Question

According to the textbook, a(n).......... relationship is formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.

a. third-party beneficiary
b. bailment
c. incidental beneficiary
d. principal-agent
e. principal-independent contractor

Answer 1

In an employer-employee relationship, a principal-agent relationship is formed when the employer hires an employee and gives them the authority to act and enter into contracts on their behalf.

Step-by-step explanation:

The correct answer to the question is d. principal-agent.

In an employer-employee relationship, a principal-agent relationship is formed when the employer hires an employee and gives them the authority to act and enter into contracts on their behalf. The employer is the principal who delegates authority, and the employee is the agent who acts on behalf of the employer.

For example, a company may hire a salesperson (the agent) and authorize them to negotiate and sign contracts with customers (third parties) on behalf of the company (the principal).