Which of the Following Statements Is True of the Liability

question 39

Multiple Choice

Which of the following statements is true of the liability of an agent who is acting for a nonexistent or incompetent principal?

• A) If the third person is unaware of the lack of capacity of a nonexistent or incompetent principal, the agent is not personally liable on the contract.
• B) A minor is considered an incompetent principal, and an agent acting on behalf of such principals is personally liable on the contract.
• C) If the principal is judged insane, the law imposes an apparent warranty by the agent that the principal has the capacity to be bound.
• D) A person judged insane is considered to be nonexistent or incompetent and is personally liable for acts undertaken by an agent.

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Definitions:

Life Insurance

A contract between an insurer and a policyholder in which the insurer guarantees payment to named beneficiaries upon the death of the insured.

Disability Insurance

A type of insurance coverage that provides income in the event that a worker is unable to perform their work and earn money due to a disability.

Educational Expense Assistance

Programs or benefits provided by an employer to help cover education-related costs for their employees, often to encourage continuous learning and development.

Skill Obsolescence

The phenomena where skills become outdated or irrelevant due to technological advancement or changes in the industry.