UGBA 175 CH 19-20 EXAM QUESTIONS
AND ANSWERS 100% PASS
Q: What is agency? - ANS A: A consensual relationship in which one person (agent) acts on
behalf of another (principal) and is subject to the principal's control.
Q: What acts may a principal delegate to an agent? - ANS A: Any act the principal could
lawfully perform personally.
Q: What acts may NOT be delegated to an agent? - ANS A:
Illegal acts
Crimes
Purely personal services (e.g., painting a portrait)
Q: Are all employees agents? - ANS A: Yes.
Q: Are all agents employees? - ANS A: No.
Q: Does an unpaid agent have authority equal to a paid agent? - ANS A: Yes — unpaid agents
can bind principals and create liability.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Q: What is agency by estoppel? - ANS A: Liability imposed when a principal creates the
appearance of authority for an agent and a third party reasonably relies on it.
Q: Elements of agency by estoppel (EXAM LIST)? - ANS A:
Principal causes belief of authority (intentionally or carelessly)
Principal knows or should know and fails to correct
Third party reasonably and in good faith relies
Third party changes position detrimentally
Q: Liability consequence if agency by estoppel exists? - ANS A: Principal is liable for losses
caused by the third party's reliance.
Q: What defines an independent contractor? - ANS A: Hired to achieve a result, but not
controlled as to manner and means.
Q: When is a writing required to create agency? - ANS A:
Agency lasting more than one year
Authority to sell land (in many states)
Equal-dignity statutes
Q: What is a power of attorney? - ANS A: A written document stating the agent's authority.
Q: What happens if the principal lacks capacity? - ANS A: Agency is voidable; contracts with
third parties may be voidable.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
AND ANSWERS 100% PASS
Q: What is agency? - ANS A: A consensual relationship in which one person (agent) acts on
behalf of another (principal) and is subject to the principal's control.
Q: What acts may a principal delegate to an agent? - ANS A: Any act the principal could
lawfully perform personally.
Q: What acts may NOT be delegated to an agent? - ANS A:
Illegal acts
Crimes
Purely personal services (e.g., painting a portrait)
Q: Are all employees agents? - ANS A: Yes.
Q: Are all agents employees? - ANS A: No.
Q: Does an unpaid agent have authority equal to a paid agent? - ANS A: Yes — unpaid agents
can bind principals and create liability.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Q: What is agency by estoppel? - ANS A: Liability imposed when a principal creates the
appearance of authority for an agent and a third party reasonably relies on it.
Q: Elements of agency by estoppel (EXAM LIST)? - ANS A:
Principal causes belief of authority (intentionally or carelessly)
Principal knows or should know and fails to correct
Third party reasonably and in good faith relies
Third party changes position detrimentally
Q: Liability consequence if agency by estoppel exists? - ANS A: Principal is liable for losses
caused by the third party's reliance.
Q: What defines an independent contractor? - ANS A: Hired to achieve a result, but not
controlled as to manner and means.
Q: When is a writing required to create agency? - ANS A:
Agency lasting more than one year
Authority to sell land (in many states)
Equal-dignity statutes
Q: What is a power of attorney? - ANS A: A written document stating the agent's authority.
Q: What happens if the principal lacks capacity? - ANS A: Agency is voidable; contracts with
third parties may be voidable.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
