TJ_Comp 20_TB_Ch38

TJ_Comp 20_TB_Ch38 - Chapter 38THIRD PERSONS IN AGENCY...

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Chapter 38—THIRD PERSONS IN AGENCY TRUE/FALSE 1. The liability of an agent to a third person depends on the existence of authority and the manner of ex- ecuting the contract. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. If an agent makes a properly authorized contract with a third person on behalf of a disclosed principal, the agent has no personal liability on the contract. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Even after there is an effective ratification, the original action of an agent still is treated as unauthor- ized. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 4. When a person purports to act as an agent for a principal, an implied warranty arises that such person has authority to do so. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss. ANS: T TOP: AICAP BB-Legal MSC: AACSB Analytic 6. An agent's liability as a party to a contract with a third person is affected little by the degree of disclos- ure of the principal. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. A third person dealing with the agent of a disclosed principal ordinarily intends to make a contract with the principal, not the agent. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. In the partially disclosed principal situation, the agent is considered a party to the contract. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Agent's may intentionally make themselves liable on contracts with third persons. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. If the principal is not disclosed, the agent is necessarily the other contracting party and is bound to the contract. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. An agent should never sign a contract using "by" or "per" and then his or her name. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 12. Parol evidence is allowed to show whether an agent has signed in a representative or an individual ca- pacity. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. If an agent commits a crime, the agent's liability will depend on the agency relationship. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Agents are themselves liable for harm caused third persons by the agents' fraudulent, intentional, or negligent acts. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. A principal may be liable to a third person for an agent's unauthorized contracts. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 16. In a simple contract made by an authorized agent on behalf of a disclosed principal, the third person may sue either the agent or the principal in the event of a breach. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 17. Subject to certain limitations, a third person, on learning of the existence of an undisclosed principal, may sue the principal. ANS: T
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TJ_Comp 20_TB_Ch38 - Chapter 38THIRD PERSONS IN AGENCY...

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