Business Law - AICPA

II. Agency

For items 11 through 20, indicate whether the statements are true (T) or false (F)

Statements Answer 1. Principal must be able to give legal consent and must have legal capacity 2. If an agency agreement cannot be completed within one year, the agreement must be in writing 3. Secret limitations have no effect on 3"d parties, while the limitation is effective to limit the agent's actual authority 4. Contracts performed by the one who is not an agent may be ratified by the principal 5. The agent must act in the best interest of the principal 6. The principal is liable for the contract if the agent had actual or apparent authority or the principal ratified unauthorized contracts 7. The principal is liable for the agent's tort committed within the scope of business 8. Generally the principal is not liable for torts of independent contractors 9. Notice is required to terminate apparent authority 10. Either party has the power to terminate the agency at any time