NCA Business Organizations Practice Questions - NCA Business Organizations (Business Associations) Examination Exam - NCA Business Organizations Practice Questions - NCA Business Organizations (Business Associations) Examination Exam

Question 1

P appoints A as a sales manager and tells A privately never to offer discounts above 10%. Without P's knowledge, A offers a 25% discount to a customer who is unaware of the limit, and the customer accepts. Is P bound by the contract?

No, because A acted beyond the express limit P set No, because a principal is never bound by an agent's unauthorized acts Yes, because A had apparent authority arising from the position P placed A in Yes, but only if P later ratifies the discount

Correct Answer:

Yes, because A had apparent authority arising from the position P placed A in

Question 2

Which statement best describes 'actual authority' in the law of agency?

Authority a third party reasonably believes the agent has based on the principal's conduct Authority a court imposes to prevent unjust enrichment of the principal Authority that arises automatically whenever an agency relationship is created by contract Authority the principal has actually conferred on the agent, whether expressly or by implication

Correct Answer:

Authority the principal has actually conferred on the agent, whether expressly or by implication

Question 3

An agent enters into a contract purportedly on behalf of a principal but in fact has no authority to do so. The principal later learns of the contract and, with full knowledge, accepts its benefits and treats it as binding. What is the legal effect?

The contract remains void because authority cannot be created after the fact The principal has ratified the contract, which is treated as authorized from the outset Only the agent is bound, because ratification requires a fresh signed agreement The third party may rescind because ratification is ineffective against an unauthorized act

Correct Answer:

The principal has ratified the contract, which is treated as authorized from the outset

Question 4

Why is the agency relationship generally described as fiduciary?

Because the agent owes the principal duties of loyalty and good faith, including avoiding undisclosed conflicts and secret profits Because the agent must always indemnify the principal for any business losses Because the principal guarantees the agent a fixed commission regardless of performance Because the agent and principal are jointly and severally liable to all third parties

Correct Answer:

Because the agent owes the principal duties of loyalty and good faith, including avoiding undisclosed conflicts and secret profits

Question 5

An agent, while acting within the scope of authority and in the ordinary course of the principal's business, negligently injures a third party. Which principle most directly makes the principal liable?

The indoor management rule The doctrine of ultra vires Vicarious liability of the principal for torts committed by the agent within the scope of authority The rule in Salomon v Salomon

Correct Answer:

Vicarious liability of the principal for torts committed by the agent within the scope of authority

Question 1

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Prepare with the NCA Business Organizations Practice Questions - NCA Business Organizations (Business Associations) Examination Exam practice quiz. This question bank includes 100 questions covering corporation, cbca, partnership, principal, and business. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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NCA Business Organizations Practice Questions - NCA Business Organizations (Business Associations) Examination Exam

This practice set contains 100 questions from the matching question bank and focuses on corporation, cbca, partnership, principal, and business. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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NCA Business Organizations Practice Questions - NCA Business Organizations (Business Associations) Examination Exam

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