BULE 303 Final Exam Study Guide
questions and answers graded A+
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You and a friend are taking a road trip during summer break and decide to stop for lunch. You
choose your favorite fast food restaurant. You both order a burger, fries, and a soft drink and
chow down. In the afternoon, as you are continuing your journey, both of you begin to feel
stomach cramps. They get worse so you decide to go to an urgent care clinic. The doctor there
diagnoses you both with food poisoning and prescribes medication. You fill the prescription,
check into a hotel, and experience several days of agony. You later discover the cook at the
restaurant undercooked the beef in your burger, which caused your food poisoning. You sue the
restaurant. Is the restaurant liable to you or is only the employee liable? - correct answer ✔✔
-Only the employee is liable because she was acting outside the scope of her employment when
she cooked the food.
-The restaurant is liable.
-Only the employee is liable because the employee was the one who was negligent in
undercooking the hamburger.
-Neither party is liable; when ordering food customers assume the risk that the food might not
be prepared properly. - correct answer ✔✔The restaurant is liable
Which of the following scenarios illustrates a business world without agency relationships?
-Hiring an expert as an employee.
-A corporation with only one employee.
-The owner prepares the tax returns.
-Hiring an expert as an independent contractor. - correct answer ✔✔The owner prepares the
tax returns.
,How do agency relationships affect businesses and the business world? Choose 2 answer
choices.
-Workers can specialize and become experts.
-Businesses can grow by hiring employees.
-Principals are benefited, but agents are not benefited.
-Agency relationships eliminate legal concerns. - correct answer ✔✔Worker can specialize and
become experts & Businesses can grow by hiring employees
What does the ratification of an agency relationship include?
-The principal led a third party to believe someone was an agent.
-The law creates an agency relationship in the case of an emergency.
-There is an agreement between the principal and the agent.
-A party affirms the contract another person made with a third party. - correct answer ✔✔-A
party affirms the contract another person made with a third party
What does agency by ratification require? Choose 2 answer choices.
-The agent must have followed all of the principal's rules in negotiating and signing the contract.
-The principal must have the legal capacity to contract.
-The principal must have hired the agent before the contract was signed.
-The principal affirms the agent's entire act, not just a portion. - correct answer ✔✔-The
principal must have the legal capacity to contract.
-The principal affirms the agent's entire act, not just a portion.
What is the key factor in apparent authority?
-The principal's actions
-The agent's actions
-The actions of both the principal and the agent
, -Apparent authority is dictated by operation of law in case of emergencies. - correct answer
✔✔The Principal's actions
What are the two types of actual authority? Choose 2 answer choices.
-Express authority
-Implied authority
-Fiduciary relationship authority
-Apparent authority - correct answer ✔✔Express and implied authority
In which situation does an agent have the least exposure to liability?
-Unidentified principal
-An agent's liability exposure is the same, regardless of the degree of disclosure.
-Fully disclosed principal
-Undisclosed principal - correct answer ✔✔-Fully disclosed principal
What are some good reasons to refrain from disclosing an agency or a principal's identity?
Choose 2 answer choices.
-When a principal wishes to remain anonymous for privacy reasons
-When a principal wishes to avoid exposure to liability
-When a principal wishes to enter into transactions, but is concerned that if third parties knew
his or her identity they would be less likely to enter into the agreement
-When a principal does not have adequate resources in case he or she is held liable for damages
related to an agency relationship - correct answer ✔✔-When a principal wishes to remain
anonymous for privacy reasons
-When a principal wishes to enter into transactions, but is concerned that if third parties knew
his or her identity they would be less likely to enter into the agreement
What authority is ended with the termination of an agency relationship?
questions and answers graded A+
passed
You and a friend are taking a road trip during summer break and decide to stop for lunch. You
choose your favorite fast food restaurant. You both order a burger, fries, and a soft drink and
chow down. In the afternoon, as you are continuing your journey, both of you begin to feel
stomach cramps. They get worse so you decide to go to an urgent care clinic. The doctor there
diagnoses you both with food poisoning and prescribes medication. You fill the prescription,
check into a hotel, and experience several days of agony. You later discover the cook at the
restaurant undercooked the beef in your burger, which caused your food poisoning. You sue the
restaurant. Is the restaurant liable to you or is only the employee liable? - correct answer ✔✔
-Only the employee is liable because she was acting outside the scope of her employment when
she cooked the food.
-The restaurant is liable.
-Only the employee is liable because the employee was the one who was negligent in
undercooking the hamburger.
-Neither party is liable; when ordering food customers assume the risk that the food might not
be prepared properly. - correct answer ✔✔The restaurant is liable
Which of the following scenarios illustrates a business world without agency relationships?
-Hiring an expert as an employee.
-A corporation with only one employee.
-The owner prepares the tax returns.
-Hiring an expert as an independent contractor. - correct answer ✔✔The owner prepares the
tax returns.
,How do agency relationships affect businesses and the business world? Choose 2 answer
choices.
-Workers can specialize and become experts.
-Businesses can grow by hiring employees.
-Principals are benefited, but agents are not benefited.
-Agency relationships eliminate legal concerns. - correct answer ✔✔Worker can specialize and
become experts & Businesses can grow by hiring employees
What does the ratification of an agency relationship include?
-The principal led a third party to believe someone was an agent.
-The law creates an agency relationship in the case of an emergency.
-There is an agreement between the principal and the agent.
-A party affirms the contract another person made with a third party. - correct answer ✔✔-A
party affirms the contract another person made with a third party
What does agency by ratification require? Choose 2 answer choices.
-The agent must have followed all of the principal's rules in negotiating and signing the contract.
-The principal must have the legal capacity to contract.
-The principal must have hired the agent before the contract was signed.
-The principal affirms the agent's entire act, not just a portion. - correct answer ✔✔-The
principal must have the legal capacity to contract.
-The principal affirms the agent's entire act, not just a portion.
What is the key factor in apparent authority?
-The principal's actions
-The agent's actions
-The actions of both the principal and the agent
, -Apparent authority is dictated by operation of law in case of emergencies. - correct answer
✔✔The Principal's actions
What are the two types of actual authority? Choose 2 answer choices.
-Express authority
-Implied authority
-Fiduciary relationship authority
-Apparent authority - correct answer ✔✔Express and implied authority
In which situation does an agent have the least exposure to liability?
-Unidentified principal
-An agent's liability exposure is the same, regardless of the degree of disclosure.
-Fully disclosed principal
-Undisclosed principal - correct answer ✔✔-Fully disclosed principal
What are some good reasons to refrain from disclosing an agency or a principal's identity?
Choose 2 answer choices.
-When a principal wishes to remain anonymous for privacy reasons
-When a principal wishes to avoid exposure to liability
-When a principal wishes to enter into transactions, but is concerned that if third parties knew
his or her identity they would be less likely to enter into the agreement
-When a principal does not have adequate resources in case he or she is held liable for damages
related to an agency relationship - correct answer ✔✔-When a principal wishes to remain
anonymous for privacy reasons
-When a principal wishes to enter into transactions, but is concerned that if third parties knew
his or her identity they would be less likely to enter into the agreement
What authority is ended with the termination of an agency relationship?
