Principals Often Are Liable for the Torts of Their Agents

question 23

True/False

Principals often are liable for the torts of their agents under the doctrine of res ipsa loquitur, which means "let the master answer."

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Definitions:

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in another's best interests, such as between shareholders (principals) and company executives (agents).

Stockholders

Individuals or entities that own shares in a corporation, giving them an ownership stake.

Firm's Managers

Individuals responsible for making significant corporate decisions and managing the overall operations and resources of a business.

Capital Budgeting

The process by which a business determines and evaluates potential expenses or investments that are significant in amount.