Contractual Liability & Authority of a Principal


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question 1 of 3

With what authority does the agent act with in order for a principal to be bound by a contract?

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1. Bart hires Bernie to be his talent agent. Bart asks Bernie to negotiate and make acting contracts on his behalf. What is this an example of?

2. Bart hires Bernie to be his talent agent. Bart tells Bernie to find work for him as an actor. Bernie then negotiates and makes an acting contract on Bart's behalf. What is this an example of?

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About This Quiz & Worksheet

This quiz and worksheet combo will help you assess your knowledge of the contractual liability and authority of a principal, which is the party who legally authorizes someone else to act on his or her behalf in a business deal. To pass the test, you'll need to understand the different types of authority.

Quiz & Worksheet Goals

These assessment tools will gauge your understanding of the following:

  • When a principal will be bound by an agent's contract
  • Recognizing examples of of express authority, unauthorized acts, apparent authority and implied authority

Skills Practiced

  • Making connections - understand the concept of contractual liability
  • Critical thinking - apply relevant concepts to examine information about agency relationships
  • Defining key concepts - ensure that you can accurately define main phrases, such as implied authority and express authority
  • Information recall - access the knowledge you've gained regarding the authority of a principal

Additional Learning

To learn more about agency relationships, review the corresponding lesson on the Contractual Liability and Authority of a Principal. This lesson covers the following objectives:

  • Learn about agency relationships in business transactions
  • Discuss contractual liability
  • Review actual authority
  • Discuss apparent authority
  • Define express authority and implied authority