Which of the Following Is True Regarding Sandra's Statement That

question 10

Multiple Choice

Which of the following is true regarding Sandra's statement that a written agreement is not necessary to set up a partnership?

• A) She is correct.
• B) She is correct but only because three or fewer members are involved.
• C) She is incorrect but only because fewer than five members are involved.
• D) She is correct only if all partners are considered sophisticated investors.
• E) She is incorrect only if none of the partners have experience with the partnership form of business.

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Definitions:

Agency Agreement

A contract where one party (the agent) agrees to act on behalf of another party (the principal) in commercial transactions.

Principal

The amount of money originally invested or loaned, in contrast to interest or profit earned on that amount.

Partially Disclosed

Pertains to transactions or agreements where some but not all relevant information is revealed to one or more parties involved.

Apparent Authority

The situation in which an agent's actions lead a third party to reasonably believe that the agent has the authority to act on behalf of the principal.