Question 1

Distinguish between an agent and an employee.

Accepted Answer

An employee performs work under the cont

Question 2

With respect to ratification,which one of the following statements is true?

Accepted Answer

A)  Ratification is the act of a principal approving a contract when her agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
B)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. 
C)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
D)  Irving has been given authority to contract for the purchase of 1000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
E)  The ratification by the principal must be in writing to be effective. 
A)  Ratification is the act of a principal approving a contract when her agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 
B)  When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. 
C)  The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. 
D)  Irving has been given authority to contract for the purchase of 1000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. 
E)  The ratification by the principal must be in writing to be effective.

Question 3

Information that comes to the agent because of his position as agent must be passed on to the principal.

Accepted Answer

A) True 
 B)False

Question 4

Partners can agree among themselves as to what portion of liability they each will bear,and their losses will be limited to that portion when being sued by outsiders.

Accepted Answer

A) True 
 B)False

Question 5

Three students in a business faculty created a computer program that compared various retirement plans.They decided to go into business together to offer their services directly to the public.After doing a feasibility study,they felt there were profits to be made.For tax reasons,they decided not to incorporate.Each contributed $15 000 and Wayne,one of the three,contributed a computer.In a short written agreement,they agreed that all three would be actively involved in the management of the business,that all three would work to update the program,that they would share the profits equally,and that they should not be viewed as partners.Based on these facts,which of the following statements is true?

Accepted Answer

A)  They are not partners because they do not share profits in proportion to their capital contributions. 
B)  They would be considered partners despite their express intention to the contrary in their agreement. 
C)  They are not partners unless they realize a profit from their enterprise. 
D)  If one partner dies, the partnership would be dissolved even if they state otherwise in their agreement. 
E)  If Wayne were to go bankrupt, the partnership would be dissolved even if they state otherwise in their agreement. 
A)  They are not partners because they do not share profits in proportion to their capital contributions. 
B)  They would be considered partners despite their express intention to the contrary in their agreement. 
C)  They are not partners unless they realize a profit from their enterprise. 
D)  If one partner dies, the partnership would be dissolved even if they state otherwise in their agreement. 
E)  If Wayne were to go bankrupt, the partnership would be dissolved even if they state otherwise in their agreement.

Question 6

List three duties that an agent has to the principal.

Accepted Answer

To act in a reasonable manner with compe

Question 7

The unlimited liability of partners means that not only can they lose their entire investment in the business,but their personal assets are also at risk,such as their home and car.

Accepted Answer

A) True 
 B)False

Question 8

Norma and Janet decided to form a partnership for selling gourmet picnic baskets.To raise sufficient capital,they convinced their mothers to invest $5000 each as limited partners.Norma's mother was an experienced restaurateur and watched the business with great interest.On several occasions,she advised them on the business and contacted old business associates to buy surplus stock.She even filled in taking orders in the office when needed.A customer who was made ill by contaminated food from a tin can supplied in one basket sued.What would be the liability,if any,of the mothers?

Accepted Answer

A)  Janet's mother would be liable for $10 000, twice the amount invested, because she failed to take part in the management of the business. 
B)  A limited partner has her liability limited to the amount of her initial investment; therefore, neither mother has any further liability. 
C)  Both mothers would have unlimited liability because they contributed money but not services as required. 
D)  Norma's mother would have unlimited liability because she took part in the management of the business and thus becomes a general partner. 
E)  Because one mother lost her limited liability status, they both do. 
A)  Janet's mother would be liable for $10 000, twice the amount invested, because she failed to take part in the management of the business. 
B)  A limited partner has her liability limited to the amount of her initial investment; therefore, neither mother has any further liability. 
C)  Both mothers would have unlimited liability because they contributed money but not services as required. 
D)  Norma's mother would have unlimited liability because she took part in the management of the business and thus becomes a general partner. 
E)  Because one mother lost her limited liability status, they both do.

Question 9

Which of the following is correct with respect to sole proprietorships?

Accepted Answer

A)  The sole proprietorship is a separate legal entity. 
B)  The sole proprietor has unlimited liability. 
C)  The sole proprietor has limited liability. 
D)  Sole proprietorship exists where two or more people carry on business together with a view towards profits. 
E)  A sole proprietorship must be incorporated. 
A)  The sole proprietorship is a separate legal entity. 
B)  The sole proprietor has unlimited liability. 
C)  The sole proprietor has limited liability. 
D)  Sole proprietorship exists where two or more people carry on business together with a view towards profits. 
E)  A sole proprietorship must be incorporated.

Question 10

A partner's liability for the torts of their partners extends beyond those committed on company business.

Accepted Answer

A) True 
 B)False

Question 11

Information that comes to the agent because of his position as agent must be passed onto the third party.

Accepted Answer

A) True 
 B)False

Question 12

Societies are separate legal entities,separate and apart from the members who make them up.

Accepted Answer

A) True 
 B)False

Question 13

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

Accepted Answer

A)  within her express authority. 
B)  within her implied authority. 
C)  within her apparent authority. 
D)  outside her authority but the principal ratified it. 
E)  outside her actual and apparent authority. 
A)  within her express authority. 
B)  within her implied authority. 
C)  within her apparent authority. 
D)  outside her authority but the principal ratified it. 
E)  outside her actual and apparent authority.

Question 14

Reese Publishing Inc.hosts a golf tournament.In attendance are Jennifer Reese,the owner,director,and manager of Reese Publishing Inc.; her husband,Aaryn,a professional race-car driver and voracious reader who reads everything Reese Publishing Inc.publishes; her sales force,Laura,Catherine,and Keighla (each of whom signed deals that day); and Gena,the office manager,who is responsible for all of the company's office supply purchases.Which of these are agents?

Accepted Answer

A)  only Laura, Catherine, Keighla, and Gena 
B)  only Laura, Catherine and Keighla 
C)  All of them are agents, except Aaryn. 
D)  All of them are agents. 
E)  None of them are agents. 
A)  only Laura, Catherine, Keighla, and Gena 
B)  only Laura, Catherine and Keighla 
C)  All of them are agents, except Aaryn. 
D)  All of them are agents. 
E)  None of them are agents.

Question 15

A real estate salesperson,without disclosing the fact to her client,purchases the house the client is selling for herself.Discuss the legal position of the parties.

Accepted Answer

This is clearly a breach of th

Question 16

Full disclosure refers to an obligation to reveal all details of a transaction.

Accepted Answer

A) True 
 B)False

Question 17

Sole proprietors can look only to their own resources to finance the business operation; they cannot sell shares and are restricted to their own ___________ standing when borrowing money to finance the business.

Accepted Answer

A)  asset 
B)  debt 
C)  profit 
D)  credit 
E)  retained earnings 
A)  asset 
B)  debt 
C)  profit 
D)  credit 
E)  retained earnings

Question 18

Where Joe was given authority to do "anything necessarily incidental" to carrying out his agency function of selling vacuum cleaners for the principal,that gave Joe the authority to borrow money to purchase a car to be used in the business.

Accepted Answer

A) True 
 B)False

Question 19

For an agency agreement to be binding,what is required and what is the effect if a required element is not met?

Accepted Answer

All of the elements of a contract,such a

Question 20

An agency relationship can be created by

Accepted Answer

A)  actual authority. 
B)  estoppel. 
C)  ratification. 
D)  apparent authority. 
E)  all of the above 
A)  actual authority. 
B)  estoppel. 
C)  ratification. 
D)  apparent authority. 
E)  all of the above

Distinguish between an agent and an employee.

With respect to ratification,which one of the following statements is true?

Information that comes to the agent because of his position as agent must be passed on to the principal.

Partners can agree among themselves as to what portion of liability they each will bear,and their losses will be limited to that portion when being sued by outsiders.

List three duties that an agent has to the principal.

The unlimited liability of partners means that not only can they lose their entire investment in the business,but their personal assets are also at risk,such as their home and car.

Which of the following is correct with respect to sole proprietorships?

A partner's liability for the torts of their partners extends beyond those committed on company business.

Information that comes to the agent because of his position as agent must be passed onto the third party.

Societies are separate legal entities,separate and apart from the members who make them up.

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

A real estate salesperson,without disclosing the fact to her client,purchases the house the client is selling for herself.Discuss the legal position of the parties.

Full disclosure refers to an obligation to reveal all details of a transaction.

Sole proprietors can look only to their own resources to finance the business operation; they cannot sell shares and are restricted to their own ___________ standing when borrowing money to finance the business.

Where Joe was given authority to do "anything necessarily incidental" to carrying out his agency function of selling vacuum cleaners for the principal,that gave Joe the authority to borrow money to purchase a car to be used in the business.

For an agency agreement to be binding,what is required and what is the effect if a required element is not met?

An agency relationship can be created by

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputesthe Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contractconsensus and Consideration

The Elements of a Contract capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Corporations

Real, Personal, and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

Filters

Exam 11: Agency and Partnership

Distinguish between an agent and an employee.

With respect to ratification,which one of the following statements is true?

Information that comes to the agent because of his position as agent must be passed on to the principal.

Partners can agree among themselves as to what portion of liability they each will bear,and their losses will be limited to that portion when being sued by outsiders.

List three duties that an agent has to the principal.

The unlimited liability of partners means that not only can they lose their entire investment in the business,but their personal assets are also at risk,such as their home and car.

Which of the following is correct with respect to sole proprietorships?

A partner's liability for the torts of their partners extends beyond those committed on company business.

Information that comes to the agent because of his position as agent must be passed onto the third party.

Societies are separate legal entities,separate and apart from the members who make them up.

A principal is not bound in contract with the third party with whom the agent dealt if the agent is

A real estate salesperson,without disclosing the fact to her client,purchases the house the client is selling for herself.Discuss the legal position of the parties.

Full disclosure refers to an obligation to reveal all details of a transaction.

Sole proprietors can look only to their own resources to finance the business operation; they cannot sell shares and are restricted to their own ___________ standing when borrowing money to finance the business.

Where Joe was given authority to do "anything necessarily incidental" to carrying out his agency function of selling vacuum cleaners for the principal,that gave Joe the authority to borrow money to purchase a car to be used in the business.

For an agency agreement to be binding,what is required and what is the effect if a required element is not met?

An agency relationship can be created by

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputesthe Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contractconsensus and Consideration

The Elements of a Contract capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Corporations

Real, Personal, and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Priority of Creditors

Filters