Jason, who is very knowledgeable regarding computers, agrees to purchase computers for Nick's...


Jason, who is very knowledgeable regarding computers, agrees to purchase computers for Nick's business. Jason is retained for that purpose only, he is paid a set rate for the job, and Nick exercised no control over the manner in which Jason did his work. Jason purchased computers from ABC Computers without any mention of Nick. The computers worked well and were not defective in any way. Unfortunately, Nick did not pay ABC Computers on a timely basis. Therefore, Jason paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and because his name was on the invoice. Jason asked Nick for reimbursement, but Nick refused. Nick claimed that if Jason had only waited, ABC Computer might have agreed to take less. Did Jason have any legal liability to ABC Computers?

A. Yes, because he made the purchase from ABC Computers without mention of Nick.

B. Yes, but only because office equipment is involved.

C. No, because his status was as an agent regardless of whether ABC Computers was aware of that fact.

D. No, because he was an independent contractor.

E. No, because he was an employee.

Legal liability:

Legal liability is the financial liability in law in which a business is responsible for loss or damage to the other party. The result of legal liability can lead to fines, penalties and punishment.

Answer and Explanation: 1

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The correct option is (A), i.e., Yes, because he purchased ABC computers without the mention of Nick.

As Jason acted in the capacity of the agent, he...

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Classification & Legal Protection of Business Entities


Chapter 1 / Lesson 2

A business entity is any organization that is selling goods or services, organized into five types with varying legal protections. Learn the structural and legal details of sole proprietorships, partnerships, corporations, limited liability entities, and business trusts.

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