BLAW Final (True and False)

A contract made by an agent on behalf of an undisclosed principal is never binding on a third party who did not know about the principal.

False

A principal may designate someone to execute all transactions connected with running a business. Such a person is known as a special agent.

False

A subagent is an agent of an agent, not an agent of the principal, so owes no duty to the principal, only to the agent.

False

Agency relationships must be evidenced by a written contract.

False

Agency relationships used to be common in decades past, but in recent years they have fallen out of favor.

False

Agents rarely can change a principal's legal obligations.

False

All valid agency relationships are contracts.

False

An agent is expected to perform responsibilities with the degree of care that is called ordinary care under the circumstances.

False

An agent makes a contract with a third party on behalf of the disclosed principal. The principal then breaches the contract. The third party may sue the agent to recover damages.

False

An agent may not legally bind a principal to contracts without the principal agreeing to each contract.

False

An express ratification takes place when the principal behaves as if she has the intention of ratifying an unauthorized agreement.

False

An independent contractor is an agent and an employee of the person who hired her.

False

Express or actual authority may only be created by written instruction or written contract.

False

Fiduciary duties apply to principals; agents have only non-fiduciary duties.

False

Gratuitous agents are appointed by other agents to undertake some work for the principal.

False

If either the principal or agent dies, the agency relationship is suspended until replacements continue the agency's purpose.

False

If the subject matter of an agency agreement is destroyed, the agency relationship continues until new subject matter is found.

False

In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was not liable because it had no way to know of his actions.

False

In Coelho v. Posi-Seal the Connecticut Supreme Court found that statements by the company president to an employee that he had good job security, but later fired him, was a breach of implied contract for continued employment.

False

In France v. Southern Equipment, where a worker was seriously hurt on a roofing job, the court held that the owner of the building being roofed was liable for the injuries suffered by the worker.

False

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his dismissal breached an implied contract to be terminated only for cause.

False

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his tenure at the company created a presumption that he could only be dismissed for good cause.

False

In Town Center Shopping Center v. Premier Mortgage, a lease for office space, made by a manager of a mortgage company, was negated by the courts because the leasing company should have known that a person in the position of the manager would not have such authority.

False

In Town Center Shopping Center v. Premier Mortgage, a lease for office space, made by a manager of a mortgage company, was negated by the courts because the manager did not have authority to commit her company to that.

False

In Yin v. J's Fashion Accessories, the court found that Yim was an agent for his company, Hosung, so was not liable for debts owed by Hosung, the principal.

False

In an agency relationship, the agent is a neutral party regarding contracts between the principal and third parties.

False

In her relations with her principal, an agent must meet the "ordinary standard of conduct" imposed on people engaged in business dealings.

False

Legal obligations in an agency run from agent to principal, not principal to agent.

False

One factor that courts may consider when trying to decide if an independent contract or employee relationship exists is whether or not the contractor has the right to direct or control the work of the employer.

False

Power of attorney may only be held by a licensed attorney.

False

Principals are presumed at common law to have no duties to their agents.

False

Principals only duty to agents is to compensate.

False

The legal document intended for the purpose of expressly establishing an agency is the attorney-in-fact.

False

if money is commingled (funds of agent mixed with funds of the principal), a violation of duty to account occurs only if the principal can show actual harm.

False

A check-out clerk at the grocery store is typically in a master-servant relationship, not an agency relationship.

True

A general power of attorney is usually given to a universal agent.

True

A major duty of principals to their agents is to indemnify them under most circumstances for liabilities incurred in completing the purpose of the agency.

True

A person appointed by an agent to help the agent for certain specific transactions is a special agent.

True

A principal is contractually liable to a third party if that party enters into a contract presented by an agent with apparent authority to act for the principal.

True

A principal may designate someone to do all acts that can be legally delegated to an agent. That agent is called a universal agent.

True

A principal's major reason for developing agency relationships is to expand business opportunities.

True

A real estate agent who sells a house on commission is an agent, not an employee of the homeowner.

True

A senior manager at a car dealership is likely both an agent and employee.

True

A stocker in a grocery store is an employee but not an agent for the store.

True

Actual authority involves powers given by the principal to the agent.

True

Agencies may be terminated by operation of law, without either party taking any action.

True

Agency relationships may be based on an oral agreement.

True

Agents have a duty of obedience to their principals, which means that if the agent ignores the principal's instructions, she violates her duty.

True

Agents have a fiduciary duty to their principals.

True

Agents have no obligation to engage in activity on behalf of principals that could lead to personal liability.

True

An agency relationship may terminate by lapse of time.

True

An agency that is for the sale of land usually must be evidenced by a written contract.

True

An agency that is to last more than one year usually must be evidenced by a written contract.

True

An agent has a duty to notify his principal of all facts relevant to the purpose of the agency.

True

An agent's authority is the power to change the principal's legal obligations.

True

An auctioneer who sells goods is likely an agent and independent contractor.

True

An express contract for certain terms of employment can restrict employment at-will.

True

An express ratification takes place when the principal gives a clear signal to be bound by an action that would otherwise be unauthorized.

True

An implied ratification takes place when the principal behaves as if she has the intention of ratifying an unauthorized agreement.

True

An independent contractor is not an employee of the person who hires her.

True

An independent contractor is usually not an agent of the principal who hired her, but can have that role too.

True

An undisclosed principal is a principal whose identity is unknown to the third party with whom the agent is involved.

True

Apparent authority arises when the principal creates an appearance of authority in an agent that leads the third party to conclude that the agent has authority to act for the principal.

True

Destruction of the subject matter of an agency ends an agency relationship.

True

Employment-at-will means that, unless a contract holds otherwise, employers are free to fire workers at any time for any reason and employees are free to quit their jobs at any time for any reason.

True

European nations generally have more detailed rules regarding employees than does the U.S.

True

Geary was fired by his supervisor for revealing to higher management a serious problem with a company product. He sued for wrongful dismissal. You would expect the court held that Geary's dismissal was proper under employment-at-will despite his good motives.

True

If Hilda volunteers to sell Heidi's horse for her, because Hilda knows lots of potential buyers, and Heidi agrees, Hilda is a gratuitous agent.

True

If a hurricane is coming and you spend $800 to buy supplies to protect your neighbor's house against storm damage, when they are gone and cannot be reached, you may have created an agency by operation of law.

True

If a principal behaves as if he intended to ratify an unauthorized agreement between his agent and a third party, a court will find that implied ratification has occurred.

True

If an American company sends an American employee to work in its office in France, the employee may be under French employment law.

True

If an agency relationship did not establish a rate of compensation for the duties of the agent, the principal must pay the "customary" rate for such services.

True

If an agent is discovered to be representing conflicting interests, she has violated her duty of loyalty.

True

If someone volunteers to act as a gratuitous agent, and performs a task, such as selling a car, fora principal, the legal consequences are the same as if the agent were paid.

True

If you hire a builder to build a home, he is likely an independent contractor for you.

True

In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was liable for breach of fiduciary duty.

True

In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was liable for his actions because it failed to monitor Gritton's improper actions sufficiently.

True

In France v. Southern Equipment, where a worker was seriously hurt on a roofing job, the courts held that the owner of the building being roofed was not responsible for the injury suffered by an employee of an independent contractor doing the roof work.

True

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his tenure at the company did not affect the right of the company to dismiss him without good cause.

True

In Town Center Shopping Center v. Premier Mortgage, a manager of a mortgage company was held to have apparent authority when she entered into a lease for office space, even though she did not have authority to commit her company to that.

True

In Yin v. J's Fashion Accessories, the court found that Yim was an undisclosed agent for his company, Hosung, but was liable for debts owed by Hosung, the principal.

True

In Yin v. J's Fashion Accessories, the court stated that in most cases if an agent makes a contact without identifying his principal, the agent incurs personal liability for the contract.

True

In an emergency, when someone acts on behalf of someone else in order to avoid a loss, the law may create an agency by operation of law.

True

In the case of an undisclosed principal, a third party is unaware of the identity of the principal as well as the existence of an agency relationship.

True

Power of attorney is based on a legal document.

True

Power of attorney is given to an agent called an attorney-in-fact.

True

Principals are presumed to have a duty to cooperate with their agents.

True

Principals have an obligation to reimburse their agents for their normal business expenses related to the agency, unless otherwise agreed.

True

Principals may be bound by the unauthorized acts of agents if the agent appears to third parties to have the authority to act.

True

Ratification is an affirmation by the principal of an unauthorized agreement by a person acting as an agent with a third party.

True

Some state courts hold that employment contracts contain implied covenants of good faith and fair dealing.

True

The agency relationship is a key part to most business operations.

True

The death of a principal would affect the validity of contracts then made by the agent for the principal.

True

The two general classifications of authority an agent can possess are actual authority and implied authority.

True

Traditionally, employees did not act as agents for their principals, but today employees may well also be agents.

True

When a principal's conduct appears consistent with the existence of an agency relationship, an agency by estoppel may be created.

True

When an agent has the power to do whatever is reasonable and customary to carry out the agency purpose, the agent has implied authority.

True

When an agent is allowed to delegate duties to other agents, the other agents are subagents who assist the agent.

True

When an agent is authorized to execute all transactions connected with a business, the person isa general agent.

True

When an agent pays for the right to exercise authority for a business, there is an agency coupled with an interest.

True