Legal Environment Final Exam – Business Law – 2026 – Study and
Practice Guide
Concept of agents, there are three ideas - correct answer ✔✔ Principal-Agent, Employer-
Employee, and Master-Server
__________ is someone who is given power for the principal. Contrasted with a independent
contractor. - correct answer ✔✔ Agent
_________ _________ is liable for their own contractual violations of others and their own
tortes. (Window washer) - correct answer ✔✔ Independent Contractor
How does an agency get created? - correct answer ✔✔ 1. Expressed (In writing or oral)
2. Implied (by conduct)
3. Ratification (no relationship, "you're not my agent but I like what you've done so I'll ratify it")
4. Estoppel (injustice enrichment)
The duties of agent to the principal. The ________ has a fiduciary duty, based on trust (the
highest duty of care). If the ________ violates the fiduciary duties then the agent could be
liable. List of agent's duties to the principal. - correct answer ✔✔ agent; agent
1. Performance
2. Notification
3. Loyalty
4. Obedience
5. Accounting
Scope of agent's authority - correct answer ✔✔ 1. Expressed authority
2. Implied authority
, 3. Apparent authority
When there is an expressed agency it will expressly allow the person to do whatever they are
tasked to do - correct answer ✔✔ Expressed authority
To do what is reasonable necessary to carry out the duty of that agency (Ex: Putting someone
in-charge of the store) - correct answer ✔✔ Implied authority
If you, the principal, allows to someone who looks like their agent that gives them ________
________ to act for you. - correct answer ✔✔ Apparent authority
Who is liable? (Principal to the agents) - correct answer ✔✔ 1. Disclosed principal- the one
they're making the contract for (Buying parts for GM, you are not liable) (Generally the principal
is liable)
2. Particularly disclosed principal- they do not know who could be liable
Liability for tortes and crimes.Principal to agent relationship - correct answer ✔✔ Generally the
principal is not liable for crimes (few exceptions) (Ex: if a liquor store allows their employees to
sell liquor to minors they would be found as if the did it)
Under the doctrine of ___________ __________ (a Latin term meaning "let the master
respond"), a principal may also be liable for harm that his or her agent causes to a third party.
Under the scope of the employer. - correct answer ✔✔ respondent superior
Negligence or torts, there is liability, ___________________________. - correct answer ✔✔
respondent superior
What do the courts look at to determine whether the act of the agent was within the scope of
the employer (Ex: drove the companies van after hours) - correct answer ✔✔ 1. Whether the
employee's act was authorized by the employer
Practice Guide
Concept of agents, there are three ideas - correct answer ✔✔ Principal-Agent, Employer-
Employee, and Master-Server
__________ is someone who is given power for the principal. Contrasted with a independent
contractor. - correct answer ✔✔ Agent
_________ _________ is liable for their own contractual violations of others and their own
tortes. (Window washer) - correct answer ✔✔ Independent Contractor
How does an agency get created? - correct answer ✔✔ 1. Expressed (In writing or oral)
2. Implied (by conduct)
3. Ratification (no relationship, "you're not my agent but I like what you've done so I'll ratify it")
4. Estoppel (injustice enrichment)
The duties of agent to the principal. The ________ has a fiduciary duty, based on trust (the
highest duty of care). If the ________ violates the fiduciary duties then the agent could be
liable. List of agent's duties to the principal. - correct answer ✔✔ agent; agent
1. Performance
2. Notification
3. Loyalty
4. Obedience
5. Accounting
Scope of agent's authority - correct answer ✔✔ 1. Expressed authority
2. Implied authority
, 3. Apparent authority
When there is an expressed agency it will expressly allow the person to do whatever they are
tasked to do - correct answer ✔✔ Expressed authority
To do what is reasonable necessary to carry out the duty of that agency (Ex: Putting someone
in-charge of the store) - correct answer ✔✔ Implied authority
If you, the principal, allows to someone who looks like their agent that gives them ________
________ to act for you. - correct answer ✔✔ Apparent authority
Who is liable? (Principal to the agents) - correct answer ✔✔ 1. Disclosed principal- the one
they're making the contract for (Buying parts for GM, you are not liable) (Generally the principal
is liable)
2. Particularly disclosed principal- they do not know who could be liable
Liability for tortes and crimes.Principal to agent relationship - correct answer ✔✔ Generally the
principal is not liable for crimes (few exceptions) (Ex: if a liquor store allows their employees to
sell liquor to minors they would be found as if the did it)
Under the doctrine of ___________ __________ (a Latin term meaning "let the master
respond"), a principal may also be liable for harm that his or her agent causes to a third party.
Under the scope of the employer. - correct answer ✔✔ respondent superior
Negligence or torts, there is liability, ___________________________. - correct answer ✔✔
respondent superior
What do the courts look at to determine whether the act of the agent was within the scope of
the employer (Ex: drove the companies van after hours) - correct answer ✔✔ 1. Whether the
employee's act was authorized by the employer
