A Gratuitous Agent Can Be Liable to a Principal for Breach

question 7

True/False

A gratuitous agent can be liable to a principal for breach of contract, even in the absence of a contract, but not liable for the negligent performance of the deal.

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Definitions:

Designated Market Maker

A designated market maker is a market participant responsible for maintaining liquidity in a financial market by buying and selling securities.

Securities

Assets indicating equity in a publicly-traded company, a bond signifying indebtedness to a company or government, or options granting ownership rights.

Collateralized Debt Obligations

Collateralized debt obligations (CDOs) are complex financial instruments that pool together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

Default Risk

The potential that a borrower will fail to meet the obligations of a loan or debt agreement.