Business Legal Ch 14

_____________ is the authority given by the principal to the agent.

Actual authority

___________ consists of oral or written instructions given by the principal to an agent.

Express authority

____________ takes place when the principal behaves as if he has the intent of ratifying an unauthorized agreement.

Implied ratification

An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):

a special agent

An agent is trying to sell a house for $100,000 for her principal. The principal will sell the house for as little as $80,000, but wants to get as much as possible. The agent tells her cousin to offer $81,000. The agent's actions are:

a violation of the duty of loyalty

Which of the following is an advantage to having the ability to use agents:

access to the expertise of agents

Fiduciary duties include:

accounting, notification, and performance loyalty and reasonable care

Agency by estoppel means:

actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf

The authority given by the principal to an agent, conferring on the agent the power and right to change the principal's legal status is referred to as:

actual authority

The agent's ability to transact business on behalf of and for the principal depends on whether the agent possesses:

actual authority apparent authority

The duties of a principal to an agent do not include:

allowing the agent "significant discretion"

When you go on vacation you give your neighbor authority to pick up your mail and watch for burglars for you. You tell the neighbor not to go into the house or let anyone else in. A fire on the hills threatens your house. The neighbor goes in to carry out valuables before the house burns. This action is:

an agency through operation of law

A key element of an agency relationship is:

an agent's ability to transact business for the principal

When a principal creates an impression of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal, the agent is said to have:

apparent authority

Express ratification creating an agency by the principal occurs when the principal:

by action shows a clear intent to be bound by unauthorized acts of the agent

Which of the following is NOT a duty owed by the agent to the principal:

compensation

Scott is an agent for Lee and his duties require him to fly to Chicago from Cleveland. Scott gets up late and misses his flight to Chicago so he has to buy a second plane ticket. As principal, Lee:

does not have a duty to reimburse Scott for the second plane ticket because it was Scott's fault he had to buy it

Because of the ______________ an agent may not represent another party whose interests are in conflict with those of the principal.

duty of loyalty

If an agency agreement did not specify how much an agent would be paid for his work, the principal has a ______________ the "customary" amount.

duty to compensate

The principal has a __________ with her agent by performing responsibilities defined in the agreement forming the agency.

duty to cooperate

Insuring an agent against losses suffered during the course of authorized transactions is part of the principal's:

duty to indemnify

The principal is under a ________________ for damages to cover the agent's losses (such as from litigation) suffered while undertaking authorized transactions for the principal.

duty to indemnify

A principal has a _______________ the agent for reasonable expenses incurred in carrying out the duties of the agency.

duty to reimburse

Which of the following is an advantage to having the ability to use agents:

expanded business opportunities

Implied ratification of an agency occurs when the principal:

fails to object to the unauthorized activities of an agent accepts the benefits of an unauthorized agreement with a third party

An agent is a(n) ______________ of the principal, which means that the agent occupies a position of trust, honesty, and confidence for the principal.

fiduciary

If a payment amount is not specified in the agency agreement, a principal's duty to compensate means that the principal must pay the agent:

for the reasonable value of the services provided

A person authorized to execute all regular transactions connected with a business is called a:

general agent

If an agent competes with his principal without the principal's consent:

he is violating his duty of loyalty

Lyle is Thelma's agent. Thelma has made it clear to Lyle that she does not want him to sign the contracts that he negotiates; she retains that power. If, despite Thelma's instructions, Lyle negotiates and signs a contract with Tom committing Thelma to spend thousands of dollars, what will the consequences of Lyle's actions be?

if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible

The power of an agent to do whatever is reasonable and customary to carry out the agency purpose is given by:

implied authority

The principal's duty to reimburse does not cover expenses:

incurred due to the agent's misconduct or negligence

The principal's duty to indemnify the agent means the principal must:

insure the agent against losses suffered during the course of authorized transactions

The buyer for an electronics store is bribed by a supplier to order more of the brand sold by the supplier. This action violates which of the agent's duties?

loyalty

The duty of _________ requires an agent to place the principal's interests before the agent's personal interests or those of any third party:

loyalty

Which of the following is a duty owed by the agent to the principal:

loyalty reasonable care accounting notification

If an agent claims to have authority but in fact has none, the principal is:

not responsible for the agent's dealings with third parties who have no reason to think the agent has authority

For an agent to be a fiduciary means to:

occupy a position of trust, honesty, and confidence with respect to the principal

The scope of an agent's authority is determined from the:

oral or written expressions of the principal principal's conduct customs in the business for which the agent is employed

Through an agency relationship, the agent becomes a representative of the:

principal

In an agency the principal:

provides the agent with authority

Clark, a movie producer, was allowed to work at a movie production company's offices (ITC) out of courtesy. His business card listed the ITC address and his phone calls were handled by ITC staff. In the office, he made a deal to produce a movie for another company. When problems developed and the company, presuming Clark worked for ITC, sued ITC. The court would be likely to hold that ITC:

ratified Clark's actions and so became liable for his actions

When a principal accepts the consequences of the activities of a person who had previously not been the principal's agent, the principal:

ratifies the agency

An alleged principal becomes a real principal by:

ratifying the agreement

The duty of loyalty:

requires an agent to place the principal's interests before the agent's personal interests or those of any third party

The authority given by the principal to an agent, conferring on the agent the power and right to change the principal's legal status is referred to as:

special authority

Which of the following determines the scope of authority given to an agent:

statements of the principal the principal's conduct the trade customs in business

Persons appointed by an agent delegated some authority are known as:

subagents

Implied ratification usually occurs when:

the agent accepts the benefits of the agreement

For an agency to be valid in most states:

the agent must be subject to the principal's control

The law of agency places its primary emphasis on the duties:

the agent owes to the principal

Actual authority give the agent:

the power and right to change the principal's legal status

Implied authority consists of:

the power to do whatever is reasonable and customary to carry out the agency purpose

To establish an agency relationship:

the principal and agent must agree to form an agency

Apparent authority arises when:

the principal creates an appearance of authority in an agent that leads a third party to conclude reasonably that the agent has authority to act for the principal

A principal's ratification is:

the principal's acceptance of responsibility for an agent's activities

An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following:

third parties

A person designated by a principal to do all acts that can be legally delegated to an agent is a:

universal agent

Someone designated to do all acts that can be legally granted to an agent is called a(n):

universal agent

Express authority consists of the agent's:

written or oral instructions from principal to agent