LAW OF AGENCY-FINAL FINAL TEST 2026 QUESTIONS
WITH CORRECT ANSWERS GRADED A+
● Principal. Answer: The party who authorizes an agent to act on their behalf
● Agent. Answer: Party authorized to represent the principal in dealings with third parties
● Fiduciary. Answer: Person with legal duty to act in another's best interest
● Confidentiality. Answer: Duty to protect principal's private information from disclosure
● Obedience. Answer: Duty to follow all lawful instructions of the principal
● Loyalty. Answer: Duty requiring agent to place principal's interests above their own
● Disclosure. Answer: Duty to reveal all material information known to the agent
● Reasonable Care. Answer: Duty to perform services with skill expected of a competent
professional
● Accounting. Answer: Duty to report on all funds and property held for the principal
● Express Authority. Answer: Authority directly stated in the agency agreement
● Implied Authority. Answer: Authority reasonably necessary to carry out express authority
● Apparent Authority. Answer: Authority arising from principal's conduct toward third parties
● Ratification. Answer: Retroactive approval of an unauthorized act by principal
● Estoppel. Answer: Legal principle preventing a party from contradicting prior conduct
● Respondeat Superior. Answer: Employer liable for employee torts committed within scope
of employment
● Scope of Employment. Answer: Range of activities an employee is authorized to perform
● Independent Contractor. Answer: Worker who controls their own work methods and tools
● Frolic. Answer: Employee's detour for personal purposes taking them outside scope of
employment
WITH CORRECT ANSWERS GRADED A+
● Principal. Answer: The party who authorizes an agent to act on their behalf
● Agent. Answer: Party authorized to represent the principal in dealings with third parties
● Fiduciary. Answer: Person with legal duty to act in another's best interest
● Confidentiality. Answer: Duty to protect principal's private information from disclosure
● Obedience. Answer: Duty to follow all lawful instructions of the principal
● Loyalty. Answer: Duty requiring agent to place principal's interests above their own
● Disclosure. Answer: Duty to reveal all material information known to the agent
● Reasonable Care. Answer: Duty to perform services with skill expected of a competent
professional
● Accounting. Answer: Duty to report on all funds and property held for the principal
● Express Authority. Answer: Authority directly stated in the agency agreement
● Implied Authority. Answer: Authority reasonably necessary to carry out express authority
● Apparent Authority. Answer: Authority arising from principal's conduct toward third parties
● Ratification. Answer: Retroactive approval of an unauthorized act by principal
● Estoppel. Answer: Legal principle preventing a party from contradicting prior conduct
● Respondeat Superior. Answer: Employer liable for employee torts committed within scope
of employment
● Scope of Employment. Answer: Range of activities an employee is authorized to perform
● Independent Contractor. Answer: Worker who controls their own work methods and tools
● Frolic. Answer: Employee's detour for personal purposes taking them outside scope of
employment
