Introductory Business Law CLEP Prep Practice Exam

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Prepare for the CLEP Business Law Exam with flashcards and multiple-choice questions. Each question comes with hints and explanations to help you succeed. Master the content and pass your exam!

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Under the law of agency, what is the purpose of an authorization form?

To clarify the authority delegated to an agent
To hold an agent accountable for their actions
To define the limits of an agent's liability
To prove the agent is an independent contractor

The correct answer is: To clarify the authority delegated to an agent

An authorization form is used in the law of agency to clarify the authority that has been delegated to an agent. This form outlines the specific tasks and responsibilities that the agent is authorized to undertake on behalf of their principal. This is important because it establishes clear boundaries and expectations for the agent's actions and can help prevent misunderstandings or unauthorized actions. The other options do not accurately describe the purpose of an authorization form. While a form may hold an agent accountable for their actions, this is not the main purpose of the form. Similarly, while the form may define limits of liability for the agent, this is not the primary purpose. Finally, while the form may indicate that the agent is an independent contractor, this is not the primary purpose of the form in the law of agency.