Question

When a third person is dealing with a known agent, which of the following is true?

a.	The third person may not act negligently.	b.	The burden of proof rests with the third person when a dispute arises.
c.	The third party must use reasonable diligence.	d.	The third person cannot be held liable for negligence.

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The principal and agent have what type of relationship with each other?

a.	Fiduciary	b.	Statutory
c.	Arm’s length	d.	Equitable

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An agent’s apparent authority is based on the words and conduct of ______.

a.	the principal	b.	reasonable third parties
c.	the agent	d.	diligent third parties

Answer 1

Answer 1: Option C

Explanation: While dealing with a known agent of our firm, a third party should use a reasonable level of diligence on their end.

Answer 2: Option A

Explanation: In a fiduciary relationship, a party places trust and reliance on the second party to carry out the activities. Same happens in a principal-agent scenario where the Principal hires an agent to manage their firm.

Answer 3: Option A

Explanation: The agent’s authority and conduct are based on the guidance and conduct of the Principal.