If an Agent Does an Act That They Were Expressly

question 47

Multiple Choice

If an agent does an act that they were expressly instructed by the principal not to do, and the act is beyond the scope of their express or apparent authority, what will generally happen if the act is a tort that causes harm to a third party?

• A)The Principal will not be liable for the agent's actions and the third party will not be able to sue the principal in respect of the tort.
• B)The Principal will be entitled to terminate the agent's employment and have them prosecuted.
• C)The Principal will be liable for the agent's actions and can be sued for the tort.
• D)The agent will be an independent contractor.

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Definitions:

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy a company's stock at a specific price before a certain date.

Convertible Bond

A financial instrument that can be transformed into a certain number of the issuer's shares at various points in its existence, most often per the discretion of the individual possessing the bond.

Putable Bond

A type of bond that gives the holder the option to require the issuer to repurchase the security before its maturity date at a predetermined price.

American Options

Financial derivatives that can be exercised by the holder at any time before they expire.