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Blaw unit 5 quizzes
Terms in this set (37)
The agent's death automatically terminates the agency relationship as a matter of law.
Apparent authority is based on whatever the principal communicates or manifests to a third party and whatever the principal "communicates" or "manifests" to the third party must cause the third party to form a reasonable belief that the agent has authority.
Agents have a duty to
All the above
A written agency contract normally states the duties the principal owes the agent, but law implies certain duties on the principal.
To indemnify the agent for losses suffered in conducting the principal's business.
Unless otherwise agreed, an agent may not use or share confidential information of the principal for the agent's own benefit or for the benefit of a third party.
An agent's duty of confidentiality continues after the agency ends.
Agents are always considered employees of the principal.
Implied authority arises when the principal's actions cause a third party to believe that the agent is authorized to act in a certain way on behalf of the principal.
An agent is ordinarily forbidden to deal with himself when conducting the principal's business, even if the transaction in question is outside the subject matter of the agency.
As a fiduciary, an agent is free to any manner even if detrimental to the principal.
A written contract is necessary to create an agency relationship.
Agency is a two-party relationship in which one party (agent) is authorized to act on behalf of, and under the control of another party (principal).
Apparent authority may arise when an individual, without the principal's knowledge or consent, falsely tells a third party that she is fully authorized to act on behalf of the principal.
Which of the following is not an example of implied authority?
A golf course supervisor borrows money and mortgages the clubhouse to make improvements to the golf course.
An agent acting within his or her stated authority can never be personally liable on a contract made on behalf of the principal.
An agent may find himself personally liable to perform the contract obligations of the principal in one of the following circumstances.
An agent who contracts with an innocent third party while lacking authority from the principal may become personally liable to the third party under which of the following implied warranties?
Implied warranty of authority
Apparent authority protects third parties who reasonably rely on the principal's manifestations that the agent has authority.
An employer is liable for all torts committed by its employees including those acting beyond the scope of their employment.
Both the principal and the agent can be liable for a tort committed by the agent.
One exception to the rule that principals are not ordinarily liable for torts committed by nonemployee agents is harm caused by a nonemployee agent who carelessly performs some dangerous activity.
A principal is normally bound by a contract made by his agent acting with either actual or apparent authority.
An agent enters in to a construction contract with a third party that is not consistent with the authority granted by the principal. The principal is aware of the contract and begins to perform the contract and accepts the initial payment due from the third party. This is an example of:
Respondeat superior is a form of vicarious liability that makes employers liable for the torts committed by employees acting in the scope of their employment.
In terms of tax treatment, a limited partner in a limited partnership is most nearly like
a partner in a general partnership
Cash or other property contributed to a partnership upon its formation is referred to as:
Rauber and Ryan, Inc. was a management consulting business operating in 27 states. If they decide to change their business organization to a limited liability company (LLC), a potential disadvantage would be:
that it may trigger capital gains tax liability caused by the termination of the corporation.
In terms of liability consequences, a limited partner in a limited partnership is most nearly like
a shareholder in a corporation
Corporations, partnerships and limited liability companies are all tax paying entities according to the federal tax law.
A limited liability company is much like a limited partnership, with the following exception:
Members of LLCs may participate in management without risking personal liability for business debts while limited partners may not.
A corporation has a life separate from its owners and managers.
Which one of the following business entities does not require a filing with the state when it is created?
In a partnership equally owned by two partners, each partner is personally liable for half the debts of the partnership business.
A limited partnership is generally divided into two classes of owners: general partners and limited partners.
Limited partnerships generally share profits and losses according to each partner's capital contribution.
Marisa was a CPA who formed a partnership with another CPA, Dave. They formed a limited liability partnership (LLP). If Marisa negligently fails to correctly calculate a client's tax liability, resulting in fines to the client:
Marisa is personally liable, since she was negligent, but not Dave, who was not negligent.
The owners of a corporation are referred to as which one of the following?
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