Business Law ch 20 & 21 Test Questions
And 100% Correct Answers 2025/2026.
A person who does work for pay under the supervision and control of another person is an
employee. - Answer true
All employees are agents - Answer false
When a salesperson makes sales contracts with customers for a business owner, agency exists -
Answer true
Agency can only be used in contracting - Answer false
If an agent acts outside the scope of authority, the principal is still bound - Answer false
All agents owe to their principal's obligations called fiduciary duties - Answer true
While there may be contractual liability for ending the agency, no one can be compelled to
continue in an agency relationship - Answer true
When there is no contract and the agent receives no consideration, the agency is called an
implied agency - Answer false
A power of attorney is a writing that appoints someone as an agent. - Answer true
Commingling is a violation of the duty of confidentiality. - Answer false
An agent must obey the instructions of the principal even if the act is illegal or immoral. -
Answer false
The principal is not liable for an agent's criminal behavior unless it had been authorized or
ratified. - Answer true
, Generally, both the agent and the principal have the power but not the right, to terminate the
agency at any time. - Answer true
Even if a change of law makes the agent's required actions illegal, the agency still is in force. -
Answer false
The person who authorizes another in an agency relationship is the - Answer principal
Any agreement reached by the agent in an agency relationship binds - Answer the principal
and the third party
The range of acts authorized by the principal is known as - Answer the scope of authority
Damages resulting from acts of the agent outside of the agent's scope of authority can be
recovered by the third party from - Answer the agent
A warranty of the principal's capacity is imposed by law on the - Answer agent
The fiduciary duty that binds the agent even years after the agency relationship has ended is -
Answer confidentiality
The principal has an obligation to the agent to - Answer -pay what was promised for the
agent's service.
-reimburse expenses.
-repay any loss suffered due to the principal's instructions.
An agency may be terminated - Answer -according to the terms of the agency agreement.
-by unilateral action of a party to the agency.
-by a change of law.
Which of the following statements is untrue? - Answer Minors can not be agents because they
lack contractual capacity.
And 100% Correct Answers 2025/2026.
A person who does work for pay under the supervision and control of another person is an
employee. - Answer true
All employees are agents - Answer false
When a salesperson makes sales contracts with customers for a business owner, agency exists -
Answer true
Agency can only be used in contracting - Answer false
If an agent acts outside the scope of authority, the principal is still bound - Answer false
All agents owe to their principal's obligations called fiduciary duties - Answer true
While there may be contractual liability for ending the agency, no one can be compelled to
continue in an agency relationship - Answer true
When there is no contract and the agent receives no consideration, the agency is called an
implied agency - Answer false
A power of attorney is a writing that appoints someone as an agent. - Answer true
Commingling is a violation of the duty of confidentiality. - Answer false
An agent must obey the instructions of the principal even if the act is illegal or immoral. -
Answer false
The principal is not liable for an agent's criminal behavior unless it had been authorized or
ratified. - Answer true
, Generally, both the agent and the principal have the power but not the right, to terminate the
agency at any time. - Answer true
Even if a change of law makes the agent's required actions illegal, the agency still is in force. -
Answer false
The person who authorizes another in an agency relationship is the - Answer principal
Any agreement reached by the agent in an agency relationship binds - Answer the principal
and the third party
The range of acts authorized by the principal is known as - Answer the scope of authority
Damages resulting from acts of the agent outside of the agent's scope of authority can be
recovered by the third party from - Answer the agent
A warranty of the principal's capacity is imposed by law on the - Answer agent
The fiduciary duty that binds the agent even years after the agency relationship has ended is -
Answer confidentiality
The principal has an obligation to the agent to - Answer -pay what was promised for the
agent's service.
-reimburse expenses.
-repay any loss suffered due to the principal's instructions.
An agency may be terminated - Answer -according to the terms of the agency agreement.
-by unilateral action of a party to the agency.
-by a change of law.
Which of the following statements is untrue? - Answer Minors can not be agents because they
lack contractual capacity.
