Future Business Leaders of America (FBLA) Business Law Practice Exam

In what situation might a general agent operate?

1. Handling a specific transaction only

2. Running day-to-day operations of a business

3. Restricting authority to defined actions

4. Acting solely under written authority

The correct answer is: Running day-to-day operations of a business

A general agent is typically designated to handle a broad range of tasks and responsibilities on behalf of a principal. This role often involves managing the ongoing, day-to-day operations of a business, allowing the agent to make decisions and take actions necessary for the proper functioning of the business without needing to consult the principal for every minor decision. This contrasts with the other scenarios presented: handling a specific transaction only implies a limited scope of authority, which is characteristic of a special agent rather than a general agent. Restricting authority to defined actions suggests a more narrow focus, which does not align with the expansive responsibilities of a general agent. Acting solely under written authority also suggests limited engagement and control, typical of a specific or special agent rather than a general agent who operates with a broader mandate and often a higher level of autonomy. In summary, the key characteristic of a general agent is the ability to run the everyday operations of a business, which enables them to make decisions and perform tasks that keep the organization running smoothly without needing continuous oversight from the principal.