Chapter 10

Question 1

actual authority

Answer 1

Authority given to an agent expressly or by implication

Question 2

Agency

Answer 2

The service an agent performs on behalf of a principal

Question 3

Agency agreement

Answer 3

An agreement creating an agency relationship between principal and agent

Question 4

Agency by necessity

Answer 4

Consent to act as an agent that is implied when there is an urgent reason

Question 5

Apparent authority

Answer 5

Authority as suggested to a third party by the conduct of a principal; may exist even when there is no actual authority

Question 6

Authority

Answer 6

The right or power to act or to make a decision

Question 7

Corporation

Answer 7

A business organization that is a separate legal entity from its owners, the shareholders

Question 8

Delegation

Answer 8

Entrusting someone else to act in one’s place; an agent normally cannot delegate their responsibilities to someone else

Question 9

Enduring power of attorney

Answer 9

The power to act as the donor’s trustee or representative following the donors lack of capacity

Question 10

Equitable estoppel

Answer 10

The principle that when a gratuitous promise to do something in the future causes a person who relies on that promise to incur and expense, the promise will not be allowed to enforce other contractual rights that are inconsistent with that promise; the promise can only be used as a defence by the promisee

Question 11

Estoppel

Answer 11

An equitable remedy that stops a party from trying to establish a position or deny something that, if allowed, would create an injustice

Question 12

Express authority

Answer 12

The authority of the agent as actually stated by the principal

Question 13

Firm

Answer 13

A partnership

Question 14

Full disclosure

Answer 14

The obligation to reveal all relevant details of a transaction

Question 15

General partner

Answer 15

A partner in a limited partnership whose liability is unlimited

Question 16

Holding corporation

Answer 16

A corporation that owns shares in other corporations

Question 17

Implied authority

Answer 17

When the authority of the agent is implied from surrounding circumstances such as the position or title given by the principal to the agent

Question 18

Joint venture

Answer 18

The collaboration of several businesses, usually to complete a major project

Question 19

Jointly liable

Answer 19

Under joint liability, all parties must be sued together; partners may face joint liability for debts of the firm

Question 20

Limited liability partnership

Answer 20

A form of partnership in which only the partner responsible for the loss faces unlimited liability

Question 21

Limited partner

Answer 21

A partner in a limited partnership whose liability is limited to the amount of their investment

Question 22

Limited partnership

Answer 22

A partnership with general and limited partners

Question 23

Non profit society

Answer 23

A separate legal entity with different procedures of incorporation and liabilities of its members from corporations

Question 24

Partnership

Answer 24

When the ownership and responsibilities of a business are shared by two or more people with a view towards profit

Question 25

Power of attorney

Answer 25

An agency agreement in writing and under seal

Question 26

Principal

Answer 26

The person who authorizes an agent to represent them

Question 27

Promissory estoppel

Answer 27

Same as equitable estoppel

Question 28

Ratification

Answer 28

When the majority agrees with the terms of a collective bargain; when a principal confirms a contract entered into by their agent

Question 29

Severally liable

Answer 29

Under several liability, each partner can be sued separately

Question 30

Sole proprietorship

Answer 30

An individual carrying on business alone

Question 31

Undisclosed principal

Answer 31

A principal whose identity is concealed from the third parties with whom the agent is dealing; the rights and obligations of the parties depend on wether the agent makes it clear that they are representing an undisclosed principal rather than operating on their own behalf

Question 32

Unlimited liability

Answer 32

The liability of the sole proprietor or the partners for all debts incurred by the business to the extent of their personal resources

Question 33

Utmost good faith

Answer 33

A duty to act in the best interests of another; such a duty may arise between directors and officers and the corporation they serve, between business associates including senior employees and their employer and between partners; also known as fiduciary duty