Business Law (Chapters 19 & 20)

Question 1 2 / 2 pts A principal is not..

Business Law (Chapters 19 & 20)

Question 1

2 / 2 pts
A principal is not responsible to third parties for all agreements made by the agent on behalf of the principal even if the agent acted within the scope of his or her authority.

True
Correct!

False

Question 2

2 / 2 pts
A person who is delegated the authority to act only in a particular kind of transaction, under definite instructions, and with specific limits on the scope of his or her authority, is called a:

general agent.

super-agent.

hired agent.
Correct!

special agent.

Question 3

2 / 2 pts
It is not necessary for the agent to obey all of the principal’s reasonable and lawful orders and instructions within the scope of the agency contract.

True
Correct!

False

Question 4

2 / 2 pts
The legal principles governing the relationship of principal and agent and of employer and employee are entirely different from each other.

True
Correct!

False

Question 5

2 / 2 pts
A minor who has appointed an agent may ________ the contract of agency in some states
Correct!

avoid

estop

reform

modify

Question 6

2 / 2 pts
The authority that a third party may reasonably assume an agent possesses, despite the fact that the agent does not actually possess such authority, is known as:

unlawful authority.

ultra vires authority.

delegated responsibility.
Correct!

apparent authority.

Question 7

2 / 2 pts
An agent may perform only those acts that have been authorized by the principal or:

the government.

his or her employer.
Correct!

the court.

the spouse of the principal.

Question 8

2 / 2 pts
When an agent does not inform the third party that he or she is acting on behalf of another person, the unidentified principal is known as a(n):

unauthorized principal.

unaware principal.

distinct principal.
Correct!

undisclosed principal.

Question 9

2 / 2 pts
When the agent informs the third party that he or she is acting on behalf of another, and makes the third party aware of the identity of the principal, the principal is known as a furtive principal.

True
Correct!

False

Question 10

2 / 2 pts
A principal is liable for the torts and crimes of the agent if they are committed at the direction of the principal or while the agent is performing authorized duties during the ordinary course of the agency.
Correct!

True

False

Question 11

2 / 2 pts
Organizational forms that are referred to as not-for-profits may include:
Correct!

charitable organizations.

industrial corporations.

limited liability corporations.

joint ventures.

Question 12

2 / 2 pts
Shareholders vote for __________ who are responsible for managing the overall strategy and operations of the firm over the long term.

coordinators

administrators
Correct!

directors

financiers

Question 13

2 / 2 pts
The major advantage of a corporation is the fact of ____________to shareholders.

restricted authority

unlimited credibility
Correct!

limited liability

unrestrained reliability

Question 14

2 / 2 pts
The not-for-profits organizations include all of the following, EXCEPT:

social clubs.
Correct!

limited liability partnerships

political parties.

universities.

Question 15

2 / 2 pts
Dissolution of a partnership is governed by a stockholders’ agreement. .

True
Correct!

False

Question 16

2 / 2 pts
Corporations are owned by shareholders, who purchase shares of stock in the corporation.
Correct!

True

False

Question 17

2 / 2 pts
Many people in the United States have an entrepreneurial spirit that encourages them to pursue the “American Dream” of:
Correct!

owning and operating their own business.

having employment security.

having a leisurely life.

traveling throughout the world.

Question 18

2 / 2 pts
A business owned and operated by one person is called a(n):

LLC.
Correct!

sole proprietorship.

501(c) corporation.

limited partnership

Question 19

2 / 2 pts
Duty of care means that a director has a legal and ethical obligation to act diligently and prudently in conducting the affairs of the corporation.
Correct!

True

False

Question 20

2 / 2 pts
In a corporation, directors and officers of the company in which they hold their positions have a _____________ to the company.
Correct!

fiduciary responsibility

dependability

time bound duty

mandatory duty
Question 1

2 / 2 pts
A principal must reimburse an agent for any loss or damage suffered by the agent in the legitimate:

ownership of property.

transfer of power.
Correct!

performance of duties.

enforcement of rules.

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Question 2

2 / 2 pts
An agent may perform only those acts that have been authorized by the principal or:
Correct!

the court.

the spouse of the principal.

his or her employer.

the government.

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Question 3

2 / 2 pts
When the agent informs the third party that he or she is acting on behalf of another, and makes the third party aware of the identity of the principal, the principal is known as a furtive principal.

True
Correct!

False

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Question 4

2 / 2 pts
An agency by invention is created when circumstances make such an agency necessary.

True
Correct!

False

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Question 5

2 / 2 pts
A minor who has appointed an agent may ________ the contract of agency in some states

modify

estop
Correct!

avoid

reform

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Question 6

2 / 2 pts
A principal is liable for the torts and crimes of the agent if they are committed at the direction of the principal or while the agent is performing authorized duties during the ordinary course of the agency.
Correct!

True

False

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Question 7

2 / 2 pts
The authority that a third party may reasonably assume an agent possesses, despite the fact that the agent does not actually possess such authority, is known as:

unlawful authority.

delegated responsibility.
Correct!

apparent authority.

ultra vires authority.

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Question 8

2 / 2 pts
Agency is a type of contract and, like other contracts, may be terminated by agreement, by performance, or by operation of law.
Correct!

True

False

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Question 9

2 / 2 pts
The legal principles governing the relationship of principal and agent and of employer and employee are entirely different from each other.

True
Correct!

False

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Question 10

2 / 2 pts
If an agent makes a fraudulent statement in a contract within the scope of his or her authority, then the:
Correct!

principal is responsible.

agent is responsible.

principal is not responsible.

contracting party’s agent is responsible.

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Question 11

2 / 2 pts
A limited partner will be deemed by the courts to be a general partner if he or she:
Correct!

participates in the overall management of the business.

unintentionally violates the duty of care owed to the corporation.

constantly refuses to sign a proxy.

participates regularly in the duty of loyalty and duty of care.

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Question 12

2 / 2 pts
In a business, there may be times when partners disagree on how the business should be run. This serves as a(n):

lead.

stepping-stone.

advantage.
Correct!

disadvantage.

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Question 13

2 / 2 pts
At times, individuals can become partners for only a short period of time, or for only a single project. This activity is defined as a(n):

partnership.

LLC.

LLP.
Correct!

joint venture.

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Question 14

2 / 2 pts
Dissolution of a partnership is governed by a stockholders’ agreement. .

True
Correct!

False

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Question 15

2 / 2 pts
An advantage to a sole proprietorship is that the owner has complete authority, within the boundaries of the law, for the running of the business.
Correct!

True

False

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Question 16

2 / 2 pts
A director has a legal and ethical obligation to act diligently and prudently in conducting the affairs of the corporation. This is called the:

legal responsibility.
Correct!

duty of loyalty

psychological duty.

mandatory duty.

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Question 17

2 / 2 pts
The duty of loyalty means that a director has no legal or ethical obligation to administer to the affairs of the corporation with personal integrity, honesty, and candor.

True
Correct!

False

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Question 18

2 / 2 pts
The not-for-profits organizations include all of the following, EXCEPT:

universities.
Correct!

limited liability partnerships

social clubs.

political parties.

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Question 19

2 / 2 pts
In a corporation, directors and officers of the company in which they hold their positions have a _____________ to the company.
Correct!

fiduciary responsibility

dependability

mandatory duty

time bound duty

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Question 20

2 / 2 pts
A business owned and operated by one person is called a(n):

limited partnership

LLC.

501(c) corporation.
Correct!

sole proprietorship.

 

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