Exam (elaborations)
Business Law CPA Exam Questions with correct Answers
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Business Law CPA Exam
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Business Law CPA ExamAgency - answer- a legal relationship in which the principal appoints an agent to act on
his or her behalf
- a writing is not generally required
- consideration is not required
The following duties are implied:
1. loyalty
2. obedience
3. reasonable care
4. duty to account
5. subagent
Actual Authority - answer- authority agent reasonably believes that he possesses
because of principal's communication to agent
1. Express: principal specifically grants the power (oral/written instructions)
2. Implied: agent reasonably believes that he has authority based on dealings between
principal and agent
Apparent Authority - answer- power that a third party reasonably believes agent has,
based on principal's conduct or communications towards third party
Disclosed principal - answer- if principal's existence and identity are known to third
party, agent is not liable to third party under the contract
Tort liability - answer- principal is not liable for torts committed by agent; only agent is
liable
Respondeat superior - answer- employer can be held liable for employee's tort
committed within the scope of employment
Methods of formation - answer1. express contract
2. implied in fact contract
3. implied in law
4. unilateral
5. biliateral
, Sources of contract law - answer- UCC for sale of goods and the common law
Elements of a contract - answer1. Offer and Acceptance
2. Consideration
3. Lack of defenses
Mailbox rule - answer- acceptances are effective upon dispatch
- offeror may opt out by stating that acceptance is effective upon receipt
Consideration - answer- legal value, through a bargained for exchange
Defenses - answer1. Fraud
2. Innocent misrepresentation
3. Duress
4. Undue influence
5. Mutual mistake
6. unilateral mistake
7. illegality
8. intoxication
9. insanity
10. statute of limitation
Statute of Frauds - answer- MY LEGS
1. marriage
2. performed within a year
3. land
4. executors
5. goods
6. surety
Novation - answer- occurs when a new contract substitutes a new party for an old party
in an existing contract and all of the parties agree that the old party is immediately
released from liability
Express Warranty - answer- arises from any statement of fact or promise made by
seller, any description of the goods made by seller or any sample or model shown by
seller
- need not be in writing or even verbalized
- cannot be disclaimed
Implied Warranty of Title - answer- implied in every sale is a promise that seller has
good title and a right to transfer it
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