chapter 33

. Beth, acting within the scope of her authority for the Cake Bake Shop, contracts with Eden Valley Orchards to buy an assortment of fruit. Cake Bake is liable on the contract, and Beth is not, if Cake Bake is a. a disclosed principal. b. a partially disclosed principal. c. an undisclosed principal. d. not a principal. ANSWER: a

a

44. Seed Packets, Inc., a garden seed company, requires its customers to pay by check. Taylor, a Seed Packets driver, tells customers that they can pay her with cash. When Seed Packets learns of Taylor's collections, it does not act to stop them. Taylor steals some of the cash. Under the doctrine of apparent authority, Seed Packets will most likely a. suffer the loss. b. recover the amount of the cash payments from its customers. c. increase its prices to cover the amount of the stolen cash. d. hold its accountant liable for apparently authorizing the cash collections. ANSWER: a

a

Avis is an officer of Budget Building Corporation. With respect to binding Budget to contracts, Avis's authority a. may be actual or apparent. b. must be actual and apparent. c. must be actual and not apparent. d. cannot be actual or apparent. ANSWER: a

a

Based on Oona's conduct, Porcio reasonably believes that Qasim has the authority to act on Oona's behalf even though Qasim does not have the actual authority to do so. In this circumstance, Qasim has a. apparent authority. b. express authority. c. implied authority. d. no authority. ANSWER: a

a

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate a. after the condos have been sold. b. if the prices of the condos must be reduced to sell them. c. once Bayou Development obtains insurance to cover the property. d. when Bayou Development pays Coastal Brokerage its first commission. ANSWER: a

a

Ben manages a warehouse and its inventory for Coffee Shops, Inc. To operate this part of the business, Ben's authority can be inferred a. from the position Ben occupies. b. by a reasonable party with whom Coffee Shops does business. c. to contradict Ben's express authority. d. under no circumstances. ANSWER: a

a

Chemical Refining Corporation hires Disposal & Recovery Company to work as an independent contractor. Whether Chemical Refining will be liable for torts committed at the site by Disposal & Recovery depends on a. what Disposal & Recovery bid for the job. b. whether unusually hazardous activities are involved. c. which party obtained insurance to cover tort liability. d. who is paying Disposal & Recovery. ANSWER: b

b

Darla serves in a representative capacity for Ellen. To accomplish the objectives of this relationship, Darla's authority can be implied a. by contradiction. b. by custom. c. by any subjective measure. d. under no circumstances. ANSWER: b

b

Fact Pattern 33-1 Berry indicates that she is acting as an agent on behalf of an unidentified client—Cuisine Catering, LLC—when she enters into a contract with Désean. Refer to Fact Pattern 33-1. Liability to Désean for nonperformance of the contract may be imposed on a. none of the choices. b. Berry and Cuisine Catering. c. Berry only. d. Cuisine Catering only. ANSWER: b

b

Flo, an agent for Grover, enters into a contract on Grover's behalf with Hong that must be in writing to be enforceable under the Statute of Frauds. Failure to comply with the equal dignity rule, with respect to this contract, can make the contract voidable at the option of a. Flo. b. Grover. c. Hong. d. none of the choices. ANSWER: b

b

Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that an instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda buys the instrument. Liable for this misrepresentation is a. no one. b. Lena. c. Musical Instruments. d. Nayda. ANSWER: b

b

Metro Hospital, Inc., employs New Collection Company as an agent for the collection of Metro's unpaid accounts. While garnishing O'Shea's wages, New Collection misstates the amount and collects too much. O'Shea can recover from a. Metro only. b. Metro or New Collection. c. New Collection only. d. none of the choices. ANSWER: b

b

. Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify a. only third parties who are aware of the agency relationship. b. the public generally. c. Stuart and any third parties who are aware of the agency relationship. d. Stuart only. ANSWER: c

c

40. Romero employs Supplies Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is a. apparent authority. b. equal authority. c. express authority. d. implied authority. ANSWER: c

c

57. Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred a. due to a propensity Netanya was not and could not have been aware of. b. during normal working hours. c. in the course and scope of Mirena's employment. d. outside the parties' employment relationship. ANSWER: c

c

53. Linus hires Mieko to act as his agent to purchase Ngoc's Southeast Asian Buffet. Linus tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. Linus is a. a disclosed principal. b. not a principal. c. an undisclosed principal. d. a partially disclosed principal. ANSWER: d

d

69. Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent a. until Orin's insurer pays Pat's commission. b. until the destroyed house is sold. c. until the destroyed house is rebuilt and sold. d. no more. ANSWER: d

d

Bud approves on behalf of Cody—but without authorization—a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be a. partly successful. b. partly unsuccessful. c. totally successful. d. totally unsuccessful. ANSWER: d

d

Chuck hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to increase considerably. The agency agreement is likely a. continued with a proportionate increase in Danielle's sales commission. b. continued until Danielle tells prospective buyers of the discovery. c. terminated by act of the parties. d. terminated by operation of law. ANSWER: d

d

Donald approves on behalf of Evelyn—but without authorization—a contract with Farouk to build a new silo. Evelyn does not ratify the contract. The deal with Farouk is a. an enforceable contract with Donald. b. a voidable contract. c. an enforceable contract with Evelyn. d. an unaccepted offer. ANSWER: d

d

Fact Pattern 33-1 Berry indicates that she is acting as an agent on behalf of an unidentified client—Cuisine Catering, LLC—when she enters into a contract with Désean. 51. Refer to Fact Pattern 33-1. Cuisine Catering is a. a disclosed principal. b. an apparent agent. c. an undisclosed principal. d. a partially disclosed principal. ANSWER: d

d

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute a. none of the choices. b. Private Security. c. Private Security or Olsen. d. Olsen. ANSWER: d

d

Clark hires Dion to act as his agent to purchase Expo Sports Arena, Inc. Clark tells Dion to reveal that he is buying the firm and its assets on behalf of a third party and to tell the seller who that third party is. Clark is a. a disclosed principal. b. not a principal. c. an undisclosed principal. d. a partially disclosed principal. ANSWER: a

a

Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of her employment if he a. crashed into a car at the airport while off duty. b. hit a pedestrian in a parking lot during a "working" lunch. c. ran over an attendant at Quik's gas station while refueling the truck. d. smashed into a store-front while intoxicated on-duty. ANSWER: a

a

Lima, an agent for Mindwonder Games LLC, executes an unauthorized contract with NOW Marketing Inc. The deal is highly advantageous to Mindwonder, and the company ratifies the contract. The contract is a. valid. b. vicarious. c. void. d. voidable. ANSWER: a

a

Olive, an agent for Precision Paving Corporation, enters into an unauthorized contract with Quality Asphalt, Inc., purportedly on Precision's behalf. Precision does not ratify the contract. Liability may be imposed on a. Olive to Quality for misrepresenting her authority. b. Precision to Quality for not ratifying the contract. c. Quality to Precision for entering into an unauthorized contract. d. Precision to Olive for not ratifying the contract. ANSWER: a

a

Rachel is an agent for Sports Logo Merchandise, Inc. Rachel makes an innocent misrepresentation when entering into a contract on behalf of Sports Logo with Team Marketing & Sales Corporation. Sports Logo a. is directly responsible for Rachel's misrepresentation. b. is estopped from performing the contract. c. may rescind the contract. d. must ratify the contract. ANSWER: a

a

Rod is an employee of Savers Bank. In deciding whether Rod acts within the scope of his employment when he commits a tort against Tracy, a court will not consider whether a. Rod indicated that he was acting on behalf of Savers Bank. b. Savers Bank authorized the act. c. Savers Bank furnished the means by which the injury was inflicted. d. the act is one commonly performed by employees for their employers. ANSWER: a

a

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity. After the grain is bought, the agency relationship terminates a. automatically. b. following notice to all actual grain sellers. c. following notice to all potential grain sellers. d. following published notice in a local newspaper. ANSWER: a

a

Without authorization, Lars contracts on behalf of Mina to have Nemo paint the interior and exterior of Mina's house. If Mina decides to ratify the contract, she must affirm a. all of the contract. b. any part of the contract, with Lars liable to Nemo for the difference. c. any part of the contract before performance begins. d. any part of the contract at any time. ANSWER: a

a

Norton grants an ordinary power of attorney to Olena to locate potential real estate investment opportunities on Norton's behalf. This power will terminate on Norton's a. taking advantage of one of the investment opportunities. b. death or incapacity. c. sixty-fifth birthday. d. hiring an actual attorney to exercise the power granted to Olena. ANSWER: b

b

OnlineSales.com uses an e-agent to take a purchase order from a consumer over the Internet. The e-agent fails to provide an onscreen confirmation of the order. The effect of any error in the order can be avoided by a. OnlineSales.com. b. the consumer. c. both parties. d. none of the choices. ANSWER: b

b

Based on Esteban's conduct, Floyd reasonably believes that Glynis has the authority to act on Esteban's behalf even though Glynis does not have the actual authority to do so. Floyd makes a payment to Glynis for Esteban. Glynis keeps the money and disappears. Esteban a. can demand that Floyd make a repayment directly to Esteban. b. can obtain damages from Floyd for Glynis's misconduct. c. may be estopped from denying that Glynis had authority. d. must repudiate Glynis's misconduct to avoid liability. ANSWER: c

c

Mikayla, an agent for Nahir, enters into a contract on Nahir's behalf with Onora that must be in writing to be enforceable under the Statute of Frauds. Mikayla's authority to enter into this contract is not in writing. Under the equal dignity rule, this contract is a. enforceable. b. void. c. voidable at Nahir's option. d. voidable at Onora's option. ANSWER: c

c

On March 1, Eugene retains Farley to act as his authorized agent. On April 1, Eugene dies. On April 2, before Farley knows of Eugene's death, he enters into a contract on Eugene's behalf. The contract is a. binding on Eugene's heirs. b. binding on Farley. c. void. d. voidable. ANSWER: c

c