Chapter 28

T/F Ann becomes Bruno's agent if Ann does something for Bruno, even if Ann has not consented to act as an agent.

False

T/F Apparent authority can be created by the conduct of the agent.

False

T/F If an employee has not signed a non-compete agreement, she may solicit the employer's clients for her own future benefit.

False

T/F Some states order disloyal employees to pay punitive damages.

True

T/F Unless they agree otherwise in advance, the agent or the principal can terminate the agency relationship at any time.

True

Either party in an agency agreement has the power to terminate the agreement but not the right. This means that

a person can be required to pay damages for terminating an agency relationship but cannot be prevented from leaving it

Which of the following elements are not required for an agency relationship? Select all that apply. a. Compensation b. Formal agreement c. Fiduciary relationship d. A written agreement e. Control f. Loyalty g. Consent

a. Compensation b. Formal agreement d. A written agreement

Select the four elements of the duty an agent owes to his principal: a. Duty of care b. Duty to provide information c. Duty to obey instructions d. Duty to protect principal against legal claims e. Duty to provide compensation f. Duty to reimburse the principal for reasonable expenses g. Duty of loyalty h. Duty to act loyally in matters not connected to the agency relationship

a. Duty of care b. Duty to provide information c. Duty to obey instructions g. Duty of loyalty

Which of the following remedies are available to a principal when an agent breaches a duty? Select all that apply. a. If the agent violates a duty of loyalty, the principal may rescind the transaction. b. Principal may recover damages. c. If principal wins her suit the agent may go to prison. d. Principal may recover the agent's profits.

a. If the agent violates a duty of loyalty, the principal may rescind the transaction. b. Principal may recover damages. d. Principal may recover the agent's profits.

Is it possible for Colleen to owe a fiduciary duty to Bobby without Bobby controlling Colleen? a. Yes, but it is not an agency relationship. b. Yes, it is possible to have an agency relationship in which the principal is owed a fiduciary duty but does not control the agent. c. Yes, but it is risky to enter into a fiduciary relationship in which neither party has control. d. No, because a fiduciary duty requires control.

a. Yes, but it is not an agency relationship.

An employer is generally liable for a physical tort committed by an employee _____________ and a nonphysical tort of an employee ___________

acting within the scope of employment acting with authority

To create a(n) _________ relationship, the principal and the agent must mutually agree that the _______will act on behalf of the __________, and be subject to the ___________, thereby creating a(n) _________ relationship

agency agent principal principal's control fiduciary

Under the theory of respondeat superior,

an employer is liable for the misbehavior of his employee even if the employer tried to prevent the employee from misbehaving

Which of the following statements describes apparent authority? a. Authority granted by the principal's words of conduct that, reasonably interpreted cause the agent to believe the principal desires her to act on the principal's account. b. A principal can be liable for the acts of an agent who is not acting with authority if the principal's conduct causes a third party to reasonably believe that the agent is authorized. c. Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it.

b. A principal can be liable for the acts of an agent who is not acting with authority if the principal's conduct causes a third party to reasonably believe that the agent is authorized.

Which of the following are circumstances under which the principal is liable for the acts and statements of his agent? Select all that apply. a. The agent was acting in good faith. b. The agent had authority. c. The agent was acting for the benefit of the principal. d. The contract was not illegal. e. The principal ratified the acts of the agent.

b. The agent had authority. e. The principal ratified the acts of the agent.

Which of the following are circumstances under which a principal is liable for an employee's intentional physical torts? Select all that apply. a. The employer has a professional relationship with the injured party. b. The employer was negligent in hiring the employee. c. The employer was negligent in supervising the employee. d. The employee intended to serve some purpose of the employer. e. The employee's conduct is extreme or outrageous. f. The employee was fulfilling a work obligation at the time of the intentional tort.

b. The employer was negligent in hiring the employee. c. The employer was negligent in supervising the employee. d. The employee intended to serve some purpose of the employer.

Select the three obligations imposed on a principal under his duty to cooperate with his agent: a. The principal must compensate the agent as provided in the agreement. b. The principal cannot unreasonably interfere with the agent's ability to accomplish his task. c. The principal must provide the agent with a bonus if her work is exemplary. d. The principal must perform her part of the contract. e. The principal must furnish the agent with the opportunity to work. f. The principal must indemnify an agent for any expenses or damages reasonably incurred in carrying out her agency responsibilities.

b. The principal cannot unreasonably interfere with the agent's ability to accomplish his task. d. The principal must perform her part of the contract. e. The principal must furnish the agent with the opportunity to work.

When is a principal liable for the nonphysical torts of an employee? Select all that apply. a. When the employee's conduct was negligent b. When the employee acted with express authority c. When the employee intended to bring a benefit to the employer d. Always e. Never f. When the employee acted with implied authority g. When the employee acted with apparent authority

b. When the employee acted with express authority f. When the employee acted with implied authority g. When the employee acted with apparent authority

nce an agency relationship ends, an agent may compete with her principal, but she may not use confidential information she learned during the agency relationship. Can an agent ever work for two principals whose interests conflict? a. No, unless preventing the agency relationship would impose an undue hardship on one or both of the principals. b. Yes, as long as the principals know about the conflict and consent to the agency relationship. c. Yes, as long as at least one principal is aware of the conflict and agrees to act in good faith. d. No. It is never possible to overcome the conflict of interest.

b. Yes, as long as the principals know about the conflict and consent to the agency relationship.

An employee is acting within the scope of employment if the act: a. occurs during the agent's commute. b. is one that employees are generally responsible for. c. takes place during hours that the employee is generally employed. d. is seriously criminal. e. is similar to the one the principal authorized.

b. is one that employees are generally responsible for. c. takes place during hours that the employee is generally employed. e. is similar to the one the principal authorized.

What happens when an agent receives an outside benefit while working in the scope of her agency? a. The agency relationship terminates unless the agent reimburses the principal for the benefit. b. She is entitled to keep it. c. She must give it to her principal. d. She must inform her principal, who may take the benefit or allow the agent to keep it.

d. She must inform her principal, who may take the benefit or allow the agent to keep it.

An agent who is not being paid is called a(n) ________ agent. They are held to a(n) _______ standard of care than a typical agent. They are _______for gross negligence; they are ___________ for ordinary negligence.

gratuitous lower liable not liable

Once an agency relationship ends, the agent no longer ______________. If she continues to act, she ___________

has the authority to act for the principal is liable to the principal for any damages she incurs as a result

A principal is liable for the physical torts of an independent contractor

only if the principal has been negligent in hiring or supervising the contractor

In an agency relationship, the role of the ___________is generally less complicated than the role of the __________. The range of tasks undertaken by agents is ___________than the range of tasks undertaken by the principal.

principal agent much greater

In Zankel v. United States of America, the defendant should argue that

Dreyer had abandoned the principal's business

T/F An agent's obligation not to engage in behavior that reflects badly on the principal applies only to his conduct when he is on-duty.

False

If Dirk consents to being Percival's agent, an agency relationship will not be created

If Percival does not have control over Dirk

In Abkco Music, Inc. v. Harrisongs Music, Ltd., the court held that

Klein violated his fiduciary duty to Harrison

T/F Agents are always responsible for their own torts.

True

T/F An agent may compete with her principal once the agency relationship ends.

True

T/F Generally, a principal is not liable for the physical torts of an independent contractor.

True

T/F In general, a principal cannot rescind contracts entered into by the agent.

True

T/F Principals have substantial liability for the actions of their agents.

True

Wyatt, a Certified Public Accountant, misinterprets a basic provision of the tax code when filing a client's taxes, and the error ultimately costs his company several thousand dollars to fix. Is Wyatt liable?

Yes because Wyatt has special skills and will be held to a higher standard of care

If an agent hires subagents, is the principal liable for the acts of the subagent?

Yes, as long as the agent was authorized to hire the subagents

In Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp LLC, the court held that

a duty of loyalty exist when employment is at-will

Nick agrees to work for Carmine until Carmine's baseball card business sells $7,000 worth of cards. What type of agency agreement is this?

a term agreement for achieving a purpose

A(n) ________ is a person who acts for someone else.

agent

In general, there is no reason why the bankruptcy of a(n) ________ would prevent him from continuing to work. The bankruptcy of a(n) ________is different because once he ____________, he may be forced to terminate the agreement.

agent principal losses control of his assets

Acceptance of the benefit of an unauthorized transaction or failure to repudiate it, thereby making the transaction binding as if it had been authorized. a. Approval b. Repudiation c. Endorsement d. Ratification e. Acceptance

d. Ratification

An act is within the scope of employment, even if it is expressly forbidden, if it is of the same general nature as that authorized or

incidental to the conduct authorized

If a lawyer asks hospital employees to administer a blood test to his client, the hospital employees are

not acting as agents of the lawyer or his client if they do not consent to being agents

A(n) ________ is someone who has someone else acting for him.

principal

An agent has a duty to provide the principal with all information in her possession that __________________. She also has a duty to provide ____________

she has reason to believe the principal wants to know accurate information