Agency Relationship Flashcards, test questions and answers
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Principal Agent Relationship
Business Law Ch. 18 – Flashcards 69 terms
69 terms
Preview
Business Law Ch. 18 – Flashcards
question
A principal has the right to control an agent's conduct in matters entrusted to the agent.
answer
T
question
Through agents, a principal can conduct multiple business operations simultaneously.
answer
T
question
In a principal-agent relationship, the parties agree that the principal will act on behalf and instead of the agent in negotiating and transacting business with third persons.
answer
F
question
Employees who deal with third parties are agents of their employers.
answer
T
question
An employer has no control over an employee's work.
answer
F
question
Real estate brokers are independent contractors.
answer
T
question
An independent contractor is an employee.
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F
question
The relationship between a principal and an independent contractor always involves an agency relationship.
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F
question
An independent contractor is an employer who controls his or her agent's performance.
answer
F
question
An agency relationship can only be formed with a written agreement.
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F
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A person must have contractual capacity to be an agent.
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F
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An agency relationship created for an illegal purpose is enforceable.
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F
question
An agency relationship must be based on an express or implied agreement that the agent will act for principal and that the principal agrees to have the agent so act.
answer
T
question
An agency relationship cannot exist in the absence of a formal agreement.
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F
question
A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.
answer
T
question
An agency relationship may occur by operation of law in a family.
answer
F
question
Generally, the agent owes the principal no duties.
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F
question
It is basic tenet of agency law that notice to the agent is notice to the principal.
answer
T
question
Remedies of the agent for breach of duty by the principal arise out of contract and tort law.
answer
T
question
An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.
answer
T
question
If a principal cannot be contacted in an emergency situation, an agent cannot deviate from previously given instructions.
answer
F
question
A principal owes an agent a duty of compensation.
answer
T
question
Authority declared in clear, direct, definite terms is express authority.
answer
T
question
Giving an agent a power of attorney confers implied authority.
answer
F
question
The equal dignity rule requires that a principal and agent treat each other with "equal dignity."
answer
F
question
For an agent's implied authority to be effective, a principal must ratify it.
answer
F
question
if a principal does not ratify an authorized contract, the principal is not bound.
answer
F
question
If a principal ratifies a contract without knowing all of the facts, the principal can rescind the contract.
answer
T
question
If a principal does not ratify an unauthorized contract, the principal is not bound.
answer
T
question
A disclosed principal is a principal whose identity is not known by the third party at the time the contract is made by the agent.
answer
T
question
A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.
answer
T
question
Under the doctrine of respondeat superior, an agent is liable for the principal's negligence.
answer
F
question
A principal is responsible for all intentional torts committed by an agent.
answer
F
question
An agency can terminate once its purpose is achieved.
answer
T
question
When an agency relationship is terminated, the principal has a duty to personally notify third parties who knew of its existence.
answer
F
question
Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is
answer
an agent and has the authority.
question
KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands. KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the standards that should be observed, the goals that should be attained, and the methods that should be used. Lola is most likely KupaJava's
answer
principal.
question
Clara is a salesperson in The Corner Store. When Carla makes a sale to Jenny, the sale is
answer
question
Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely
answer
an agent.
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Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is
answer
an independent contractor.
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Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite's employee is
answer
the control Delite has over the details of the work.
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George and James create an agency relationship to facilitate the sale of illegal narcotics. This agency relationship
answer
is illegal.
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Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between
answer
a principal and an agent.
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Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act. They set out the terms in a written document, which they both sign. This is
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an agency by agreement.
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Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby. Jessie orally agrees to do so. This is
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an agency by agreement.
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Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is
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an agency by operation of law.
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Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to affirm the contract. This is
answer
n agency by ratification.
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Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached
answer
the duty of performance.
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Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must
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use reasonable diligence and skill in selling.
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Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is
answer
liable, because notice to Mackenzie is notice to Lindsay.
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Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I'll install it for half of what the store would charge." Dita buys the carpet, which Bob installs for half the store's price. Bob keeps the money. Bob has breached
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the duty of loyalty.
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Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays. Will enters into a contract on MaryElise's behalf on Tuesday. Will has breached
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the duty of obedience.
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Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's
answer
duty of reimbursement.
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Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to pay the rest of the price. Timberline sues Rangle for breach of contract. His right to hold Siena liable for any damages that he has to pay is the right of
answer
indemnification.
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Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of
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cooperation.
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Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and duties of both parties. This is
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express authority.
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Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied
answer
by custom.
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Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by
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an inference from the position Sonia occupies.
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Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has
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apparent authority.
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Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract relating to the exterior. This attempt will be
answer
totally unsuccessful.
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Bud approves on behalf of Cody?but without authorization?a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be
answer
totally unsuccessful.
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Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Company. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is
answer
a partially disclosed principal.
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Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the contract, and Joli is not, if Cake Bake is
answer
a disclosed principal.
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Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not consider whether
answer
Custodial was personally at fault.
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Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she
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crashed into a car at the airport while off duty.
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Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell the condominiums in a building at BDC's coastal resort. The agency will terminate
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after the condos have been sold.
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Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on
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Miklos's death or incapacity.
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Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house burns down before being sold. The agency agreement is likely
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terminated by operation of law.
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Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Treadwell must notify
answer
Uri and any third parties who are aware of the agency relationship.
Agency Relationship
Business Law
Business Management
Pictures
Real Estate
The House
Business Law – Chapter 28 – Flashcards 80 terms
80 terms
Preview
Business Law – Chapter 28 – Flashcards
question
Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.
answer
False
question
Dwayne agrees to serve as Walker's agent in booking spots for Walker's portable basketball game. Dwayne asks Walker for pictures and size specifications of the game so he can provide potential customers information they need. If Walker does not provide the pictures and size information, he is breaching a duty to Dwayne.
answer
True
question
Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer and contract for the sale of his house in the U.S. The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.
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True
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An agent must obey any and all instructions of the principal.
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False
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Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both parties.
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True
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You cannot be held liable for the actions of your agents if the agents are violating your instructions.
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False
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The bankruptcy of an agent automatically terminates an agency relationship.
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False
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Generally, either party to an agency relationship has the power to terminate it at any time.
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True
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Victoria is the director of marketing for Big Corporation. Victoria needed to negotiate an out-of-town contract on behalf of Big. Big has a legal duty to reimburse Victoria for the hotel expenses she incurs negotiating the contract.
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True
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John is the trustee of a large testamentary trust. Lori is the sole beneficiary of the trust. Because John is the trustee, he is Lori's agent.
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False
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Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
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True
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It does not create an agency relationship between Minott Mills and Douthett Co. for Minott Mills to contract to sell 500 yards of fabric to Douthett Co.
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True
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A principal must indemnify an agent for any expenses incurred in carrying out agency responsibilities, but the principal will not be responsible for indemnifying an agent for any unauthorized purchases.
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False
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Esday, Inc. hired Mark to be a financial analyst. Because of the equal dignities rule, the employment contract between Esday and Mark must be in writing.
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False
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As a good neighbor, Lou gratuitously agreed to try to sell Haley's aquarium while she was on vacation. Since there is no consideration for this agreement, there can be no agency relationship between Lou and Haley.
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False
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An agency relationship can be created:
answer
A. By the conduct of the parties
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Which of the following persons is an agent?
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D. All of the above
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Can a person work as an agent for two different people with conflicting interests?
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B. Yes, provided the agent discloses to both principals that she is representing both persons and the principals agree to the dual relationship.
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Which of the following is not required of an agency relationship?
answer
A. Consideration
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Nathan agrees to act as an agent for Cheyenne. Which of the following is true?
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C. Cheyenne may compete with Na-than in matters within the scope of the agency business.
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Wanting to save the money she would have to pay for a commission, Marsha asks her friend Howard to check on the Internet and see if he can find a five-day cruise to the Bahamas for under $400 and if he does, to book it for her. He agrees, but later tells her he doesn't have time to check for her. Howard:
answer
B. is not liable to Marsha because he was a gratuitous agent and had both the power and the right to quit any time he wanted.
question
The equal dignities rule relative to agency law applies to an agent:
answer
D. All of the above
question
Janet was employed as a sales representative for Esday, Inc. An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet keep the bracelet?
answer
B. Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet.
question
Mohammad was an employee in the new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months. Estay took great care to keep information concerning the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to leave Estay to direct Ceries' marketing department. Which statement is correct?
answer
D. Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency.
question
Ron is the business agent for Kansas Sunshine, a rock band. He is also the agent for another popular Midwestern rock group, City Sand. Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game. The promoter was willing to pay $250,000 for both groups to play after the game; however, Ron talked her into booking just City Sand for $175,000. Given his contract with City Sand, Ron made more money under this arrangement. Has Ron violated his fiduciary duty to Kansas Sunshine?
answer
A. Yes. It appears that Ron put his own interests ahead of his principal's interests.
question
Nikki was an tax accountant with HBR Accounting. Nikki decided to do some tax consulting in the evenings and on weekends. HBR is unaware of Nikki's consulting work. Which statement is correct?
answer
D. Nikki has breached a fiduciary duty to HBR since she is competing with HBR.
question
Cameron, editor of the local newspaper, assigned to Jim the writing of a story about pollution of a nearby stream. Although Jim used reasonable care in gathering and checking his information, unknown to Jim, the story contained a defamatory statement about Maureen. Maureen reads the story and sues Jim for libel. Cameron, who read and published the story:
answer
A. Must indemnify Jim for Maureen's claim
question
An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct:
answer
C. During both working hours and off-duty time
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Pamela hired Lena to sell her business. Lena:
answer
C. Can buy the business only with Pamela's permission
question
An agency will be terminated in all but which one of the following situations?
answer
B. A travel agent files for individual bankruptcy under Chapter 13
question
Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate, acting as a prudent person." On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29.
answer
A. The contract is void since the agency terminated May 29.
question
Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct?
answer
A. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence.
question
Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Tom:
answer
D. should not hire Elton. Tom has a duty to obey Esday's instructions only if they are legal and ethical.
question
The death of the agent:
answer
A. Automatically terminates the agency relationship
question
If the agent is disloyal to the principal:
answer
D. All the above are correct
question
Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda's antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct? (1)
answer
D. All the above are correct
question
Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda's antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct? (2)
answer
C. Only Tonya can terminate the relationship
question
John hired Tim to sell his house. Which statement is correct?
answer
A. John is Tim's principal
question
In a power coupled with an interest:
answer
C. The principal has neither the power nor the right to terminate
question
HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct?
answer
C. Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.
question
If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.
answer
True
question
If ambiguity is present as to the principal's intent, the court will look to the principal's subjective intent.
answer
False
question
If someone acts without authority, a "principal" can decide later to be bound by the actions as long as the "agent" indicates to the third party that he is acting for a principal, the "principal" knows all the material facts of the transaction, and the "principal" accepts the benefit of at least part of the transaction.
answer
False
question
If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job.
answer
True
question
The implied authority of an agent is the same an agent's apparent authority.
answer
False
question
Respondeat superior means "let the master answer."
answer
True
question
As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal.
answer
False
question
Erica's supervisor told her to arrange for a conference room at the Kelly Inn. Erica has express authority to contract for the room.
answer
True
question
An act is not "within the scope of employment" if it is expressly forbidden, even if it is of the same general nature as an authorized act.
answer
False
question
The issue in apparent authority is what the principal has done to make the third party believe that the agent actually has authority.
answer
True
question
An employer is generally liable for the intentional wrongful acts of his or her employees.
answer
False
question
If a principal accepts the benefits of a whole unauthorized contract, the principal is deemed to have ratified the contract and is bound as if the act had been originally authorized.
answer
True
question
If estoppel applies, the principal would be prevented from asserting that no agency relationship existed.
answer
True
question
Maylin has the authority to delegate her tasks as agent for Brian unless he has expressly restricted her from doing so.
answer
False
question
An agent is always liable for his or her own torts committed within the scope of the agency relationship.
answer
True
question
Jenny is a salesperson in a hardware store. As such, she:
answer
D. All the above are correct
question
The doctrine of estoppel would most often apply in situations of:
answer
B. Apparent authority
question
Express authority can be created by:
answer
D. All the above
question
Thomas, the manager of an apartment complex, rented an apartment to Donna. A few weeks later, Donna complained that the hot water did not work. Thomas hired Hometown Plumbers to fix the hot water, but the job was not successful. A few days later Donna moved out since she had no hot water. She sued the landlord and Thomas for breach of contract.
answer
B. The landlord is liable, but not Thomas
question
In the Dickinson v. Charter Oaks case, the court found:
answer
C. a reasonable inference could be made that Carol Dickinson know-ingly permitted her husband to act as having apparent authority.
question
Circus Pizza contracted with Art to run its birthday parties. Art's responsibilities included supervising the children and organizing the games. Circus did not investigate Art's background, which included a history of assaulting children. Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party. Circus Pizza:
answer
C. may be held liable on the basis of negligent hiring.
question
Kirk is bound by the acts of his agent, Tyra, if:
answer
D. All of the above
question
Paula appointed Al to be her agent via a contract in writing that spelled out the scope of Al's authority. The contract provided that Al was not to disclose that he was acting on behalf of Paula. In entering into a contract for Paula, Al did not disclose to the third party that he was acting as an agent. In this case, the principal was:
answer
C. Undisclosed
question
When a principal is partially disclosed:
answer
A. the agent and principal will be jointly and severally liable on the contract.
question
If an employer and employee are jointly and severally liable, the third party:
answer
D. Can collect the full award from either the employee or employer
question
Mike worked for Frank's Pizza as a driver. His duties consisted of making deliveries along a designated route. One day Mike decided to see his girlfriend, Jackie, who lived 50 miles out of his pizza route. While driving to his girlfriend's, Mike injured a pedestrian, Chuck. The accident was caused because of Mike's negligent operation of the delivery truck. Chuck is now suing both Mike and Frank's for personal injuries. Under the circumstances:
answer
D. Frank's is probably not liable be-cause Mike's excursion was not within the scope of his employment.
question
Factors influencing whether a servant is acting within the scope of employment include all but which of the following?
answer
D. All of the answer choices are factors in determining if an act is "within the scope of employment."
question
Rosa was authorized to purchase computer equipment for her company, Zebra Toy Company. Her employer required her to obtain written approval from the vice president if she wanted to buy more than $100,000 of equipment. One day Rosa purchased $225,000 of computer equipment from Computer Sales Company, without written approval. Which of the following is correct?
answer
C. Zebra Toy must honor the contract if Computer Sales reasonably believed Rosa had the authority to purchase the equipment.
question
Rosa was authorized to purchase computer equipment for her company, Zebra Toy Company. Her employer required her to obtain written approval from the vice president if she wanted to buy more than $100,000 of equipment. One day Rosa purchased $225,000 of computer equipment from Computer Sales Company, without written approval. If Zebra Toy Company purchases the equipment:
answer
A. it will be doing what it had to do, since Rosa had the apparent authority to buy the equipment.
question
Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri's car. If Rick is an employee, who is liable to Terri?
answer
B. The landlord and Rick
question
Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri's car. If Rick is an independent contractor, who is liable to Terri?
answer
D. Only Rick
question
Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri's car. If Judy had been negligent in hiring Rick, who is liable to Terri?
answer
A. The landlord, Judy, and Rick
question
Joan agrees to try to negotiate the purchase of an acre of land for a prospective office building on behalf of Cheryl, who does not want to be identified to the seller. Joan tells the seller, "My friend is interested in purchasing this land." If the seller contracts with Joan, Cheryl is:
answer
A. an unidentified principal, and in case of a breach of contract Joan and Cheryl are jointly and severally liable.
question
The doctrine of respondeat superior:
answer
B. applies to employees but not inde-pendent contractors.
question
Jackie is an employee for Hardware Store, Inc. When attempting to open a can of bright orange paint, she accidentally spills paint on Maggie, a customer in the store. Maggie claims that her $800 business suit is ruined. The legal liability here can best be described as:
answer
C. Both the store and Jackie are liable to Maggie.
question
Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can:
answer
C. Hold Chance but not the company liable
question
Which of the following statements is correct?
answer
A. An employer is liable for the intentional misconduct of his employee if that employee was motivated, at least in part, by a desire to serve the employer.
question
While at work one evening, Joe was confronted by Tim. Tim had come into the store and accused Joe of trying to steal his girlfriend. Joe told Tim he was crazy but Tim persisted in yelling at Joe. Joe, now angered, stepped around the cash register and hit Tim in the jaw. Tim was seriously injured and sued Joe and his employer for his damages.
answer
C. Joe, but not his employer, is probably liable to Tim.
question
Renee works for a restaurant. One Saturday morning, she and several other employees participate in a "fun run" to benefit a charitable cause. She is not paid for this activity but she and her co-workers wear clothing bearing the company's name. While running through a street, Renee accidentally trips a fellow runner. The runner claims that both Renee and her company are liable for his injuries. Most likely:
answer
A. the court would consider whether Renee was acting within the scope of her employment during the fun run.
question
An employer can be liable for:
answer
D. All the above
Acting
Agency Relationship
Business Law
Business Management
Contract Law
Real Estate
Bus Law Practice Test – Flashcards 99 terms
99 terms
Preview
Bus Law Practice Test – Flashcards
question
Which of the following is not required of an agency relationship
answer
Consideration
question
The equal dignities rule relative to agency law applies to an agent
answer
hired to contract for booth at a trade show scheduled to occur in two years
question
Mohammad was an employee int he new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that essay intended to launch in 6 months. Estay took great care to keep information concering the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammed to leave Estay to direct Ceries' marketing department. Which statement is correct?
answer
Mohammad cannot share with Ceries the confidential information he knows about the Estay's new product because he has a duty not to disclose confidential information he acquired during the agency
question
An agency relationship can be created:
answer
by the conduct of the parties
question
Ron is the business agent for Kansas Sunshine, a rock band. He is also the agent for another popular Midwestern rock group, City Sand. Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game. The promoter was willing to pay 250,00 for both groups to play after the game; however, Ron talked her into booking just City Sand for 175,000. Given his contract with City Sand, Ron made more money under this arrangement. Has Ron violated his fiduciary duty to Kansas Sunshine?
answer
Yes. It appears that Ron put his own interests ahead of his principal's interests.
question
John hired Tim to sell his house. Which statement is correct?
answer
John is Tim's principal
question
The doctrine of estoppel would most often apply in situations of
answer
apparent authority
question
Cameron, editor of the local newspaper, assigned to Jim the writing of the story about pollution of a nearby stream. Although Jim used reasonable care in gathering and checking his information, unknown to Jim, the story contained a defamatory statement about Maureen. Maureen reads the story Jim for libel. Cameron, who read and publish the story:
answer
must indemnify Jim for Maureen's claim
question
Pamela hired Lena to sell her business Lena:
answer
can buy the business only with Pamela's permission
question
Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can:
answer
hold Chance but not the company liable for her injury
question
Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated wight he sale of real estate, acting as a prudent person" On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real-estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29
answer
The contract is void since the agency terminated May 29
question
Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct?
answer
Since Jim is a gratutious agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence
question
Tom, the production manager at Esday was told by his supervisor to hire Elton, a 15-year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Tom:
answer
should not hire Elton. Tom has a duty to obey Esday's instructions only if they are legal and ethical
question
If the agent is disloyal to the principal:
answer
All the above ware correct
question
Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda;s antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda couldd pay off the loan, Tonya sold the antiques and paid Linda the proceeds atet deducting the balance of the loan. Which of the following is correct?
answer
All the above are correct
question
HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct?
answer
Denise, as a CPA, is an agent with special skills, She is held to a higher duty than ordinary negligence
question
Express authority can be created by:
answer
All the above
question
Circus Pizza contracted with Art to run its birthday parties. Art's responsibilities included supervising the children and organizing the gams. Circus did not investigate Art's background, which included a history of assaulting children. Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party. Circus Pizza:
answer
may be held liable on the basis of negligent hiring
question
When a principal is partially disclosed:
answer
the agent and principal will be jointly and severally liable on the contract
question
Debra and Lawrence have no equal partnership. This year, after expenses the partnership had a profit of $200,000. Debra and Lawrence will each pay taxes on:
answer
$100,000
question
All the business forms listed below have limited liability except the:
answer
general partnership
question
Rachel and Cyndi started a retail business called Zebra Toy Company. The business is operated as a partnership. Under partnership law:
answer
All the above
question
Seventy farmers in Morgan county joined together to gain the advantages f purchasing seed and fertilizer in the bulk and of obtaining better prices when distributing and selling their crops. The farmers have formed a:
answer
cooperative
question
The business form that is taxed as a partnership and gives all owners limited liability, is:
answer
a limited liability company
question
All of the following are characteristics of a closely held corporation EXCEPT:
answer
the shares are publicly traded
question
The form of business ownership that is most easily transferable is the:
answer
corporation
question
The corporate from of business:
answer
was first known and used by the Greeks and then spread through the Romans to England
question
What federal agency requires that the seller of a franchise give the potential buyer an offering circular and audited financial statements?
answer
The Federal Trade Commission (FTC).
question
Harold and Zack have pooled their money together to buy real estate broker, finds buyers for the property they have subdivided. Harold and Zack are engaged in a:
answer
partnership
question
LLCs have become popular for all EXEPT which of the following reason:
answer
uniformity of law
question
Charles and Ellen, and unmarried couple, run an ice cream store. The business is not incorporated and they have filed no formation papers wight he state. Their business is a:
answer
partnership
question
E.I James is a writer with a best selling novel. He wishes to create a corporation called "James, Inc "He will be the only shareholder. Can James incorporate his business of writing?
answer
Yes, this would be the incorporation of a sole proprietorship.
question
Marin, Leah and Pablo are considering forming a business. What factors should they consider in making a choice of organization?
answer
Ease of creation and operation
question
Charles and Becky are partners. If they have a disagreement, the Uniform Partnership Act will govern their respective rights with each other:
answer
only if they do not have a written partnership agreement that addresses the issue of dispute
question
A partnership is the association of two or more persons to carry on as co-owners a business for profit. The association:
answer
means be established by a formal agreement
question
Jackie and Robert own an apartment building as partners. Cyndi, one of their tenants, gives Robert written notice she will be moving out at the end of the following month. Robert did not tell Jackie that Cyndi was moving. Has Cyndi properly given notice to the partnership?
answer
Yes. Notice to Robert was notice to the partnership.
question
Which of the following events occurs first with the respect to the ending of a partnership?
answer
Dissolution
question
Theresa and Bobbi bought a race car together. They agreed to share all expenses and split net profits equally. There was no agreement as to the duration of the partnership. After about year, Bobbi decided she was tired of the racing business and left the partnership. Bobbie did not violate the partnership agreement. Theresa claims Bobbi's leaving was wrongful. Is Theresa correct?
answer
No, in a partnership at will, a partner has the right to leave the partnership at any time
question
Art and Alma made capital contributions of 60% and 40% respectively to their newly formed partnership, AA & Associates. They did not have a written partnership agreement. At the end of the first year, the partnership made a profit of which Alma now claims half. However, Art maintains he should receive 60% Who is correct?
answer
Alma, as the UPA provides that profits are split equally unless partners agree other wise
question
Sandy, Ramon and Bonnie were partners. Sandy dissociated from the partnership Bonnie and Ramon decided to continue the business. When Sandy dissociated, there was a $50,000 debt owed to Great State Bank. Which statement is correct?
answer
Sandy remains liable on the $50,000 debt owed to Great State Bank
question
At what stage are the partnership debts paid and the proceeds distributed to the parters
answer
During winding up
question
A group of accounting alumni decided to hold a fundraiser to establish a scholarship for an accounting student. This enterprise is:
answer
None of the above
question
If Kay, a partner in an auction business, has a personal creditor who is aggressive about collecting the debt:
answer
the creditor cannot attach the partnership property to pay off the debt
question
Gary and Herman are partners in a lawn mower repair business in Ohio. While Gary is on vacation, visiting his sister in Georgia, his sister's neighbor has trouble with her mower and Gary fixes it for her. She insist on paying him Gary
answer
must turn the money over to the partnership because he earned it doing the kind of work that the partnership does.
question
Randy, Joan and Arnie are partners. Their agreement did not address dissociation nor how long the partnership would last. Randy decided to leave the partnership. When Randy serves notice he intends to withdraw:
answer
the partnership can either buy him out and continue in business or wind up the business and terminate the partnership
question
Debbie is a partner with Adam and Marty. She sells her interest in the partnership to Craig. Which statement below is the most accurate?
answer
Adam and Marty must approve the sale for Craig to become a full partner
question
Dust dissociated from a partnership. To protect himself from debts of the partnership after he leaves Dusty should:
answer
file a statement of dissociation with the Secretary of State
question
Ending a partnership involves which of the following three three steps
answer
Dissolution, winding up. and termination
question
Nacy was a partner of a small business. She could see that the buissness was beginning to fail and that it was very unlikely it would recover. Not wanting to lose her investment, she asked that the court require the partnership to dissolve since she did not have a legal right to withdraw at the time. Does a court have the authority to order a partnership to dissolve?
answer
Yes. A court can dissolve a partnership when it is convinced that the partnership is unlikely to succeed
question
Lori and Dan own a small restaurant as partners. Dan works several hours a day cooking, waiting on the tables. doing the books, and so forth. Dan believes he is entitled to be paid at least a standard wage for all his work since, at the present time, the part-time kitchen helpers earn more than he does! Lori claims Dan is not entitled to anything other than one-half the net profits. Is Lori right?
answer
Yes, as there is no agreement between Lori and Dan allowing for wither of them to be paid wages for work done at the restaurant
question
Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi. Losses will be shared:
answer
60 percent to Astrid and 40 percent to Razi, unless otherwise agreed
question
Laurie is incorporating her business. Laurie's home state is Wisconsin. Business will be conducted in the California, Michigan, Pennsylvania, and Virginia Laurie:
answer
can incorporate the business in any state
question
A corporate charter is filed with:
answer
a state's Secretary of State office
question
MegaCorp purchased 10,000 shares of it's own stock that had previously been owned by private investors. The stock MegaCorp repurchased is called:
answer
treasury stock
question
Preemptive rights are:
answer
designed to prevent dilution of a shareholder's owner in the company
question
Defining a corporation with such information as the corporate name, the number and type of authorized share of stock, identification of the purpose and the agent, is done through the:
answer
All of the above, All of these terms are used to identify the same document
question
Once a provision is in the corporate charter, it can only be changed by:
answer
both of the above are necessary to change a corporate charter
question
Incorporation protects:
answer
shareholders against personal liability for the debts of the company
question
The director of MegaCorp learn that an outsider is planning on buying enough voting stock to get herself elected to the board of directors. MegaCorp, which has cumulative voting, quickly put together a vote of shareholders to eliminate the company's cumulative voting procedure. The shareholders vote to do away with cumulative voting. The outsider, Dawn who wanted to get herself elected to MegaCorp's board, claims that the company has committed and illegal act. Is she right?
answer
No. Under the Model Act, regardless of MegaCorp's motives, it had the right to act as it did
question
Fashions Inc. has 12 shareholders. There is no shareholders agreement concerning the board of directors. The company is subject to the Model Act. How many directors is Fashions, Inc. required to have?
answer
One
question
Fashion Inc. has 12 shareholders. The company is subject to the Model Act. What officers is Fashions, Inc. required to have?
answer
Whatever officers are described in the corporation bylaws
question
Under most states statues, a corporation may:
answer
include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith
question
Which of the following statements is correct?
answer
Bonds are long-term debt secured by company asset
question
MegaCorp occasionally sells products in Michigan. It does not have an office in that state and does not advertise in Michigan. The company's marketing representative are based in New York but do travel to Michigan once a year to attend a trade show. Which statement is correct?
answer
MegaCorp is not required to register in Michigan because it does not have an ongoing presence in Michigan
question
What is meant by the term "piercing the corporate veil?
answer
Corporate directors and/or officers may be held personally liable to a person damaged by an act of the corporation
question
The executive of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans. The executives:
answer
are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee
question
If a court determines a manager's corporate decision amounted to self-dealing:
answer
the business judgment rule will not apply
question
Anti-takeover tactics include all EXCEPT:
answer
negative tender offers
question
A corporation board's refusal to remove a "poison pill" was held reasonable in:
answer
Unocal Corp. v Mesa Petroleum Co.
question
Which of the following describes the duty of loyalty
answer
It prohibits making a decision that benefits the decision-maker at the expense of the corporation.
question
Which of the following is NOT a method to acquire control of a company?
answer
Make an in tail public offering
question
Which of the following statements is correct with respect to the states efforts to offer protection to companies targeted for hostile takeover
answer
Both statutory law and offers the state courts have provided some degree of protection for companies.
question
On the day tender after begins:
answer
a bidder mist file a disclosure statement with the SEC
question
Which of the following is correct concerning anti-takeover efforts?
answer
Most states have passed laws to deter hostile takeovers, but these statuses have not totally eliminated hostile takeovers
question
For the business judgment rule to apply:
answer
the director must act in the best interests of the corporation
question
The Williams Act:
answer
is designed to regulate the conduct of those attempting to take over a company
question
Which of the following must be approved b the shareholders if a company is attempting to avoid hostile takeover bid?
answer
all the above
question
Which of the following is not true in applying the Williams Act
answer
A bidder must keep a tender offer open for at least 30 business days initially
question
The model Buissness Corporation Act states: All corporate power shall be exercised by or under the authority of and the business and affairs of the corporation managed by the directions of its:
answer
board of directors
question
The term corporate manager refers to:
answer
both of the above
question
A board of directors is considering whether to invest a great deal of money into research and development. Such a decision could have a long-term beneficial effect for the company's future. As an alternative, the board could forego the expenditures in to research and development and buy back its own shares in order to immediately increase the company's receivers. Which of the below groups would most likely favor the option to increase the company's reserves and not invest in more research development?
answer
Shareholders
question
Management duty to have a rational business purpose, avoid illegal behavior , and make informed decisions frees to its:
answer
duty of care
question
Who has the right to manage the business of a corporation?
answer
The board of directors
question
Unless the form provides for a longer period, a proxy is valid for hole long under the Model Act?
answer
11 months
question
IN derivative lawsuit, the name plaintiff:
answer
is the corporation on whose behalf the lawsuit is field
question
Under SEC rules, companies:
answer
are required to post the information in the annual report and the proxy statement on there Web site, but must mail to shareholders either hard copies of all the information or a card telling them how they vote online
question
Kain is the chief financial officer of Yonkka, Inc. He is also a member of Yonkka's board of directors. Kain is:
answer
an outside director
question
A corporation must obtain shareholder approval before the company:
answer
All the above are correct
question
The proceeds,if any of a derivative lawsuit go to:
answer
the corporation
question
Meredith a shareholder in Quarto Inc. notified Quarto's board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation's name. In response to Meredith's demand the board:
answer
can do any of the above
question
Ev-R-Green Co., a private corporation, decides to sell substantially all of the company assets. Under the Model Act and many states statues:
answer
Ev-R-Green must buy cake, at fair value, the stock of any shareholder who object to the decision.
question
Lucy owns 10 shares of stock in Quamba, Inc. Lucy wishes to place a proposal in a company's proxy statement to be voted on at the shareholders; meeting. Pursuant to the SEC rules before Lucy is allowed to place her proposal on the proxy statement she must:
answer
have owned continuously for one year at least one percent of the company or $2000 or more of the stock
question
Which of the following is correct concerning the SEC regulations on shareholders resolutions?
answer
all of the above are correct
question
Luella just purchased 5 shares of common stock in TriColor Inc. for $250. Luella has the right to:
answer
vote to elect directors
question
To be successful in a court challenge regarding an executive's compensation, shareholder must olive that"
answer
the board was grossly uniformed before it set the composition amount
question
Veritas, Inc. is planning its annual shareholder met ting on June 15 The company:
answer
must send notices to everyone who owns stock on the "record date", which can be no more than 70 days before the meeting
question
A "fundamental change" in a corporation would be illustrated by:
answer
All of the above
question
A majority of shareholders of FamLi Co. wish to expel Glenn, a minority shareholder. In most states, the company cannot expel Glenn unless:
answer
Both of the above
question
Quick Supply House breached a contract with MeganCorp. The breach resulted in a great deal of money to MegaCorp. The board of directors for MeaCorp vote not to sure the supply house since it believes the legal costs would be more than it would probably recover. If a group of shareholders wish to sure the supply house, this would:
answer
have to be a derived lawsuit
Agency Relationship
Checks And Balances
Includes Things Like
Legal Management
Politics of the United States
Presiding Officer Of The Senate
Principles Of The Constitution
Terms And Conditions
Chapter 11: The Corporate Form of Organization – Flashcards 48 terms
48 terms
Preview
Chapter 11: The Corporate Form of Organization – Flashcards
question
corporation
answer
created by law; has most of the rights and priviledges of a person
question
two common classifications of corporations
answer
1. by purpose 2. by ownership
question
publicly held corporation
answer
may have thousands of stockholders, and its stock is traded on a national securities market such as the New York Stock Exchange
question
privately held corporation
answer
also known as a closely held corporation; usually has only a few stockholders and does not offer its tock for sale to the general public; much smaller than publicly hedl corporations
question
Separate Legal Existence
answer
means that a corporation acts under its own name rather than in the name of its stockholders
question
Limited Liability of Stockholders
answer
means that the liability of stockholders is limited to ther investment in the corporation; creditors have no legal claims on the personal assets of the stockholders unless fraud has occurred
question
Transferable Ownership Rights
answer
means that stockholders may dispose of part or all of their interest in a corporation simply by selling their stock
question
Ability to Acquire capital
answer
means that it is easy for a coporation to obtain captial through the issuance of stock
question
Continuous life
answer
means that the life of a corporation, which is stated on the charter, can be renewed continuously
question
controller
answer
Chief Accounting officer; (1) miantains the accounting records (2) maintains an adequate system of internal control (3) prepares financial statements, tax returns, and internal reports
question
treasurer
answer
has custody of the corporation's funds and maintains the company's cash position
question
double taxation
answer
corporate income is taxed at the corporate level and at the individual level
question
S corporation
answer
a type of corporate from that allows for legal treatement as a corporation but tax treatment as a partnership but the size of the corporation is limited
question
charter
answer
a grant that forms a corporation; a document that describes the name and prurpose of the corporation, the types and numbers of shares of stock that are authroized to be issued and the number of shares that theses individuals agreed to purchase
question
by-laws
answer
establish the internal rules and procedures for conducting the affairs of the corporation
question
common stock
answer
the kind of stock issued when a corporation has only one class of stock; gives the stockholder a vote in the way that the company is run
question
stock certificate
answer
proof of stock ownership evidenced by a printed or engraved form
question
Stockholders have the right to...
answer
1. vote in election of board of directors 2. receive dividends 3. preemptive right 4. share in assets upon liquidation
question
preemptive right
answer
the stockholder's right to keep the same percentage ownership when new shares of stock are issued
question
authorized stock
answer
the amount of stock that a corporation is authorized to sell as indicated in its charter; the authorization of common stock does not result in a formal accounting entry
question
par value stock
answer
capital stock that has been assigned a value per share in the corporate charter
question
legal capital
answer
used to determine par value
question
market price
answer
the actual price that stock is sold at
question
no-par value stock
answer
capital stock that has not been assigned a value in the corporate charter
question
stated value
answer
a value assigned by the board of directors to no-par shares
question
the stockholders' equity section of a corporation's balance sheet includes...
answer
1. paid in (contributed) capital 2. retained earnings (earned capital)
question
paid-in capital
answer
the amount stockholders paid to the corporation in exchange for shares of ownership
question
retained earnings
answer
earned capital held for future use in the business; net income that a company retains in the business
question
treasury stock
answer
a corporation's own stock that has been reacquired by the corporation and is bein held for future use
question
Reasons a corporation may acquire treasury..
answer
1. to reissue the shares to officers/ employees 2. to increase trading of the company's stock in the securities market 3. to have additional shares available for use in acquiring other companies 4. to reduce the number of shares outstanding and increase earnings per share
question
outstanding stock
answer
the number of shares of issued stock that are being held by stockholders
question
preferred stock
answer
has contractual provisions that give it preference over common stock in certain areas like priority in relation to dividends and assets in the event of liquidation; no voting rights however
question
cumulative dividend
answer
a feature often included in preferred stock contracts that stipulates that preferred stockholders must be paid both current-year dividends and any unpaid prior-year dividends before common stockholders are paid dividends
question
dividends in arrears
answer
preferred dividends not declared in a given period when preferred stock is cumulative
question
dividend
answer
a distribution by a corporation to its stockholders on a pro rata basis
question
pro rata
answer
means that if you own 105 of the common shares, you will receive 10% of the dividend
question
cash dividend
answer
a pro rata distribution of cash to stockholders; not paid on treasury shares
question
for a corporation to pay a cash dividend it must have...
answer
1. Retained earnings 2. Adequate cash 3. Declared dividends
question
three important dates in connection with dividends
answer
1. the declaration date 2. the record date 3. the payment date
question
declaration date
answer
date on which the board of directos formally authorizes the cash dividend and announces it to the stockholders; commits the corporation to a binding legal obligation
question
record date
answer
date at which the company determines ownership of the outstanding shares for dividend purposes
question
payment date
answer
date on which the company makes cash divdedn payments to the stockholders on record
question
stock dividend
answer
a pro rata distribution of the corporation's own stock to stockholders; paid in stock
question
stock split
answer
involves the issuance of additional shares of stock to stockholders according to their percentage ownership; results in a reduction in the par or stated value per share
question
retained earnings restrictions
answer
make a portion of the balance currrently unavailable for dividends
question
two classifications within paid-in capital
answer
1. Capital Stock 2. Additional paid-in capital
question
payout ratio
answer
measures the percentage of earnings a company distributes in the form of cash dividends to common stockholders; computed by dividng total cash dividens declared to common shareholders by net income
question
return on common stockholders' equity (ROE)
answer
a widely used ratio that measures profitability from the common stockholders' viewpoint
Agency Relationship
Certified Public Accountant
Mirror Image Rule
Social Security Payments
LS Ch 32 T/F – Flashcards 40 terms
40 terms
Preview
LS Ch 32 T/F – Flashcards
question
A fiduciary relationship allows the parties to avoid obligations without liability.
answer
F
question
A corporate officer is not an agent for the corporation.
answer
F
question
An officer of a corporation cannot possess the power to bind the corporation.
answer
F
question
An agent is authorized to act on behalf of a principal in doing business with third parties
answer
T
question
An employee may act in the capacity of an agent.
answer
T
question
A fiduciary relationship involves trust and confidence.
answer
T
question
An independent contractor's physical conduct is controlled, or subject to control, by his or her employer.
answer
F
question
An agency relationship does not exist outside employer-employee relationships.
answer
F
question
Building subcontractors are not independent contractors.
answer
F
question
Employees who deal with third parties are agents of their employers.
answer
T
question
An independent contractor is an employer who controls his or her agent's performance.
answer
F
question
An employee may not act in the capacity of an agent.
answer
F
question
All employment laws apply to independent contractors
answer
F
question
An independent contractor may act in the capacity of an agent
answer
T
question
Agency relationships exist only outside employment relationships.
answer
F
question
An independent contractor always acts in the capacity of an agent.
answer
F
question
An agency relationship can be formed without consideration.
answer
T
question
A minor cannot be appointed as an agent
answer
F
question
A minor can be an agent.
answer
T
question
An agency relationship cannot exist in the absence of a formal agreement.
answer
F
question
There does not need to be a written agreement between two parties to create an agency relationship.
answer
T
question
An agency relationship may be created for any legal purpose.
answer
T
question
. A principal may deny the existence of an agency relationship whenever it suits his or her purpose.
answer
F
question
A licensed professional can employ an unlicensed agent to perform professional actions.
answer
F
question
An agent owes his or her principal a duty to act in good faith.
answer
T
question
An agency relationship may be created for any illegal purpose.
answer
F
question
An agent must use reasonable diligence and skill in acting on behalf of his or her principal.
answer
T
question
A principal can ratify an agreement made without authorization on his or her behalf by one who is not his or her agent.
answer
T
question
Information acquired through an agency relationship is confidential.
answer
T
question
A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.
answer
T
question
An agent must maintain separate accounts for the principal's funds and the agent's personal funds
answer
T
question
An agency relationship may not occur by operation of law in a family.
answer
F
question
A principal owes an agent a duty of ratification.
answer
F
question
An agent can take advantage of an agency relationship to make a "secret" profit.
answer
F
question
Generally, a principal has a duty to pay an agent for services rendered.
answer
T
question
A principal owes an agent a duty of accounting.
answer
F
question
A principal has a duty to cooperate with the agent.
answer
T
question
If an agency relationship is contractual, the agent may have a right to specific performance.
answer
T
question
If a principal breaches a duty owed to an agent, an agent may withhold performance and demand an accounting.
answer
T
question
If an agent breaches the agency agreement, the principal may avoid the contract.
answer
T
