BUL3310 Unit 7 Quiz

Alan is the general manger 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 implied b.) Actual express c.) Actual apparent d.) Constructive implied

Actual implied

In determining the rights and duties of the parties to an agency relationship, the courts look to a.) The Uniform Commercial Code b.) Federal common law c.) Case law d.) The National Labor Relations Act

Case law

Ann Agent was hired by Buyer to locate a piece of property suitable for building an office complex. Ann and her cousin jointly owned a piece of property that suited Buyer's needs. Without telling Buyer of her ownership interest, Ann negotiated the purchase on Buyer's behalf. The price for the property was its fair market value. What options are available to Buyer when he learns that Ann was the seller? a.) He must go through with the contract because her cousin's participation made this an arm's length deal. b.) He may rescind the contract because Ann violated her duty of loyalty. c.) He must go through with the contract because the price was objectively fair. d.) He must go through with the contract, but does not have to pay Ann her commission.

He may rescind the contract because Ann violated her duty of loyalty.

Implied authority is also known as ____________authority. a.) Apparent b.) Incidental c.) Ostensible d.) Constructive

Incidental

An employee who commits a tort while acting in the scope of his or her employment a.) Is not entitled to be indemnified by the principal if the tort was commited while in the workplace. b.) Has no liability to the injured third party because of the doctrine of respondeat superior. c.) Has no liability to injured party because of the doctrine of Res Ipsa Loquitor. d.) Is entitled to be indemnified by the principal if the tort was committed by following the principal's instructions.

Is entitled to be indemnified by the principal if the tort was committed by following the principal's instructions.

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 duties of loyalty and information. b.) Peg owes Jim all the duties of an agent to a principal. c.) Only the duty of loyalty. d.) Only the duties of loyalty, information and the duty to account

Peg owes Jim all the duties of an agent to a principal.

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. a.) Ratifies b.) Restores c.) Indemnifies d.) Reforms

Ratifies

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. Jim will be out of the country when a piece of land he sold goes to settlement. He wants to give Peg the authority to convey the deed and sign any necessary settlement papers in his name. To do this he should give Peg _______________. a.) General power of attorney b.) Broker Authority c.) Special power of attorney d.) Factors letters of appointment

Special power of attorney

Ruth had a contract to sell a vacation home she owned in North Carolina. Rather than make the trip from Oregon for the closing, she gave her brother Ian, who lived in North Carolina, the authority to represent her at the closing and to sign all the necessary papers. The notarized document that confers this authority on Ian is a (n) __________________; and Ian is a (n) _____________. a.) General power of attorney-------------------Attorney at law b.) Special power of attorney--------------------Attorney in fact c.) General power of attorney-------------------Attorney in fact d.) Special power of attorney--------------------Attorney at law

Special power of attorney--------------------Attorney in fact

The primacy source of law governing the relationship between the principal and the agent is a.) Federal statutes b.) Federal common law c.) The Uniform Commercial Code d.) State common law case law

State common law case law

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 the power, but not the right, to terminate Ted's contract. b.) Sue had neither the right nor the power to terminate Ted's contract. c.) Sue had the right, but not the power, to terminate Ted's contract. d.) Sue had both the right and the power to terminate Ted's contract.

Sue had the power, but not the right, to terminate Ted's contract.

Mary, a retail appliance dealer, instructs Susan to repossess a TV set from Tom, who had purchased it on an installment contract. Mary informs Susan that Tom is in arrears on his payments. Actually, Mary had made a bookkeeping error, and Tom is current in his payments. Despite Tom's protests, Susan repossesses the TV set pursuant to Mary's instructions. Susan has committed the torts of trespass and wrongful conversion. What are Susan's options if Tom elects to bring an action for tort damages against her? a.) Susan can simply give back the TV which will negate Tom's claims of tort damages. b.) Tom will not be able to collect tort damages from Susan because she was working for Mary. c.) Susan can demand that Mary indemnify her and satisfy Tom's tort claims. d.) Susan's actions were illegal and she will not be able to demand that Mary indemnify her against Tom's tort damages.

Susan can demand that Mary indemnify her and satisfy Tom's tort claims.

Which of the following is not a duty of the principal to the agent? a.) The duty to compensate b.) The duty to obey instructions c.) The duty to indemnify d.) The duty to reimburse

The duty to obey instructions

The major distinction between a servant and an independent contractor is that a.) The employer has the right to tell a servant how to do the job, while an independent contractor has exclusive control over the manner in which the job is done. b.) An independent contractor is required to be licensed. c.) Independent contractors are hired under individual contracts, while servants must be hired under collective bargaining agreements. d.) An independent contractor is required to be bonded and to carry insurance.

The employer has the right to tell a servant how to do the job, while an independent contractor has exclusive control over the manner in which the job is done.

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.) The merger of the subagency and the goods

The merger of the subagency and the goods

Which of the following statements is false about a principal's ratification of an authorized contract? a.) The principal must be aware of all material facts surrounding the negotiations and formation of the contract. b.) The principal must have been either disclosed or partially disclosed at the time the contract was formed. c.) The principal may not change any of the provisions of the contract. d.) The third party must not have withdrawn from the contract.

The principal must have been either disclosed or partially disclosed at the time the contract was formed.

Which of the following is not a factor in determining if 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.) Did the master authorize the servant to use the instrumentality of the injury? c.) Was the servant disobeying the instructions of the master when the tort was committed? d.) Was the instrumentality of the injury furnished by the master?

Was the servant disobeying the instructions of the master when the tort was committed?

Tim is the delivery person for a small local bakery. Tim often accepts payments from the bakery's customers when making his deliveries. Tim puts the payments that made by check in an envelope. He uses the cash payments to pay for his daily personal expenses. At the end of each week, he makes out a check to the bakery for the amount that he took in as cash payments. Has Tim breached any of his fiduciary duties as an agent? a.) Yes, the duty not to be negligent b.) Yes, the duty to account c.) No, so long as he keeps careful accounts and gives the bakery all that it is due.

Yes, the duty to account

Apparent authority can only be created by the actions of a.) A disclosed principal b.) An undisclosed principal c.) A partially disclosed principal d.) The agent himself

a disclosed principal

Another term for ostensible authority is _______________authority. a.) Apparent b.) Express c.) Incidental d.) Constructive

apparent

Patty Principal fired Al Agent because Al had been careless in his record keeping and had comingled personal and business funds. Unless Patty notifies the third parties who dealt with Al that he is no longer her agent, Al will continue to have __________authority and Patty will be bound by his actions. a.) Incidental b.) Actual c.) Apparent d.) Implied

apparent

A person who is given power of attorney is called an______________. a.) Attorney in fact b.) Factor c.) General agent d.) Attorney at law

attorney in fact

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.) Transferred liability rule b.) Complicity rule c.) Durham rule d.) Vicarious liability rule

complicity rule

A principal whose identity is known to a third party is an _____________principal. a.) Undisclosed b.) Disclosed c.) Partially disclosed d.) Transparent

disclosed

Athlete Superstar hired Angie Agent to negotiate a contract for him with a major cereal company. Photos of Athlete Superstar, in various action poses, are to be prominently displayed on every box of GoodForYou cereal for one year. In these circumstances, Athlete Superstar is a (n) ____________principal. a.) Undisclosed b.) Special c.) Disclosed d.) Partially undisclosed

disclosed

A principal always has the right to terminate an agency. a.) True b.) False

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. a.) True b.) False

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 a.) True b.) False

false

An employer is responsible for the torts committed by an employee while the employee is on a frolic, but not for those torts committed while the employee is on a detour. a.) True b.) False

false

An employer may have liability for the negligent hiring of a servant, but not for the negligent hiring of an independent contractor. a.) True b.) False

false

In contracts negotiated by an agent 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. a.) True b.) False

false

Officers of corporations have unlimited actual authority to sell the real property and intangible assets of the corporation. a.) True b.) False

false

The standard the agent must meet in carrying out the work of the principal is "extraordinary care and diligence." a.) True b.) False

false

Undisclosed principals have no liability to third parties for contracts negotiated by their agents. a.) True b.) False

false

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. Peg is Jim's______________. a.) Special agent b.) Independent contractor c.) General agent d.) Broker

general agent

A principal is obligated to pay any judgments 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___________. a.) Compensate b.) Indemnify c.) Account d.) Reimburse

indemnify

The duty of the principal 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.) Reimburse b.) Protect c.) Indemnify d.) Mitigate

indemnify

Bill hired Acme Paving to pave his driveway. Acme is Bill's __________________. a.) Independent contractor b.) Factor c.) Broker d.) Special agent

independent contractor

Apparent authority is also known as _____________authority. a.) Express b.) Constructive c.) Incidental d.) Ostensible

ostensible

When a third party knows that an agent is acting on behalf of a principal, but dies not know the identity of the principal, the principal is________________. a.) Undisclosed b.) Disclosed c.) Partially disclosed d.) Transparent

partially disclosed

The well-established legal principal that employers are liable for the torts committed by employees while acting within the scope of their employment is _____________________. a.) Respondeat superior b.) The rule of corporate complicity. c.) The rule of transferred intent d.) The rule of ultra vires

respondeat superior

A person who breaches a duty that is neither a contractual duty nor a crime commits a ____________. a.) Misdemeanor b.) Malum in se c.) Malum prohibitum d.) Tort

tort

A master can normally avoid liability for damages caused by a servant if he can show that the servant misunderstood his instructions. a.) True b.) False

true

A minor may act as an agent for an adult principal. a.) True b.) False

true

A person who enters into a contract with an independent contractor is called a proprietor. a.) True b.) False

true

A plaintiff who sues the employer and the employee in joint and several liability is limited to only one recovery. a.) True b.) False

true

A principal has the duty to notify third parties when an agency terminates. a.) True b.) False

true

A principal may ratify a contract by accepting the benefits of the contract. a.) True b.) False

true

A principal whose identity is known to a third party is a disclosed principal. a.) True b.) False

true

A third party must use reasonable care and diligence to make sure that an agent is acting within the scope of his or her employment. a.) True b.) False

true

An agent who is wrongfully terminated may sue the principal for damages. a.) True b.) False

true

An agent's duty to protect confidential information continues even after the agency relationship ends. a.) True b.) False

true

If the agent dies, the agency agreement terminates by operation of law. a.) True b.) False

true

In a multiple listing agreement, real estate is listed with several brokers who divide the commission on the sale. a.) True b.) False

true

Masters and servants have only joint liability for torts committed by the servant in the course of his employment. a.) True b.) False

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. a.) True b.) False

true

The principal is a fiduciary of the agent. a.) True b.) False

true

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.) Transferred liability c.) Vicarious liability d.) Primary liability

vicarious liability

The general legal principal under which an innocent person can be held liable for the wrongdoing of another is a.) The rule of ultra vires b.) The rule of corporate complicity c.) Vicarious liability. d.) The rule of transferred intent

vicarious liability

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, Marc's duties to the TV station ended when his agency relationship ended. b.) Yes, Marc violated a duty not to be negligent c.) No, it was an unpaid position so he had no agency duties. d.) Yes, Marc violated a duty to protect confidential information

yes, Marc violated a duty to protect confidential information

If an agency agreement does not state how much an agent is to be paid a.) The agent is assumed to be a gratuitous agent b.) The agency agreement is void c.) The agency agreement is voidable by the agent, but not by the principal d.) A court will read in a reasonable amount based on the customary rate in the business community.

A court will read in a reasonable amount based on the customary rate in the business community.

A proprietor will not be liable for damages caused by an independent contractor if the work the independent contractor was hired to do was a.) Illegal b.) A duty that the proprietor could not delegate c.) Inherently dangerous to the community. d.) A duty an employee could have performed

A duty an employee could have performed

Pat hired Mike to manage his deli, but the agency agreement did not state how much Mike is to be paid. In this situation, a.) The agreement is voidable by Mike. b.) The agreement is voidable by Pat. c.) A court will read in a reasonable salary based on comparable positions in the business community. d.) Mike is a gratuitous agent until a salary is negotiated.

A court will read in a reasonable salary based on comparable positions in the business community.

Tom telephoned Mike's Boat Marina and Yacht Club about purchasing a boat. The person on the telephone told Tom to contact George, the Harbor Master at the Yacht Club, when he arrived if he wanted to view the boats for sale. George's duties at the club included renting slips, pumping fuel, keeping the grass and grounds cleaned, and hauling boats in and out of the water. Upon arriving at the marina, Tom and George inspected the first boat that was for sale without incident. They then proceeded to the second boat for sale docked at the Marina, the "Lovie Dovie." When they reached the "Lovie Dovie," they discovered the interior cabin of the boat was locked. George told Tom he would break into the boat to allow them to inspect the internal cabin, to which Tom protested. George, who lived in a vessel docked in the slip next to the "Lovie Dovie," assured Tom it was okay to break into the boat because "they don't have a problem with us doing this." After entering and inspecting the inside cabin, George removed the hatch cover so Tom could inspect the bottom of the boat. Tom then accidentally stepped into the hole where the hatch cover was located and sustained physical injury after falling through the opening. Tom filed a negligence action against Mike's Marina and Yacht Club. How would a court rule? a.) A court would rule that Mike's Marina and Yacht Club would not be liable for apparent authority because breaking into boats was not in George's written employment agreement. b.) The court would find that a reasonably prudent person would believe George had the authority to break into "Lovie Dovie," especially after his statements that "they don't have a problem with us doing this", his statements would be considered relevant for the purposes of the apparent authority inquiry. c.) A court would rule that Mike's Marina and Yacht Club would be estopped from denying George's apparent authority. d.) A court would find that no reasonably prudent person would believe George had the authority to break into the "Lovie Dovie," irrespective of George's statements to the contrary, which are irrelevant for purposes of the apparaent authority inquiry.

A court would find that no reasonably prudent person would believe George had the authority to break into the "Lovie Dovie," irrespective of George's statements to the contrary, which are irrelevant for purposes of the apparaent authority inquiry.

Which of the following is not an example of a trade secret? a.) A list of customers that was published in an ad in a trade journal b.) The responses of a focus group to a company's product that have been gathered and analyzed. c.) A business's marketing plans for the next five years d.) The formula for a compound used in a manufacturing process

A list of customers that was published in an ad in a trade journal

Which of the following is not an example of a trade secret? a.) The responses of a focus group to a company's product that have been gathered and analyzed. b.) The formula for a compound used in a manufacturing process c.) A list of customers that was published in an ad in a trade journal d.) A business's marketing plans for the next five years

A list of customers that was published in an ad in a trade journal

Jill hired Ace Paving Company to pave her driveway. Ace's driver, Tom, carelessly dropped a load of hot tar on the lawn and prized rose bushes of Jill's neighbor, Dan. From whom can Dan seek damages? a.) Dan can only sue Ace and Tom in joint and several liability. b.) Dan can only sue Jill because she hired an independent contractor to carry out an unreasonably dangerous activity. c.) Dan can only sue Ace because Tom was clearly acting within the scope of his employment. d.) Dan can sue Jill and Ace and Tom in joint and several liability.

Dan can only sue Ace and Tom in joint and several liability.

In order to ratify an agent's contract, the principal must have been __________at the time the contract was formed. a.) Undisclosed b.) Either disclosed or partially disclosed c.) Partially disclosed d.) Disclosed

Disclosed

The only principal who can ratify a contract is an _____________ principal. a.) Undisclosed b.) Disclosed and undisclosed can partially ratify and disclose c.) Disclosed d.) Partially disclosed

Disclosed

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 of the following duties did Rhonda not violate? a.) Duty of loyalty b.) Duty of prescription c.) Duty to obey instructions d.) Duty to inform

Duty of prescription

Whether or not a principal has, through his actions, ratified a contract is a question of _________to be decided by the _________. a.) Law.judge b.) Law.jury c.) Fact.judge d.) Fact.jury

Fact.jury

The Principal and Agent have an ________________relationship with each other. a.) Statutory b.) equitable c.) Fiduciary d.) Arms length

Fiduciary

A master will not be liable for the torts committed by a servant if the servant was on a ______when the tort was committed. a.) Lark b.) Errand c.) Frolic d.) Detour

Frolic

When a servant completely abandons the master's work to pursue his own interests, the servant is on a ___________. a.) Trespass b.) Detour c.) Frolic d.) Outing

Frolic

Matt is employed as the manager of Local Steak House, with wide-ranging responsibilities for all aspects of the business. In this position, Matt is an________ a.) General agent b.) Broker c.) Special agent d.) Factor

General agent

An agent, John, is entitled to indemnification when a.) His own negligence caused the damage for which he is being held responsible b.) He is on a frolic c.) He committed a tort while following the instructions of the principal d.) He was acting outside the scope of his authority

He committed a tort while following the instructions of the principal

Neda, an attorney, has engaged in the following representations this past year. Which one is least likely to violate her duty of loyalty to her clients? a.) Neda represented both the buyer and the seller in the purchase of a business. b.) Neda represented both spouses in their property settlement following the divorce. c.) Neda represented a local restaurant, which she patronizes frequently, in an employment discrimination suit. d.) Neda created a limited partnership with three limited partners; she was one of the limited partners.

Neda represented a local restaurant, which she patronizes frequently, in an employment discrimination suit.

Raines Realty, a property management firm, hired Al Agent to manage an office complex. One of Al's duties was to collect the rents. Raines fired Al for negligence, but did not notify the tenants before the next rent payment was due. Al collected the rents as usual and left town with the money. Are the tenants required to pay that month's rent again to Raines? a.) Yes, because third parties have a duty to verify that agents are acting within the scope of their authority. b.) Yes, because a payment to Al stopped being a payment to Raines when Al's actual authority to accept payments ended. c.) No, because Al still had apparent authority to collect the rents until Raines told the tenants otherwise. d.) No, because Al still had implied authority to collect the rents until Raines told the tenants otherwise.

No, because Al still had apparent authority to collect the rents until Raines told the tenants otherwise.

In which of the following situations would an employee avoid liability for torts committed while carrying out his employment obligations? a.) A servant following the instructions of his master b.) A corporate officer acting on behalf of the corporation 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.

Allan, an agent, is working on behalf of Paul (the principal) to sell Paul's office building. Allan is also the agent for Bob who is interested in buying Paul's building. Allan does not tell Paul or Bob that he represents the other person. Allan acted for the best interests of Paul and the contract was as favorable as could be obtained anywhere. After Paul signs the contract to sell the property to Bob, he finds out that Allan also represented Bob. What remedies may Paul seek? a.) Paul may sue Allan and Bob for fraud. b.) Paul may sue Allan for breaching his scrivenor's duty. c.) Paul may refuse to pay Allan his commission. d.) Paul may charge Allan with the commission of a felony.

Paul may refuse to pay Allan his commission.

In an agency relationship, the principal always has the ____________to end the relationship; and the agent always has the _________________to end the relationship. a.) Right-------------------Power b.) Power-----------------Right c.) Power-----------------Power d.) Right-------------------Right

Power-----------------Power

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.) Caveat emptor b.) Alter ego liability c.) Quid pro quo D.) Respondeat superior

Respondeat superior

Barb hired Roofing Company to re-roof her garage. Bill, one of Roofing Company's employees, carelessly let a pallet of tiles fall from the roof onto the car of Barb's next door neighbor. Who is liable to the neighbor for these damages? a.) Roofing Company and Bill are liable in joint and several liability b.) Roofing Company alone is liable under the doctrine of respondeat superior. c.) Barb alone is liable because she hired Roofing Company to do the job. d.) Bill alone is liable because he committed the tort.

Roofing Company and Bill are liable in joint and several liability

Rush contracts to build a boat for Sky King at a cost of $40,000.00. The contract allows Sky King to inspect, stop the work, make suggestions or recommendations about details of the work, or prescribe alterations or deviations to the contract. a.) Rush and Sky King's relationship is that of employer and employee because Sky King has the right to prescribe alterations and deviations of the project in the contract. b.) Rush and Sky King's contractual relationship is that of employer and independent contractor. c.) Rush and Sky Kings relationship is that of employer and employee because Sky King has the right to stop the work if they are not satisfied. d.) Rush and Sky King have the relationship of employer and employee because Sky King has significant rights within their relationship to inspect, stop the work, make suggestions about the details of the work, and prescribe alteration or deviations to the contract.

Rush and Sky King's contractual relationship is that of employer and independent contractor.

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 (n) __________. a.) Factor b.) Special agent c.) General agent d.) Broke

Special agent

Bakery company is held liable for damages to an injured child who was struck by a companydelivery truck as the result of the employee-driver's negligence. After the Bakery pays the total damages to the injured party. The Bakery company may do which of the following? a.) The Bakery may sue the employee for breach of the duty to obey instructions. b.) The Bakery may take the money out of the employees wages not to exceed $1,000 per month or 20%, whichever is less. c.) The Bakery may take the money out of the employees wages for up to one year. d.) The Bakery may sue the employee for breach of the duty not to be negligent.

The Bakery may sue the employee for breach of the duty not to be negligent.

What is the status of an agency agreement when a principal files for Chapter 7 bankruptcy? a.) The agency terminates by operation of law 30 days after the trustee takes over the debtor's assets. b.) The agency terminates by operation of law when the court grants the order for relief. c.) The agency terminates by operation of law 90 days after the trustee takes over the debtor's assets. d.) The agency terminates by operation of law 60 days after the trustee takes over the debtor's assets.

The agency terminates by operation of law when the court grants the order for relief.

Sue hired Harry to sell her prized racing filly, YouGoGirl. Harry's commission was to be 20% of the selling price. Before a buyer could be found, YouGoGirl died of an equine virus. What is the status of the agency agreement between Sue and Harry? a.) The agency terminates by operation of law. b.) The agency continues unless is it terminated by the mutual agreement of Sue and Harry. c.) The agency continues unless the principal, Sue, takes a unilateral action to end it. d.) The agency continues unless the agent, Harry, takes a unilateral action to end it.

The agency terminates by operation of law.

Pat hired Mike, a dealer in livestock, to sell his herd of cattle. Mike was to receive a 20 commission on the sale. Before a buyer could be found, the herd had to be destroyed because of an outbreak of mad cow disease. Which statement best describes the status of the agency agreement? a.) The agency was terminated by operation of law b.) The agency was terminated by a unilateral action c.) The agency was terminated by mutual agreement d.) The agency will continue under the same terms when Pat acquires a new herd.

The agency was terminated by operation of law

All of the following will happen if an agent acts outside the scope of his or her authority when negotiating a contract except? a.) The agent loses the right to reimbursement b.) The agent becomes personally liable on the contract to the third party c.) The agent loses the right to indemnification d.) The agent loses the right to waiver

The agent loses the right to waiver

A principal will not have a duty to reimburse an agent if a.) The principal is disclosed b.) The principal is undisclosed c.) The expenses are for food or t ravel d.) The expenses were the result of the agent's negligence

The expenses were the result of the agent's negligence

An agent must obey the principal's instructions in which of the following situations: 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.) The instructions would cause the agent to commit a felony.

The instructions are not in the principal's best interest.

In which of the following situations would an undisclosed principal be liable to the third party on a contract? a.) The agent was acting within the scope of his or her authority. b.) The principal retained the benefits of the contract. c.) The contract negotiated by the agent was not for the agent's personal services. d.) The principal is liable in all of the situations above.

The principal is liable in all of the situations above.

Which of the following is not an element of ratification? a.) The third party has not withdrawn from the contract b.) The principal was allowed to withdraw from the contract c.) The principal was fully disclosed at the time the contract was formed. d.) The principal is aware of all of the terms of the agreement

The principal was allowed to withdraw from the contract

Respondeat superior is a firm of vicarious liability. a.) True b.) False

True

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.) Partially disclosed c.) Transparent d.) Undisclosed

Undisclosed

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.) Undisclosed b.) Transparent c.) Partially disclosed d.) Disclosed

Undisclosed

Which legal principal always imposes punitive damages on a master if the wrongful conduct of the servant justifies punitive damages ? a.) Transferred liability rule b.) Durham rule c.) Complicity rule d.) Vicarious liability rule

Vicarious liability 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 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.) Yes, Parker is liable because he is the agent of an undisclosed principal. c.) No, Parker has no liability because he was acting within the scope of this authority as Local's agent. d.) No, Parker has no liability because agents are not responsible for the torts of the principal.

Yes, Parker is liable because he is the agent of an undisclosed principal.

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. Jim received several dividend checks from his stock broker while he was gone. Peg deposited the checks in her own bank account because her funds were low. Several weeks later she made out a personal check for the amount of the dividends and deposited it into Jim's account. Has Peg breached any agency duties? a.) No, her action made no difference because Jim ended up with the amount due him. b.) No, there was no intent to convert Jim's money. c.) Yes, she breached her duty to account. d.) No, this is a gratuitous agency and her only duty is the duty of loyalty.

Yes, she breached her duty to account.

An agent's actual authority may be a.) Ostensible only b.) Express or Implied c.) Express only d.) Ostensible, Express, or Implied

express or implied

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's 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.) Factor c.) Special agent d.) Broker

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. a.) True b.) False

false

A multiple listing agreement lists real property with several brokers, but only the selling broker earns a commission on the sale. a.) True b.) False

false

A store manager is an example of a special agent. a.) True b.) False

false

Agency agreements must always be in writing. a.) True b.) False

false

An agent operating under a written power of attorney is called an attorney-at-law. a.) True b.) False

false

An agent whose agency appointment has terminated has implied authority to continue to conduct the principal's business until third parties are notified of the termination. a.) True b.) False

false

Apparent authority is created when a third party reasonably believes, based on the agent's conduct, that an unauthorized agent has the authority to act for the principal. a.) True b.) False

false

Assume that you hire an independent contractor to transport hazardous chemicals for your company. If he negligently causes damages to a third part while carrying out the job, you will not be liable because of his status as an independent contractor. a.) True b.) False

false

Employers have greater liability for employee torts in states that have adopted the complicity rule than in those states that follow vicarious liability. a.) True b.) False

false

It is the duty of an agent to notify third parties when his agency is terminated. a.) True b.) False

false

The doctrine of respondeat superior does not apply when the employees are highly trained professionals, such as doctors and airline pilots. a.) True b.) False

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. a.) True b.) False

false

When ratifying a contract, a principal may select which provisions of the contract to accept and which to reject. a.) True b.) False

false

Whether or not a principal has ratified a contract is a question of law to be decided by the judge at trial. a.) True b.) False

false

In some states, a parent-owner is liable for any damages caused by a family member operating the vehicle. This is the __________doctrine. a.) Durham b.) Family car c.) Family negligence d.) In loco parentis

family car

An agent incurs personal liability on a contract with a third party in all of the following situations except. a.) he is an agent for a fully disclosed principal b.) he acts outside the scope of his authority in negotiating the contract c.) he is an agent for a partially disclosed principal d.) he is an agent for an undisclosed principal

he is an agent for a fully disclosed principal

A person who is employed to perform services for another and who is under the other's control and subject to the other's direction is a(n) _____________. a.) Servant/employee b.) Independent contractor c.) Agent d.) Factor

servant/employee

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 agency duty would he most risk violating? a.) The duty of loyalty b.) The duty to account c.) The duty not to be negligent d.) Dual agencies pose no particular problems in carrying out agency duties.

the duty of loyalty

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. a.) True b.) False

true

Agents are personally liable to third parties on contracts when the principal was undisclosed. a.) True b.) False

true

Agents of undisclosed principals are entitled to be indemnified if held personally liable on contracts that were within the scope of their authority. a.) True b.) False

true

An agency will terminate by operation of law if the principal files for Chapter 7 bankruptcy. a.) True b.) False

true

An agent is a fiduciary of the principal. a.) True b.) False

true

An agent who comingles the principal's funds with his or her own violates the duty to account. a.) True b.) False

true

An agent who represents both the buyer and the seller in the purchase of a business is acting as a dual agent. a.) True b.) False

true

An agent will not be indemnified for injuries caused to third parties if the agent's negligence caused the injury. a.) True b.) False

true

An agent's knowledge is imputed to the principal. a.) True b.) False

true

If a principal ratifies the unauthorized act of an agent, he releases the agent from any liability for the unauthorized act. a.) True b.) False

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. a.) True b.) False

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. a.) True b.) False

true

If the principal dies, the agency agreement terminates by operation of law. a.) True b.) False

true

Normally a master is not liable for torts committed by a servant while traveling from his home to the workplace. a.) True b.) False

true

The secret formula for a soft drink is an example of a trade secret. a.) True b.) False

true

To ratify a contract, the principal must have been disclosed at the time the contract was formed a.) True b.) False

true

Under the family-car doctrine, any family member becomes an agent of the parent-owner while the family member is using the car. a.) True b.) False

true

When a principal files for Chapter 7 bankruptcy, all agency appointments end when the court grants an order of relief. a.) True b.) False

true