BUL 3310 Exam 3
Which of the following is NOT an example of a trade secret A. A business's marketing plans for the next five years, B. A list of customers that was published in an ad in a trade journal, C. The formula for a compound used in a manufacturing process, D. The responses of a focus group to a company's product that have been gathered and analyzed.
A list of customers that was punished in an ad in a trade journal
Alan is the general manager of a restaurant. Although not mentioned in his employment contract, as part of carrying out his management duties he has the authority to buy supplies, hire employees, put ads on the radio, engage a cleaning service, pay bills, etc. These duties are expressions of his ___ authority A. Actual express B. Actual implied C. Actual apparent D. Constructive implied
Actual implied
A principal whose identity is known to a third party is a ___ principal A. Disclosed, B. Undisclosed, C. Partially disclosed, D.Transparent
Disclosed
The only principal who can ratify a contract is a ___ principal A.Disclosed B.Undisclosed C.Partially disclosed D.Both a and c can ratify a contract
Disclosed
Officers of corporations have unlimited actual authority to sell the real property and intangible assets of the corporation T/F
False
The legal test to determine whether someone is a general agent or a special agent is whether or not the agent is paid for his services T/F
False
The standard of "reasonable accommodations" for disabilities are the same standards as "reasonable accommodations" for religious practices T/F
False
Undisclosed principal's have no liability to third parties for contracts negotiated by their agents T/F
False
Undisclosed principals have no liability to third parties for contracts negotiated by their agents T/F
False
When ratifying a contract, a principal may select which provisions of the contract to accept and which to reject T/F
False
Whether or not a principal has ratified a contract is a question of law to be decided by the judge, and never a jury at trial T/F
False
In some states, a parent-owner is liable for any damages caused by a family member operating the vehicle. This is the ___ doctrine Durham Family car In locoparenti Family negligence
Family car
Sam is retiring and selling his business to Ed, an employee. They want Larry Lawyer to draw up a sales contract that protects both Sam's interests as the seller and Ed's interests as the buyer. If Larry agrees to this dual agency, which duty would be most risk violating? A. The duty of loyalty, B. The duty not to be negligent, C. The duty to account D. Dual agencies pose no particular problems in carrying out agency duties.
The duty of loyalty
Which of the following statements about an agent's duty to inform is false? A. The duty to inform does not apply to gratuitous agents, only to compensated agents., B. The principal is assumed to know everything that the agent knows and can be held liable legally for this information., C. The agent must inform the principal if a credit customer is having financial difficulties., D. The agent must inform the principal about changes in market conditions.
The duty to inform does not apply to gratuitous agents, only to compensated agents
A master can normally avoid liability for damages caused by a servant if he can show that the servant misunderstood his instructions T/F
True
A minor may act as an agent for an adult principal T/F
True
A person who enters into a contract with an independent contractor is called a proprietor T/F
True
A principal has the duty to notify third parties when an agency terminates T/F
True
A principal may ratify a contract by accepting the benefits of the contract T/F
True
A principal whose identity is known to a third party is a disclosed principal T/F
True
A proprietor will be liable for the torts of an independent contractor if the duties that the contractor is hired to perform are inherently dangerous to the public T/F
True
A third party must use reasonable care and diligence to maker sure that an agent is acting within the scope of his or her employment T/F
True
Agents are personally liable to third parties on contracts when the principal was undisclosed T/F
True
Agents of undisclosed principals are entitled to be indemnified if held personally liable on contracts that were within the scope of their authority T/F
True
An agency will terminate by operation of law if the principal files for Chapter 7 Bankruptcy T/F
True
An agent is a fiduciary of the principle T/F
True
An agent who comingles the principal's funds with his or her own violates the duty to account T/F
True
An agent who is wrongfully terminated may sue the principal for damages T/F
True
An agent who represents both the buyer and the seller in the purchase of a business is acting as a dual agent T/F
True
An agent will not be indemnified for injuries caused to third parties if the agent's negligence caused the injury T/F
True
An agent's knowledge is imputed to the principal T/F
True
If a principal ratifies the unauthorized act of an agent, he releases the agent from any liability for the unauthorized act T/F
True
If a principal wishes to ratify a contract that an agent was not authorized to negotiate, he must do so before the third party withdraws from the contract T/F
True
If an agent gets a monthly advance against future commissions, the advances are treated as a minimum salary and need not be returned if the commissions on sales are not earned T/F
True
If the agent dies, the agency agreement terminates by operation of law T/F
True
If the principal dies, the agency agreement terminates by operation of law T/F
True
In a multiple listing agreement, real estate is listed with several brokers who divide the commission on the sale T/F
True
No federal law addresses workplace bullying as a form of discrimination T/F
True
Normally a master is not liable for torts committed by a servant while traveling from his home to the workplace T/F
True
Only someone in a supervisory capacity can be liable for quid pro quo sexual harassment T/F
True
Respondeat superior is a form of vicarious liability T/F
True
The general manager of a business will have the implied actual authority to perform duties that are not expressly authorized in the employment agreement T/F
True
The principal is a fiduciary of the agent T/F
True
The secret formula for a soft drink is an example of a trade secret T/F
True
To ratify a contract, the principal must have been disclosed at the time the contract was formed T/F
True
Under the family-car doctrine, any family member becomes an agent of the parent-owner while the family member is using the car T/F
True
The last semester of his senior year, Marc had an unpaid internship in the sales department of a local TV station. When Marc left, he took a copy of the station's client list with him, reasoning that it would prove useful in the future when he graduated and got a permanent job at some other company in sales. Has Marc violated any agency duties? A. No, it was an unpaid position so he had no agency duties., B. No, Marc's duties to the TV station ended when his agency relationship ended, C. Yes, Marc violated a duty to protect confidential information D Yes, Marc violated a duty not to be negligent
Yes, Marc violated a duty to protect confidential information
The Principal and Agent have ___ relationship with each other A. Arms length, B. Statutory, C. Fiduciary, D. equitable
A fiduciary
When a servant completely abandons the master's work to pursue his own interests, the servant is on ___ A. Detour, B. Outing, C. Trespass, D. Frolic
A frolic
Carla was the agent for Newco, a New York company that wanted to relocate its corporate offices to New Jersey. Carla was given the authority to purchase 600 acres of New Jersey farmland, but was not allowed to tell the sellers that she represented Newco. She was only allowed to say that she represented an out-of-state corporation. After the contracts were signed, Newco's board decided not to relocate and wants to rescind the contracts. Which of the following statements is true about the liability of the parties? 1.Carla has no personal liability on the contracts because she was acting within the scope of her authority. 2.Newco is not liable to the sellers on these contracts because Carla it is an out-of-state corporation. 3.Carla is not personally liable on the contracts because she disclosed that it was an out-of-state corporation. 4.Carla is personally liable on the contracts, but Newco must indemnify her because she was acting within the scope of her authority.
4
If an agency agreement does not state how much an agent is to be paid, what happens? A. The agency agreement is void, B. The agency agreement is voidable by the agent, but not by the principal, C.The agent is assumed to be a gratuitous agent, D. A court will read in a reasonable amount based on the customary rate in the business community.
A court will read in reasonable amount based on the customary rate in the business community
An agent incurs personal liability on a contract with a third party when ... A. When he acts outside the scope of his authority in negotiating the contract., B. When he is an agent for an undisclosed principal. C. When he is an agent for a partially disclosed principal., D. All of the above
All of the above
Rhonda Realtor was hired to find Client an undeveloped lot that met the following requirements: the lot must be in the mountains, on a pristine lake, consist of at least 10 acres, and be available for no more than $500,000. Rhonda found a property that met all these requirements for only $425,000. Enchanted, she bought the property for herself. She did not tell Client about her find and is still diligently seeking another property that meets Client's needs. Which, if any, agency duties has Rhonda violated? A. Duty of loyalty, B.Duty to inform, C. Duty to obey instructions, D. All of the above
All of the above
Which of the following would NOT terminate an agency by operation of law? A. The death of the principal, B. The death of the agent, C. The destruction of the goods that the agent was hired to sell, D. All of the above would terminate an agency by operation of law.
All of the above would terminate an agency by operation of law:
When does an agent incur personal liability on a contract with a third party? A. When he acts outside the scope of his authority in negotiating the contract., B. When he is an agent for an undisclosed principal. C. When he is an agent for a partially disclosed principal., D. All of the above
All of the above: - When he acts outside the scope of his authority in negotiating the contract - When he is an agent for an undisclosed principal - When he is an agent for a partially disclosed principal
A person who is given power of attorney is called an ___ A. Attorney at law, B. Attorney in fact, C. Factor, D. General agent
Attorney in fact
Apparent authority can only be created by the actions of which of the following? A.The agent himself B. a disclosed principal C. A disclosed agent D. An undisclosed principal
B. a disclosed principal
An agent's actual authority may be ___ A. Express B. Implied C. Ostensible D. Both a and b
Both A and B:
An agent has a duty to obey the principal's instructions unless which of the following is true? A. the instructions require the agent to perform duties that are not in the agency agreement, B. the instructions are to perform an illegal act, C. the instructions are not in the principal's best interest, D. both a and b
Both A and B: - The instructions require the agent to perform duties that are not in the agency agreement - The instructions are to perform an illegal act
An employee who commits a tort while acting in the scope of his or her employment ... A. Has no liability to the injured third party because of the doctrine of respondeat superior B. Is entitled to be indemnified by the principal if the tort was committed by following the principal's instructions C. Has joint and several liability with the principal to the injured party D. Both b and c
Both B and C: - Is entitled to be indemnified by the principal if the tort was committed by following the principal's instructions - Has joint and several liability with the principal to the injured party
Ted was hired under a one year contract to manage Sue's sub shop. Eight months into the contract, Sue fired Ted in order to hire a new manager who had just graduated with a degree in marketing and had a lot of ideas for increasing sales. Ted had not breached the contract in any way. Which statement best describes Sue's rights in these circumstances? A. Sue had both the right and the power to terminate Ted's contract., B. Sue had neither the right nor the power to terminate Ted's contract., C. Sue had the power, but not the right, to terminate Ted's contract., D. Sue had the right, but not the power, to terminate
C
In contracts negotiated by an agent who is acting within the scope of his authority for a disclosed principal, the agent, the principal, and the third party are equally liable on the contract T/F
False
Masters and servants ONLY have joint liability for torts committed by the servant in the strict course of his employment T/F
False
Which legal rule will not impose punitive damages on a master for the torts of his servants unless the master himself took some part in the wrongful action? A. Vicarious liability rule, B. Durham rule, C. Complicity rule, D. Transferred liability rule
Complicity rule
Parker is a dealer in Oriental antiques and rugs. A sign in his store recommends that customers bring in their rugs to him for cleaning and repair. In fact, Parker does none of the cleaning or repair work for himself. He sends the rugs to Local Cleaners, for whom he works as an agent making a 20 commission. Due to a mishap at Local's plant, the rug belonging to Parker's customer was damaged. Is Parker liable to the customer for the damage? A. No, Parker is Local's agent and has no fiduciary duties to third parties B. No, Parker has no liability bc he was acting within the scope of his authority as Local's agent C. No, Parker has no liability bc agents are not responsible for the torts of the principal D. Yes, Parker was liable bc he is the agent of an undisclosed principal
D
Assume that you hire an independent contractor to transport hazardous chemicals for your company. If he negligently causes damages to a third party while carrying out the job, you will not be liable because of his status as an independent contractor T/F
False
Whether or not a principal has, through his actions, ratified a contract is a question of ___ usually decided by a ___ A. Fact ; judge B. Law ; judge C. Fact ; jury D. Law ; jury
Fact ; Jury
Whether or not a servant was acting in the scope of his employment when he injured a third party is a question of ___ to be decided by the ___ A. Fact ; judge B. Law ; judge C. Fact ; jury D. Law ; jury
Fact ; Jury
Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in pottery making. He has an arrangement with K&M, a large equipment maker, to sell K&M kilns in both his own name and in K&M's name and to receive payments from customers. Mike's relationship with K&M is that of a ___ A.Independent contractor B.Special agent C. Broker D. Factor
Factor
A factor is an agent with the special limited authority of procuring a customer so that the principal can affect a sale or exchange of property T/F
False
A factor is an agent with the special limited authority of procuring customers so that the principal can affect a sale or exchange of property T/F
False
A multiple listing agreement lists real property with several brokers, but only the selling broker earns a commission on the sale T/F
False
A principal always has the right to terminate an agency T/F
False
A principal may terminate the agency of a disloyal agent only if the principal suffered a financial loss because of the agent's disloyalty T/F
False
A store manager is an example of a special agent T/F
False
Agency agreements must always be in writing T/F
False
An agent operating under a written power of attorney is called an attorney-at-law T/F
False
An agent whose agency appointment has terminated has the implied authority to continue to conduct the principal's business until third parties are notified of the termination T/F
False
An employer cannot be held liable under respondeat superior for the negligence of a person who is working under the employer's control and direction, but who is not being paid T/F
False
A master will not be liable for the torts committed by a servant if the servant was on a ___ when the tort was committed Lark Errand Frolic Detour
Frolic
Implied authority is also known as ___ authority A.Apparent, B.Ostensible, C.Incidental, D.Constructive
Incidental
A principal is obligated to pay any judgements against an agent who incurred liability to a third party while carrying out the principal's orders. This duty to hold the agent "harmless" is the duty to ___ Indemnify Mitigate Express Ratify
Indemnify
The duty of the principal is to hold an agent "harmless", and to pay any judgments for which the agent becomes liable while carrying out the principal's orders, is the duty to ___ A. Mitigate, B. indemnify, C. protect, D. reimburse
Indemnify
Bill hired Acme Paving to pave his driveway. Acme is Bill's ___ A.Broker, B. Independent contractor, C. Factor, D. Special agent
Independent contractor
When a third party knows that an agent is acting on behalf of a principal, but does not know the identity of the principal, the principal is ___ A. Disclosed B. Undisclosed C. Partially disclosed D.Transparent
Partially disclosed
In which of the following situations would an employee avoid liability for torts committed while carrying out his employment obligations? A. A corporate officer acting on behalf of the corporation, B. A servant following the instructions of his master, C. An agent carrying out the orders of his principal, D. None of the above: everyone has personal liability for the torts he commits.
None of the above; everyone has personal liability for the torts he commits
Jim was called to active duty in the military. Knowing that he would be out of the country for a year or more, he gave his sister Peg authority to pay bills in his name, access his bank accounts, buy and sell stock in his brokerage accounts, and incur expenses to maintain his house and car and boat. Because Peg is not compensated for the activities she is performing on her brother's behalf she owes him ... A. Only the duty of loyalty., B. Only the duties of loyalty and information., C. Only the duties of loyalty, information and the duty to account, D. Peg owes Jim all the duties of an agent to a principal.
Peg owes Jim all the duties of an agent to a principal
A supervisor offering an employee a promotion or extra vacation time in exchange for sexual favors is an example of ___ harassment A. Quid pro quo, B. Hostile workplace, C. Constructive, D. Disparate treatment
Quid pro quo
When a principal decides to adopt and be bound on a contract that his agent did NOT have the authority to form, the principal ___ the contract Indemnifies Reforms Ratifies Restores
Ratifies
The legal doctrine that holds the master liable for the torts committed by a servant while acting within the scope of this employment is ___ A. Quid pro quo, B. Respondeat superior, C. Caveat emptor, D. Alter ego liability
Respondeat Superior
Conan, an outstanding college pitcher, hired Masters to represent him in negotiations with a major league team. Masters may only negotiate a contract for Conan; he has no authority to make investments or purchase property on Conan's behalf. Masters would be classified as a ___ Factor Broker Special agent General agent
Special agent
What is the status of an agency agreement when a principal files for Chapter 7 Bankruptcy? A. The agency terminates by operation of law when the court grants the order for relief. B. The agency terminates by operation of law thirty days after the trustee takes over the debtor's assets. C. The agency terminates by operation of law sixty days after the trustee takes over the debtor's assets. D. The agency terminates by operation of law ninety days after the trustee takes over the debtor's assets.
The agency terminates by operation of law when the court grands the order for relief
Pat hired Mike, a dealer in livestock, to sell his herd of cattle. Mike was to receive 20 percent commission on the sale. Before a buyer could be found, the herd had been destroyed because of an outbreak of mad cow disease. Which statement best describes the status of the agency agreement? A.The agency will continue under the same terms when Pat acquires a new herd. B.The agency was terminated by operation of law. C.The agency was terminated by a unilateral action D.The agency was terminated by mutual agreement
The agency was terminated by operation of law
A person who breaches a duty that is neither a contractual duty nor a crime commits a ___ A. Tort, B.Misdemeanor, C. Malum in se, D.Malum prohibitum
Tort
If a third party does not know that he is dealing with an agent and believes that the agent is acting on his own behalf and will perform on the contract, the principal in this situation is ___ A. Disclosed, B. Undisclosed, C. Partially disclosed, D.Transparent
Undisclosed
The general legal doctrine that holds one person responsible for the torts committed by another because of the relationship they have to each other is ___ A. respondeat superior B. vicarious liability C. primary liability D. transferred liability
Vicarious liability
The general legal principal under which an innocent person can be held liable for the wrongdoing of another is ... A. respondeat superior B. vicarious liability C. primary liability D. transferred liability
Vicarious liability
Which legal principle always imposes punitive damages on a master if the wrongful conduct of the servant in the course of business justifies punitive damages? A. Vicarious liability rule, B. Complicity rule, C. Transferred liability rule, D. Durham rule
Vicarious liability rule
Which of the following is NOT a factor in determining whether a servant was acting within the scope of his employment? A. Was the servant carrying on the master's business when the tort was committed? B. Was the servant disobeying the instructions of the master when the tort was committed? C. Was the instrumentality of the injury furnished by the master? D. Did the master authorize the servant to use the instrumentality of the injury?
Was the servant disobeying the instructions of the master when the tort was committed?
When will a principle not have a duty to reimburse an agent? A. When the principal is disclosed, B. When the principal is undisclosed, C. When the expenses were the result of the agent's negligence, D. When the expenses are for food or travel
When the expenses were the result of the agent's negligence