Question 1

Explain the concept of apparent authority.

Accepted Answer

Apparent authority is created by the con

Question 2

When an agent commits a tort or crime while working for the principal, the agent is not liable for the consequences of his actions if he is acting at the direction of the principal.

Accepted Answer

A) True 
 B)False

Question 3

Ratification gives the agent the same right to compensation that he or she would have had if there had been prior authorization.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is true of a principal's liability for notice and payments to the agent?

Accepted Answer

A)  The agent is not legally bound to inform the principal of knowledge gained in the course of his or her responsibilities. 
B)  Payment to the agent of a debt owed to the principal discharges the debt if the agent has authority to receive such payments. 
C)  An agent who makes over-the-counter sales is viewed as having express authority to collect for the goods. 
D)  The principal is not bound by the information that is passed on by the agent if it does not relate to the scope of the agent's responsibilities and authority. 
A)  The agent is not legally bound to inform the principal of knowledge gained in the course of his or her responsibilities. 
B)  Payment to the agent of a debt owed to the principal discharges the debt if the agent has authority to receive such payments. 
C)  An agent who makes over-the-counter sales is viewed as having express authority to collect for the goods. 
D)  The principal is not bound by the information that is passed on by the agent if it does not relate to the scope of the agent's responsibilities and authority.

Question 5

Express authority:

Accepted Answer

A)  is created when the principal specifically describes the extent of the agent's powers. 
B)  arises from the principal's failure to inform third persons that the relationship between the principal and the agent is not what it appears to be. 
C)  arises from the justifiable belief of a third party dealing with the agent. 
D)  is created by the conduct of the principal that causes a third person to incorrectly believe that another has the authority to act for the principal. 
A)  is created when the principal specifically describes the extent of the agent's powers. 
B)  arises from the principal's failure to inform third persons that the relationship between the principal and the agent is not what it appears to be. 
C)  arises from the justifiable belief of a third party dealing with the agent. 
D)  is created by the conduct of the principal that causes a third person to incorrectly believe that another has the authority to act for the principal.

Question 6

An attorney-in-fact is the label given to an agent whose authority is:

Accepted Answer

A)  in writing. 
B)  implied. 
C)  apparent. 
D)  assumed after the death of the principal. 
A)  in writing. 
B)  implied. 
C)  apparent. 
D)  assumed after the death of the principal.

Question 7

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 8

Liability is imposed on an agent who has exceeded his authority on the basis of an implied warranty of merchantability.

Accepted Answer

A) True 
 B)False

Question 9

One may become liable through ratification for an unauthorized act that was done by an agent.

Accepted Answer

A) True 
 B)False

Exam 24: Liability of Principals and Agents to Third Parties

Explain the concept of apparent authority.

When an agent commits a tort or crime while working for the principal, the agent is not liable for the consequences of his actions if he is acting at the direction of the principal.

Ratification gives the agent the same right to compensation that he or she would have had if there had been prior authorization.

Which of the following statements is true of a principal's liability for notice and payments to the agent?

Express authority:

An attorney-in-fact is the label given to an agent whose authority is:

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) _____.

Liability is imposed on an agent who has exceeded his authority on the basis of an implied warranty of merchantability.

One may become liable through ratification for an unauthorized act that was done by an agent.

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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