OK Bar Business Organizations 3

Question 1

Under agency law, a principal is vicariously liable for torts committed by an employee acting within the scope of employment under the doctrine of:

Accepted Answer

Respondeat superior

Answer

Respondeat superior imposes vicarious liability on an employer for torts committed by an employee within the scope of employment.

Question 2

An agent has apparent authority to bind the principal when:

Accepted Answer

A third party reasonably believes the agent has authority based on the principal's conduct or representations

Answer

Apparent authority is created by the principal's conduct or representations that reasonably lead a third party to believe the agent is authorized to act.

Question 3

Which business entity provides BOTH pass-through taxation AND limited liability protection for ALL of its owners?

Accepted Answer

Limited liability company (LLC)

Answer

An LLC combines pass-through taxation (avoiding double taxation) with limited liability protection for all members, making it popular for small and medium-sized businesses.

Question 4

A principal is generally bound by an agent's previously unauthorized act when:

Accepted Answer

The principal later ratifies the act by accepting its benefits or expressly affirming it with full knowledge

Answer

Ratification occurs when a principal affirms a previously unauthorized act with full knowledge of the material facts, binding the principal retroactively as if the act had been authorized from the start.

Question 5

An S-corporation differs from a C-corporation primarily because an S-corporation:

Accepted Answer

Avoids entity-level federal income tax by passing income and losses through to shareholders

Answer

S-corporations elect pass-through taxation so income and losses flow to shareholders' personal returns, avoiding the double taxation faced by C-corporations at both the entity and shareholder levels.

(OK Bar) Oklahoma Bar Exam Practice Test

(OK Bar) Oklahoma Bar Exam Practice Test

OK Bar Business Organizations 3