Identify the True Statement Concerning the Law of Principal and Agent

question 191

Multiple Choice

Identify the true statement concerning the law of principal and agent.

• A) Agency is only created by way of a contract.
• B) The principal and his agent owe each other the same duties.
• C) An agent who puts himself in a position where his interests conflict with those of his principal is in breach of his duties even though no actual harm comes to his principal.
• D) An agent with no express authority can never bind his principal into a contract with a third party.
• E) An agent can never be liable to the third party himself while the principal will bear no such liability.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including fees to underwriters, legal fees, and registration fees.

Rights Offering

A method by which a company raises additional capital by giving existing shareholders the right to buy new shares at a discount.

Subscription Price

The fee that investors pay when subscribing to a new issue of securities.