D

Question 2

Only the entire act of the agent can be ratified; the principal may not ratify what is beneficial and deny what is burdensome.

Accepted Answer

A) True 
 B)False  True

Question 3

The test of an agent's express authority is the:

Accepted Answer

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

Question 4

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 5

After Bart and Veronica were involved in an automobile accident, Bart retained Rhonda as an attorney to negotiate an out-of-court settlement. After a lengthy discussion with Veronica's insurance company, Rhonda settled the case for $5,000. However, Bart personally rejected the $5,000 offer. Veronica filed suit to enforce the settlement, claiming that Rhonda was authorized to accept the settlement on behalf of Bart. Discuss Rhonda's express, implied, and apparent authority.

Accepted Answer

Express authority usually is created by

Question 6

Any act that the principal could have authorized at the time the act was done may be ratified.

Accepted Answer

A) True 
 B)False

Question 7

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 she has:

Accepted Answer

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

Question 8

Ratification does not release the agent from liability to the principal and the third person for having exceeded his or her authority.

Accepted Answer

A) True 
 B)False

Question 9

For ratification to be effective, the:

Accepted Answer

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

Question 10

Direct liability occurs when the:

Accepted Answer

A)  agent is not acting at the direction of the principal. 
B)  principal is negligent in the hiring and/or the supervision of the agent. 
C)  agent's criminal behavior occurs outside the scope of employment. 
D)  principal has liability insurance and the agent commits a tort. 
A)  agent is not acting at the direction of the principal. 
B)  principal is negligent in the hiring and/or the supervision of the agent. 
C)  agent's criminal behavior occurs outside the scope of employment. 
D)  principal has liability insurance and the agent commits a tort.

Question 11

The principal is bound by representations that:

Accepted Answer

A)  are necessary for the agent to make in order to accomplish the purpose of the agency since they would be apparently authorized. 
B)  the agent is expressly authorized to make. 
C)  the agent makes even if the third person is aware that the agent has exceeded his actual authority. 
D)  may not be customary in the kind of business being transacted by the agent. 
A)  are necessary for the agent to make in order to accomplish the purpose of the agency since they would be apparently authorized. 
B)  the agent is expressly authorized to make. 
C)  the agent makes even if the third person is aware that the agent has exceeded his actual authority. 
D)  may not be customary in the kind of business being transacted by the agent.

Question 12

Misrepresentations by an agent made with the intent to deceive a third person will:

Accepted Answer

A)  make the agent liable to the third person. 
B)  absolve the principal of any liabilities toward the third person. 
C)  make the third person liable to the principal. 
D)  make the principal liable to the agent and the third person. 
A)  make the agent liable to the third person. 
B)  absolve the principal of any liabilities toward the third person. 
C)  make the third person liable to the principal. 
D)  make the principal liable to the agent and the third person.

Question 13

An agent can limit the liability for the acts of a subagent to the principal by _____.

Accepted Answer

A)  issuing express authority 
B)  using a ministerial clause 
C)  issuing implied authority 
D)  using an exculpatory clause 
A)  issuing express authority 
B)  using a ministerial clause 
C)  issuing implied authority 
D)  using an exculpatory clause

Question 14

Ratification may be inferred from the principal's failure to repudiate an unauthorized contract after becoming aware of it.

Accepted Answer

A) True 
 B)False

Question 15

Authority is implied when the principal specifically describes the extent of the agent's powers.

Accepted Answer

A) True 
 B)False

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

The test of an agent's implied authority is the:

Accepted Answer

A)  justifiable belief of the agent. 
B)  specific language the principal used in granting the authority. 
C)  explicit agency agreement between the principal and the agency. 
D)  deduction of the third party dealing with the agent. 
A)  justifiable belief of the agent. 
B)  specific language the principal used in granting the authority. 
C)  explicit agency agreement between the principal and the agency. 
D)  deduction of the third party dealing with the agent.

Question 18

Which of the following is true about 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 or she would have had if there had been prior authorization. 
C)  It requires 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 or she would have had if there had been prior authorization. 
C)  It requires 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 19

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 20

An attorney-in-fact is the technical label given to an agent whose authority is in writing.

Accepted Answer

A) True 
 B)False

Exam 24: Liability of Principals and Agents to Third Parties

Apparent authority may exist:

Only the entire act of the agent can be ratified; the principal may not ratify what is beneficial and deny what is burdensome.

The test of an agent's express authority is the:

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

Any act that the principal could have authorized at the time the act was done may be ratified.

Ratification does not release the agent from liability to the principal and the third person for having exceeded his or her authority.

For ratification to be effective, the:

Direct liability occurs when the:

The principal is bound by representations that:

Misrepresentations by an agent made with the intent to deceive a third person will:

An agent can limit the liability for the acts of a subagent to the principal by _____.

Ratification may be inferred from the principal's failure to repudiate an unauthorized contract after becoming aware of it.

Authority is implied when the principal specifically describes the extent of the agent's powers.

Which of the following statements is true about apparent authority?

The test of an agent's implied authority is the:

Which of the following is true about ratification?

A general agent:

An attorney-in-fact is the technical label given to an agent whose authority is in writing.

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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