CBB Client Relations & Ethics 3

Question 1

Which of the following best describes the concept of 'informed consent' in a business broker-client relationship?

Accepted Answer

The client agrees to representation after being fully informed of the broker's role, duties, and any conflicts

Answer

Informed consent requires clients to fully understand the nature of the representation, the broker's duties, and any potential conflicts before agreeing to proceed.

Question 2

A seller instructs a business broker not to disclose to buyers that the business's primary supplier contract expires in 60 days. How should the broker respond?

Accepted Answer

Explain that this is a material fact requiring disclosure and refuse to withhold it

Answer

An expiring primary supplier contract is a material fact that buyers are entitled to know; brokers cannot ethically conceal it at a client's direction.

Question 3

When a business broker terminates an engagement due to a client's unethical conduct, what document should formally end the relationship?

Accepted Answer

A termination agreement or written notice of withdrawal

Answer

A written termination agreement or withdrawal notice creates a clear record that the broker-client relationship has ended and protects the broker from ongoing liability.

Question 4

Which scenario represents a potential conflict of interest that a business broker must disclose?

Accepted Answer

The broker has a personal financial interest in the business being sold

Answer

Any personal financial interest in a listed business creates a conflict of interest that must be disclosed to the client so they can seek independent advice.

Question 5

A buyer presents an all-cash offer below asking price. The seller instructs the broker to reject it without counter-offering. What should the broker do?

Accepted Answer

Present the offer to the seller in writing, document the rejection, and advise the seller on the offer's merits before finalizing the decision

Answer

Brokers must present all offers in writing and advise clients on their merits; the final decision rests with the seller, but the broker must ensure the client is fully informed.

(CBB) Certified Business Brokers Practice Test

(CBB) Certified Business Brokers Practice Test

CBB Client Relations & Ethics 3