CBAD 344: Test 4 – Preparing for Advanced
Business Challenges
agency - correct answer ✔✔a relationship between two parties in which one party (agent) agrees to
represent or act for the other (principal)
fiduciary - correct answer ✔✔a person having a duty created by their undertaking to act primarily for
another's benefit in matters connected with the undertaking
agency law is based on: - correct answer ✔✔common law
employment law is based on: - correct answer ✔✔statutory law
independent contractor - correct answer ✔✔one who works for, and receives payment from, an
employer but whose working conditions and methods are not controlled by the employer
4 ways an agency relationship can arise: - correct answer ✔✔1. agreement of the parties
2. ratification
3. estoppel
4. operation of law
ratification - correct answer ✔✔a party's act of accepting or giving legal force to a contract or other
obligation entered into on his or her behalf by another that previously was not enforceable
5 duties of an agent: - correct answer ✔✔1. performance
2. notification
3. loyalty
4. obedience
5. accounting
, 4 duties of a principal: - correct answer ✔✔1. compensation
2. reimbursement and indemnification
3. cooperation
4. safe working conditions
2 types of an agent's authority to act: - correct answer ✔✔1. actual (express or implied)
2. apparent
express authority - correct answer ✔✔authority declared in clear, direct, and definite terms
equal dignity rule - correct answer ✔✔a rule requiring that an agent's authority be in writing if the
contract to be made on behalf of the principal must be in writing
power of attorney - correct answer ✔✔authorization for another to act as one's agent or attorney either
in specified circumstances (special) or in all situations (general)
notary public - correct answer ✔✔a public official to attest to the authenticity of signatures
apparent authority - correct answer ✔✔authority that is only apparent, not real
3 ways principals are classified as: - correct answer ✔✔1. disclosed
2. partially disclosed
3. undisclosed
disclosed principal - correct answer ✔✔a principal whose identity is known to a third party at the time
the agent makes a contract with the third party
Business Challenges
agency - correct answer ✔✔a relationship between two parties in which one party (agent) agrees to
represent or act for the other (principal)
fiduciary - correct answer ✔✔a person having a duty created by their undertaking to act primarily for
another's benefit in matters connected with the undertaking
agency law is based on: - correct answer ✔✔common law
employment law is based on: - correct answer ✔✔statutory law
independent contractor - correct answer ✔✔one who works for, and receives payment from, an
employer but whose working conditions and methods are not controlled by the employer
4 ways an agency relationship can arise: - correct answer ✔✔1. agreement of the parties
2. ratification
3. estoppel
4. operation of law
ratification - correct answer ✔✔a party's act of accepting or giving legal force to a contract or other
obligation entered into on his or her behalf by another that previously was not enforceable
5 duties of an agent: - correct answer ✔✔1. performance
2. notification
3. loyalty
4. obedience
5. accounting
, 4 duties of a principal: - correct answer ✔✔1. compensation
2. reimbursement and indemnification
3. cooperation
4. safe working conditions
2 types of an agent's authority to act: - correct answer ✔✔1. actual (express or implied)
2. apparent
express authority - correct answer ✔✔authority declared in clear, direct, and definite terms
equal dignity rule - correct answer ✔✔a rule requiring that an agent's authority be in writing if the
contract to be made on behalf of the principal must be in writing
power of attorney - correct answer ✔✔authorization for another to act as one's agent or attorney either
in specified circumstances (special) or in all situations (general)
notary public - correct answer ✔✔a public official to attest to the authenticity of signatures
apparent authority - correct answer ✔✔authority that is only apparent, not real
3 ways principals are classified as: - correct answer ✔✔1. disclosed
2. partially disclosed
3. undisclosed
disclosed principal - correct answer ✔✔a principal whose identity is known to a third party at the time
the agent makes a contract with the third party
