BUL Exam 3 Bailey / BUL 3310 Exam 3
Study Guide | Bailey | Business Law
Concepts, Contracts, UCC & Case
Applications (2025/2026 Update)
A master can normally avoid liability for damages caused by a servant if he can show
that the servant misunderstood his instructions
T or F? - Answer--True
In contracts negotiated by an agent who is acting within the scope of his authority for a
disclosed principal, the agent, the principal, and the third party are equally liable on the
contract
T or F? - Answer--False
The legal doctrine that holds the master liable for the torts committed by a servant while
acting within the scope of this employment is ___
- quid pro quo
- respondeat superior
- caveat emptor
- alter ego liability - Answer--Respondeat Superior
,In which of the following situations would an employee avoid liability for torts committed
while carrying out his employment obligations?
- a corporate officer acting on behalf of the corporation
- a servant following the instructions of his master
- an agent carrying out the orders of his principal
- none of the above; everyone has personal liability for the torts he commits -
Answer--None of the above; everyone has personal liability for the torts he commits
Which legal rule will not impose punitive damages on a master for the torts of his
servants unless the master himself took some part in the wrongful action?
- vicarious liability rule
- durham rule
- complicity rule
- transferred liability rule - Answer--Complicity rule
Which of the following is NOT a factor in determining whether a servant was acting
within the scope of his employment?
- was the servant carrying on the master's business when the tort was committed?
- was the servant disobeying the instructions of the master when the tort was
committed?
- was the instrumentality of the injury furnished by the master?
- did the master authorize the servant to use the instrumentality of the injury? -
Answer--Was the servant disobeying the instructions of the master when the tort was
committed?
Normally a master is not liable for torts committed by a servant while traveling from his
home to the workplace
T or F? - Answer--True
Whether or not a servant was acting in the scope of his employment when he injured a
third party is a question of ___ to be decided by the ___
- fact, judge
- law, judge
- fact, jury
- law, jury - Answer--Fact ; Jury
,The general legal doctrine that holds one person responsible for the torts committed by
another because of the relationship they have to each other is ___
- respondeat superior
- vicarious liability
- primary liability
- transferred liability - Answer--Vicarious liability
Which legal principle always imposes punitive damages on a master if the wrongful
conduct of the servant in the course of business justifies punitive damages?
- vicarious liability rule
- complicity rule
- transferred liability rule
- durham rule - Answer--Vicarious liability rule
Respondeat superior is a form of vicarious liability
T or F? - Answer--True
In some states, a parent-owner is liable for any damages caused by a family member
operating the vehicle. This is the ___ doctrine
- durham
- family car
- in loco parentis
- family negligence - Answer--Family car
When a servant completely abandons the master's work to pursue his own interests, the
servant is on ___
- a detour
- an outing
- a trespass
- a frolic - Answer--A frolic
Assume that you hire an independent contractor to transport hazardous chemicals for
your company. If he negligently causes damages to a third party while carrying out the
job, you will not be liable because of his status as an independent contractor
, T or F? - Answer--False
The principal is a fiduciary of the agent
T or F? - Answer--True
An agent is a fiduciary of the principle
T or F? - Answer--True
A principal whose identity is known to a third party is a disclosed principal
T or F? - Answer--True
Undisclosed principals have no liability to third parties for contracts negotiated by their
agents
T or F? - Answer--False
A principal may terminate the agency of a disloyal agent only if the principal suffered a
financial loss because of the agent's disloyalty
T or F? - Answer--False
Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in
pottery making. He has an arrangement with K&M, a large equipment maker, to sell
K&M kilns in both his own name and in K&M's name and to receive payments from
customers. Mike's relationship with K&M is that of a ___
A.Independent contractor,
B.Special agent,
C. Broker,
D. Factor - Answer--Factor
Agency agreements must always be in writing
T or F? - Answer--False
Study Guide | Bailey | Business Law
Concepts, Contracts, UCC & Case
Applications (2025/2026 Update)
A master can normally avoid liability for damages caused by a servant if he can show
that the servant misunderstood his instructions
T or F? - Answer--True
In contracts negotiated by an agent who is acting within the scope of his authority for a
disclosed principal, the agent, the principal, and the third party are equally liable on the
contract
T or F? - Answer--False
The legal doctrine that holds the master liable for the torts committed by a servant while
acting within the scope of this employment is ___
- quid pro quo
- respondeat superior
- caveat emptor
- alter ego liability - Answer--Respondeat Superior
,In which of the following situations would an employee avoid liability for torts committed
while carrying out his employment obligations?
- a corporate officer acting on behalf of the corporation
- a servant following the instructions of his master
- an agent carrying out the orders of his principal
- none of the above; everyone has personal liability for the torts he commits -
Answer--None of the above; everyone has personal liability for the torts he commits
Which legal rule will not impose punitive damages on a master for the torts of his
servants unless the master himself took some part in the wrongful action?
- vicarious liability rule
- durham rule
- complicity rule
- transferred liability rule - Answer--Complicity rule
Which of the following is NOT a factor in determining whether a servant was acting
within the scope of his employment?
- was the servant carrying on the master's business when the tort was committed?
- was the servant disobeying the instructions of the master when the tort was
committed?
- was the instrumentality of the injury furnished by the master?
- did the master authorize the servant to use the instrumentality of the injury? -
Answer--Was the servant disobeying the instructions of the master when the tort was
committed?
Normally a master is not liable for torts committed by a servant while traveling from his
home to the workplace
T or F? - Answer--True
Whether or not a servant was acting in the scope of his employment when he injured a
third party is a question of ___ to be decided by the ___
- fact, judge
- law, judge
- fact, jury
- law, jury - Answer--Fact ; Jury
,The general legal doctrine that holds one person responsible for the torts committed by
another because of the relationship they have to each other is ___
- respondeat superior
- vicarious liability
- primary liability
- transferred liability - Answer--Vicarious liability
Which legal principle always imposes punitive damages on a master if the wrongful
conduct of the servant in the course of business justifies punitive damages?
- vicarious liability rule
- complicity rule
- transferred liability rule
- durham rule - Answer--Vicarious liability rule
Respondeat superior is a form of vicarious liability
T or F? - Answer--True
In some states, a parent-owner is liable for any damages caused by a family member
operating the vehicle. This is the ___ doctrine
- durham
- family car
- in loco parentis
- family negligence - Answer--Family car
When a servant completely abandons the master's work to pursue his own interests, the
servant is on ___
- a detour
- an outing
- a trespass
- a frolic - Answer--A frolic
Assume that you hire an independent contractor to transport hazardous chemicals for
your company. If he negligently causes damages to a third party while carrying out the
job, you will not be liable because of his status as an independent contractor
, T or F? - Answer--False
The principal is a fiduciary of the agent
T or F? - Answer--True
An agent is a fiduciary of the principle
T or F? - Answer--True
A principal whose identity is known to a third party is a disclosed principal
T or F? - Answer--True
Undisclosed principals have no liability to third parties for contracts negotiated by their
agents
T or F? - Answer--False
A principal may terminate the agency of a disloyal agent only if the principal suffered a
financial loss because of the agent's disloyalty
T or F? - Answer--False
Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in
pottery making. He has an arrangement with K&M, a large equipment maker, to sell
K&M kilns in both his own name and in K&M's name and to receive payments from
customers. Mike's relationship with K&M is that of a ___
A.Independent contractor,
B.Special agent,
C. Broker,
D. Factor - Answer--Factor
Agency agreements must always be in writing
T or F? - Answer--False
