Blaw 2301 exam 3 Chapter: 28-31 & 41
Test Questions with Complete Correct
Answers 2025-2026 Updated.
principal - Answer in an agency relationship, the person for whom an agent is acting
agent - Answer in an agency relationship, the person who is acting on behalf of a principal
equal dignities rule - Answer if an agent is empowered to enter into a contract that must be
in writing, then the appointment of the agent must also be written
gratuitous agent - Answer someone not paid for gratuitous duties
duty of care - Answer an agent has a duty to act with reasonable care
control - Answer principals are liable for an agents acts because they exercise control over
that person
fiduciary relationship - Answer a trustee acts for the benefit of the beneficiary, always
putting the interests of the beneficiary before his own
elements that are NOT required for an agency relationship - Answer -written agreement (oral
understanding is valid)
-formal agreement (principal and agent do not need to agree formally that they have a
relationship)
-compensation (an agnecy relationship need not meet all the standards of contract law)
duty of loyalty - Answer an agent has a fiduciary duty to act loyally for the principal's benefit
in all matters connected with the agency relationship
outside benefits - Answer an agent may not recieve profits unless the principal knows and
approves
, duty to indemnify - Answer a principal must indemnify an agent for any expenses they have
reaasonably incurred
duty to cooperate - Answer principals have a duty to cooperate with their agent
2 possibilities to terminate a principal-agent relationship - Answer term agreement (specific
time)
agency at will (no specified time)
wrongful termination - Answer a parties departure from the agency violates the agreement
and causes harm to the other party
principals liability for contracts - Answer the principal is liable for the acts and statements of
his agent if the agent had authority, or the principal ratified the acts of the agent
authority - Answer a principal is bound by the acts of an agent if the agent had authority
express authority - Answer the principal grants express authority by words or conduct that,
reasonably interpreted, cause the agent to believe the principal desires her to acts on the
principals account
implied authority - Answer unless otherwise agreed, authority to conduct a transaction
includes authority to do acts that are reasonably necessary to accomplish it
apparent authority - Answer a principal can be liable for the acts of an agent who is not, in
fact, acting with authority if the principals conduct causes a third party reasonably to believe
that the agent is authorized
ratification - Answer if a person accepts the benefit of an unauthorized transaction or fails to
repudiate it, then he is as bound by the act as if he had riginally authorized it
requirements for a principal to be bound - Answer -the agent indicates to the third party that
she is acting for a principal
-the principal knows all the material facts of the transaction
-the principal accepts the benefits of the whole transaction, not just part
Test Questions with Complete Correct
Answers 2025-2026 Updated.
principal - Answer in an agency relationship, the person for whom an agent is acting
agent - Answer in an agency relationship, the person who is acting on behalf of a principal
equal dignities rule - Answer if an agent is empowered to enter into a contract that must be
in writing, then the appointment of the agent must also be written
gratuitous agent - Answer someone not paid for gratuitous duties
duty of care - Answer an agent has a duty to act with reasonable care
control - Answer principals are liable for an agents acts because they exercise control over
that person
fiduciary relationship - Answer a trustee acts for the benefit of the beneficiary, always
putting the interests of the beneficiary before his own
elements that are NOT required for an agency relationship - Answer -written agreement (oral
understanding is valid)
-formal agreement (principal and agent do not need to agree formally that they have a
relationship)
-compensation (an agnecy relationship need not meet all the standards of contract law)
duty of loyalty - Answer an agent has a fiduciary duty to act loyally for the principal's benefit
in all matters connected with the agency relationship
outside benefits - Answer an agent may not recieve profits unless the principal knows and
approves
, duty to indemnify - Answer a principal must indemnify an agent for any expenses they have
reaasonably incurred
duty to cooperate - Answer principals have a duty to cooperate with their agent
2 possibilities to terminate a principal-agent relationship - Answer term agreement (specific
time)
agency at will (no specified time)
wrongful termination - Answer a parties departure from the agency violates the agreement
and causes harm to the other party
principals liability for contracts - Answer the principal is liable for the acts and statements of
his agent if the agent had authority, or the principal ratified the acts of the agent
authority - Answer a principal is bound by the acts of an agent if the agent had authority
express authority - Answer the principal grants express authority by words or conduct that,
reasonably interpreted, cause the agent to believe the principal desires her to acts on the
principals account
implied authority - Answer unless otherwise agreed, authority to conduct a transaction
includes authority to do acts that are reasonably necessary to accomplish it
apparent authority - Answer a principal can be liable for the acts of an agent who is not, in
fact, acting with authority if the principals conduct causes a third party reasonably to believe
that the agent is authorized
ratification - Answer if a person accepts the benefit of an unauthorized transaction or fails to
repudiate it, then he is as bound by the act as if he had riginally authorized it
requirements for a principal to be bound - Answer -the agent indicates to the third party that
she is acting for a principal
-the principal knows all the material facts of the transaction
-the principal accepts the benefits of the whole transaction, not just part
