PrepL Professional Ethics and Conduct 3 — Questions and Answers
Question 1: Under professional ethics standards, dual agency occurs when:
- A licensee works for two companies simultaneously
- A single professional represents both the buyer and seller in the same transaction (Correct answer)
- A licensee holds two active licenses
- Two professionals co-sign a contract
Correct answer: A single professional represents both the buyer and seller in the same transaction
Dual agency arises when one licensee represents opposing parties, creating a potential conflict of interest that must be disclosed.
Question 2: A professional receives confidential client information during an engagement. After the engagement ends, that information:
- Becomes public record
- May be shared with competitors for research purposes
- Remains confidential unless disclosure is required by law (Correct answer)
- Can be used to solicit other clients
Correct answer: Remains confidential unless disclosure is required by law
Confidentiality obligations survive the end of a professional engagement unless law mandates disclosure.
Question 3: Which of the following is an example of misrepresentation in a licensed profession?
- Providing an estimate that later proves inaccurate due to unforeseen conditions
- Deliberately omitting a known material defect from a disclosure form (Correct answer)
- Declining a project outside your area of expertise
- Referring a client to a specialist
Correct answer: Deliberately omitting a known material defect from a disclosure form
Deliberately omitting known material defects from disclosures constitutes intentional misrepresentation.
Question 4: A licensed professional is approached to provide expert testimony in a lawsuit involving a former client. They should:
- Always refuse to preserve confidentiality
- Disclose any conflict of interest and consult their attorney before agreeing (Correct answer)
- Testify freely because the engagement has ended
- Only testify if compensated above standard rates
Correct answer: Disclose any conflict of interest and consult their attorney before agreeing
Professionals must evaluate conflicts of interest and potential confidentiality issues before agreeing to serve as expert witnesses.
Question 5: The ethical concept of 'informed consent' requires that a client:
- Sign any document presented by the professional
- Receive complete information about risks, costs, and alternatives before agreeing to a service (Correct answer)
- Consult a third party before making decisions
- Accept the professional's recommendation without question
Correct answer: Receive complete information about risks, costs, and alternatives before agreeing to a service
Informed consent means clients must understand all material information before agreeing to a professional's services or recommendations.
Question 6: A professional is offered a referral fee by another service provider for sending clients their way. Under most licensing ethics codes, this is:
- Always permitted as free-market competition
- Permissible only if disclosed to the client (Correct answer)
- Prohibited under all circumstances
- Permitted only for referrals under $500
Correct answer: Permissible only if disclosed to the client
Most licensing codes allow referral fees only when fully disclosed to the client so they can assess whether the referral is in their best interest.
Question 7: When a licensed professional suspects that a client is engaging in illegal activity, the most appropriate first step is to:
- Immediately alert law enforcement without informing the client
- Continue the engagement and document concerns privately
- Consult legal counsel to understand reporting obligations before acting (Correct answer)
- Terminate the engagement without explanation
Correct answer: Consult legal counsel to understand reporting obligations before acting
Consulting legal counsel first helps the professional understand mandatory reporting obligations and how to act without violating other duties.
PrepL Professional Ethics and Conduct 3
Under professional ethics standards, dual agency occurs when: