BLAW 341 - BUSINESS ORGANIZATIONS
AND AGENCY EXAM 4 (KAPLAN)
QUESTIONS AND CORRECT ANSWERS
1. Which legal doctrine holds a principal liable for the torts of an employee committed within
the scope of employment?
A. Quantum Meruit
B. Caveat Emptor
C. Respondeat Superior
D. Ultra Vires
Answer: C
Conceptual Explanation: Respondeat superior is the doctrine that makes an employer or
principal liable for the actions of an employee when those actions occur within the scope of
their employment.
2. Under the ‘control test,’ which factor is most significant in determining whether a worker is
an employee rather than an independent contractor?
A. The degree of control the principal exercises over the details of the work
B. The method of payment (hourly vs. flat fee)
C. The length of time the person is employed
,D. Whether the worker provides their own tools
Answer: A
Conceptual Explanation: The degree of control over the physical details and methods of
the work is the primary factor used by courts to distinguish employees from independent
contractors.
3. What is required for a principal to ‘ratify’ an unauthorized contract entered into by an
agent?
A. The principal must have partial knowledge of the facts
B. The principal must accept only the beneficial parts of the contract
C. The agent must have had apparent authority at the time of signing
D. The principal must have been disclosed at the time the contract was made
Answer: D
Conceptual Explanation: For ratification to be effective, the principal must have been
disclosed or identifiable at the time of the contract, must know all material facts, and must
affirm the entire deal.
4. An agent’s duty to not act for two principals whose interests conflict is known as:
A. The duty of accounting
B. The duty of performance
C. The duty of notification
, D. The duty of loyalty
Answer: D
Conceptual Explanation: The duty of loyalty requires the agent to act solely for the benefit
of the principal and avoid conflicts of interest, such as representing two opposing parties.
5. If an agent enters into a contract with a third party on behalf of an ‘undisclosed principal,’
who can be held liable for a breach of that contract?
A. Only the principal
B. Both the agent and the principal
C. Only the agent
D. Neither, the contract is void
Answer: B
Conceptual Explanation: In the case of an undisclosed principal, the agent is personally
liable because the third party relies on the agent’s credit, but the principal is also liable
once their identity is revealed.
6. Which of the following events will terminate an agency relationship by ‘operation of law’?
A. Lapse of time
B. Mutual agreement
C. Specific performance of the task
D. Death or insanity of either the principal or the agent
AND AGENCY EXAM 4 (KAPLAN)
QUESTIONS AND CORRECT ANSWERS
1. Which legal doctrine holds a principal liable for the torts of an employee committed within
the scope of employment?
A. Quantum Meruit
B. Caveat Emptor
C. Respondeat Superior
D. Ultra Vires
Answer: C
Conceptual Explanation: Respondeat superior is the doctrine that makes an employer or
principal liable for the actions of an employee when those actions occur within the scope of
their employment.
2. Under the ‘control test,’ which factor is most significant in determining whether a worker is
an employee rather than an independent contractor?
A. The degree of control the principal exercises over the details of the work
B. The method of payment (hourly vs. flat fee)
C. The length of time the person is employed
,D. Whether the worker provides their own tools
Answer: A
Conceptual Explanation: The degree of control over the physical details and methods of
the work is the primary factor used by courts to distinguish employees from independent
contractors.
3. What is required for a principal to ‘ratify’ an unauthorized contract entered into by an
agent?
A. The principal must have partial knowledge of the facts
B. The principal must accept only the beneficial parts of the contract
C. The agent must have had apparent authority at the time of signing
D. The principal must have been disclosed at the time the contract was made
Answer: D
Conceptual Explanation: For ratification to be effective, the principal must have been
disclosed or identifiable at the time of the contract, must know all material facts, and must
affirm the entire deal.
4. An agent’s duty to not act for two principals whose interests conflict is known as:
A. The duty of accounting
B. The duty of performance
C. The duty of notification
, D. The duty of loyalty
Answer: D
Conceptual Explanation: The duty of loyalty requires the agent to act solely for the benefit
of the principal and avoid conflicts of interest, such as representing two opposing parties.
5. If an agent enters into a contract with a third party on behalf of an ‘undisclosed principal,’
who can be held liable for a breach of that contract?
A. Only the principal
B. Both the agent and the principal
C. Only the agent
D. Neither, the contract is void
Answer: B
Conceptual Explanation: In the case of an undisclosed principal, the agent is personally
liable because the third party relies on the agent’s credit, but the principal is also liable
once their identity is revealed.
6. Which of the following events will terminate an agency relationship by ‘operation of law’?
A. Lapse of time
B. Mutual agreement
C. Specific performance of the task
D. Death or insanity of either the principal or the agent
