L201 - Kelley School of Business - Final Exam
(McCrory) 2025 Questions with 100% Solved
Solutions
1. Ima hires Billy A
to buy, sell, and
lease real estate Ima IS NOT a disclosed principal
for him in In-
diana. She tells
Billy not to tell
anyone that he
is working for
her. One day, Billy
sees a car that he
knows Ima would
like. So, without
asking Ima, he
buys the car.
Which of the fol-
lowing is true?
A) Billy does not
have implied au-
thority
B) Billy has ex-
press authority
C) Two of the
above
D) None of the
above
Is Ima a disclosed
principle?
2. C
, Which of the fol-
lowing is true?
A) A gratuitous
agent is an agent
who acts be-
yond the scope of
his/her apparent
authority
B) Once an agent
has ful�lled the
requirements of
his/her duty to
obey, the agent
is allowed to dis-
close con�dential
information.
C) Commingling
and embezzle-
ment is a vi-
olation of the
agent's duty to
account
D) A and B, but
not C
E) None of the
above
3. T/F: In the case False
of Frontier Leas-
ing Corp v. Links
, Engineering, LLC,
the court found
that Fleming had
apparent author-
ity to enter
into the contract
for the beverage
cart.
4. Mitsubishi Case Boys in suits sell woman car at car show (not employees though)
-they don't have authority of any kind
-the owner of the car rati�es the sale of the car
-HOW could he ratify? => the agent was unauthorized, he could not have rati�ed
if the agent had authority.
-if the owner were to say "these boys don't work for me" and the customer
rescinds, the owner cannot ratify.
*Set up a situation for apparent authority:*
-the owner stands behind guys watching and nods head the entire time.
5. Agency a 2-party relationship in which one party (the agent) has the power to act on
behalf of, and under control of, the principal.
6. Purpose of to stimulate commerce
agency law ?
7. Method of USUALLY common law, but also codi�ed by 3rd restatement of agencies + other
agency law? statutes
8. Fiduciary Rela- a trusting relationship b/w a principle and agent, in which the agent is supposed
tionship to act in the best interest of the principle, even to their own detriment.
, 9. Does an agency No! (not contractual! No consideration necessary)
agreement re-
quire considera-
tion?
10. Does an agency YES, but it's complicated.
agreement re-
quire capacity? => an agent can be any person
=> a principle must have the capacity to do the required acts
Ex: A principle is a normal sane adult with a crazy minor agent. Agent enters into
a contract with a third party. Is it valid?
=> Yes, an agent can be anyone if the principle's actions would be valid, then the
agent's are as well.
Ex: A principle is a crazy minor and the agent is a 35-year-old normal adult. Is it
valid?
=> No, the principle has to have the capacity (minors don't have capacity), it is
voidable
Exception:
-there are some laws that protect crazy/minors because the only way they can
enter into a contract is through an agent
11. CASE: MDM vs. -MDM is an insurance broker who developed a program for insuring ski resort
CX Reinsurance against risk of "paid skier days" would fall below a stated minimum.
-CX agreed to underwrite policies covering the risks for a year, and MDM received
12.5% commission.
-1999 was a bad year, costing CX $23M
-MDM sued CX for liability/breach of �duciary duty stating they handled it im-
(McCrory) 2025 Questions with 100% Solved
Solutions
1. Ima hires Billy A
to buy, sell, and
lease real estate Ima IS NOT a disclosed principal
for him in In-
diana. She tells
Billy not to tell
anyone that he
is working for
her. One day, Billy
sees a car that he
knows Ima would
like. So, without
asking Ima, he
buys the car.
Which of the fol-
lowing is true?
A) Billy does not
have implied au-
thority
B) Billy has ex-
press authority
C) Two of the
above
D) None of the
above
Is Ima a disclosed
principle?
2. C
, Which of the fol-
lowing is true?
A) A gratuitous
agent is an agent
who acts be-
yond the scope of
his/her apparent
authority
B) Once an agent
has ful�lled the
requirements of
his/her duty to
obey, the agent
is allowed to dis-
close con�dential
information.
C) Commingling
and embezzle-
ment is a vi-
olation of the
agent's duty to
account
D) A and B, but
not C
E) None of the
above
3. T/F: In the case False
of Frontier Leas-
ing Corp v. Links
, Engineering, LLC,
the court found
that Fleming had
apparent author-
ity to enter
into the contract
for the beverage
cart.
4. Mitsubishi Case Boys in suits sell woman car at car show (not employees though)
-they don't have authority of any kind
-the owner of the car rati�es the sale of the car
-HOW could he ratify? => the agent was unauthorized, he could not have rati�ed
if the agent had authority.
-if the owner were to say "these boys don't work for me" and the customer
rescinds, the owner cannot ratify.
*Set up a situation for apparent authority:*
-the owner stands behind guys watching and nods head the entire time.
5. Agency a 2-party relationship in which one party (the agent) has the power to act on
behalf of, and under control of, the principal.
6. Purpose of to stimulate commerce
agency law ?
7. Method of USUALLY common law, but also codi�ed by 3rd restatement of agencies + other
agency law? statutes
8. Fiduciary Rela- a trusting relationship b/w a principle and agent, in which the agent is supposed
tionship to act in the best interest of the principle, even to their own detriment.
, 9. Does an agency No! (not contractual! No consideration necessary)
agreement re-
quire considera-
tion?
10. Does an agency YES, but it's complicated.
agreement re-
quire capacity? => an agent can be any person
=> a principle must have the capacity to do the required acts
Ex: A principle is a normal sane adult with a crazy minor agent. Agent enters into
a contract with a third party. Is it valid?
=> Yes, an agent can be anyone if the principle's actions would be valid, then the
agent's are as well.
Ex: A principle is a crazy minor and the agent is a 35-year-old normal adult. Is it
valid?
=> No, the principle has to have the capacity (minors don't have capacity), it is
voidable
Exception:
-there are some laws that protect crazy/minors because the only way they can
enter into a contract is through an agent
11. CASE: MDM vs. -MDM is an insurance broker who developed a program for insuring ski resort
CX Reinsurance against risk of "paid skier days" would fall below a stated minimum.
-CX agreed to underwrite policies covering the risks for a year, and MDM received
12.5% commission.
-1999 was a bad year, costing CX $23M
-MDM sued CX for liability/breach of �duciary duty stating they handled it im-
