Business Law CPA Questions and Answers.
Agency - Answer- a legal relationship in which the principal appoints an agent to act on his or her
behalf
- A writing is not generally required
- Consideration is not required
The following duties are implied:
1. Loyalty
2. Obedience
3. Reasonable care
4. Duty to account
5. Subagent
Actual Authority - Answer- authority agent reasonably believes that he possesses because of
principal's communication to agent
1. Express: principal specifically grants the power (oral/written instructions)
2. Implied: agent reasonably believes that he has authority based on dealings between principal and
agent
Apparent Authority - Answer- power that a third party reasonably believes agent has, based on
principal's conduct or communications towards third party
Disclosed principal - Answer- if principal's existence and identity are known to third party, agent is
not liable to third party under the contract
Tort liability - Answer- principal is not liable for torts committed by agent; only agent is liable
Respondent superior - Answer- employer can be held liable for employee's tort committed within
the scope of employment
, Methods of formation - Answer1. Express contract
2. implied in fact contract
3. Implied in law
4. Unilateral
5. Bilateral
Sources of contract law - Answer- UCC for sale of goods and the common law
Elements of a contract - Answer1. Offer and Acceptance
2. Consideration
3. Lack of defences
Mailbox rule - Answer- acceptances are effective upon dispatch
- offer or may opt out by stating that acceptance is effective upon receipt
Consideration - Answer- legal value, through a bargained for exchange
Defences - Answer1. Fraud
2. Innocent misrepresentation
3. Duress
4. Undue influence
5. Mutual mistake
6. Unilateral mistake
7. Illegality
8. Intoxication
9. Insanity
10. Statute of limitation
Statute of Frauds - Answer- MY LEGS
Agency - Answer- a legal relationship in which the principal appoints an agent to act on his or her
behalf
- A writing is not generally required
- Consideration is not required
The following duties are implied:
1. Loyalty
2. Obedience
3. Reasonable care
4. Duty to account
5. Subagent
Actual Authority - Answer- authority agent reasonably believes that he possesses because of
principal's communication to agent
1. Express: principal specifically grants the power (oral/written instructions)
2. Implied: agent reasonably believes that he has authority based on dealings between principal and
agent
Apparent Authority - Answer- power that a third party reasonably believes agent has, based on
principal's conduct or communications towards third party
Disclosed principal - Answer- if principal's existence and identity are known to third party, agent is
not liable to third party under the contract
Tort liability - Answer- principal is not liable for torts committed by agent; only agent is liable
Respondent superior - Answer- employer can be held liable for employee's tort committed within
the scope of employment
, Methods of formation - Answer1. Express contract
2. implied in fact contract
3. Implied in law
4. Unilateral
5. Bilateral
Sources of contract law - Answer- UCC for sale of goods and the common law
Elements of a contract - Answer1. Offer and Acceptance
2. Consideration
3. Lack of defences
Mailbox rule - Answer- acceptances are effective upon dispatch
- offer or may opt out by stating that acceptance is effective upon receipt
Consideration - Answer- legal value, through a bargained for exchange
Defences - Answer1. Fraud
2. Innocent misrepresentation
3. Duress
4. Undue influence
5. Mutual mistake
6. Unilateral mistake
7. Illegality
8. Intoxication
9. Insanity
10. Statute of limitation
Statute of Frauds - Answer- MY LEGS
