Ch. 32
Laura and Juan have an agreement where Laura will sell Juan's baseball card collection while he is out of the country. Juan does not give any specific instructions on how this should be done. To fulfill her duty of obedience, Laura must: a. act in good faith. b. seek out instructions from Juan's closest relative. c. not perform on the contract and is excused from performance. d. request specific instructions in writing
a. act in good faith.
Napoleon owns Napoleon's Construction and agrees to renovate Mrs. Cernan's bathroom. She will provide him with the plans, and then he will do the work in the manner that he determines is most cost effective and appropriate. Napoleon is likely to be classified as: a. an independent contractor. b. a partially disclosed principal. c. a disclosed principal. d. an employee.
a. an independent contractor.
Justin, as an agent for Jessica, receives an earnest money check from a buyer related to the sale of Jessica's property. Justin's receipt of the check creates a(n): a. constructive trust. b. indemnification. c. accounting. d. avoidance.
a. constructive trust.
Sam goes out shopping and, using his wife Juanita's credit card, buys $221 worth of groceries. Under agency law, Juanita will probably be deemed: a. liable for the purchase, based on the creation of an agency by operation of law. b. not liable for the purchase, based on Sam's duty of performance. c. not liable for the purchase, based on Sam's lack of a power of attorney. d. liable for the purchase because Sam is her employee.
a. liable for the purchase, based on the creation of an agency by operation of law.
Rondi holds herself out as possessing special accounting skills. As an agent, she must exercise the degree of skill or care expected of a. a person having those skills. b. a reasonable person. c. the principal. d. an average, unskilled person.
a. a person having those skills
Lucille is married to Marcus. Lucille buys food for their children's lunches and charges the cost to Marcus's account. This is a. an agency by operation of law. b. an agency by ratification. c. an agency by estoppel. d. not an agency relationship.
a. an agency by operation of law.
Dimitri, a certified public accountant and an investor, and Elinor, an insurance salesperson and a realtor, may create an agency relationship for a. any legal purpose. b. no purpose. c. a business purpose only. d. any legal or illegal purpose.
a. any legal purpose.
Business Travelers Hotel Corporation hires Conrad, a real estate agent, to locate hotel properties for the company. Conrad learns of a hotel available for $3.2 million, informs Business Travelers, and makes an offer of $2.9 million on Business Travelers's instruction. The offer is rejected. Conrad a. complied with all of the agent's duties to the principal. b. breached the agent's fiduciary duties to the principal. c. did not act strictly for the benefit of the principal. d. failed to exercise the degree of skill required of an agent
a. complied with all of the agent's duties to the principal.
Home-Baked Bread Company hires Ike to sell the company's products in a certain area. Home-Baked Bread agrees to pay Ike a salary, plus commission, for a trial period. They also agree that Ike can sell using any methods and during any hours that seem appropriate. The key factor in whether Ike is Home-Baked Bread's employee is a. the control Home-Baked Bread has over the details of the work. b. the amount of Ike's salary. c. the size of Ike's sales area. d. the length of the trial period.
a. the control Home-Baked Bread has over the details of the work.
Dara gives her agent, Marla, money to purchase a new commercial oven. Marla takes the money and deposits it into her personal checking account. Marla then accidentally spends some of Dara's money. Marla has violated her duty of: a. loyalty. b. accounting. c. cooperation. d. payment.
b. accounting.
Whitney works at home making unique children's clothes. Liam buys Whitney's clothes to sell in his store. With respect to Whitney's legal relationship to Liam, she is probably: a. a principal. b. an independent contractor. c. an agent by operation of law. d. an employee.
b. an independent contractor.
Charlie tells Jamal that Marisol has agreed to allow him to sell her racing bicycle. Marisol is present at the time, hears the conversation and says nothing. Jamal agrees with Charlie to buy Marisol's bike. Marisol then refuses to sell the bicycle. Marisol claims that she is not bound by the agreement formed by Charlie and Jamal because Charlie is not her agent. Marisol likely is: a. bound by the contract under a theory of agency by operation of law. b. bound by the contract under a theory of agency by estoppel. c. not bound by the contract because she did not have an agency agreement with Charlie. d. not bound by the contract because of a rescission.
b. bound by the contract under a theory of agency by estoppel
Judy's cousin Skip tells Judy that he will sell her car for her when she leaves the country for a church mission for two years. Skip tells her that he will do it for no charge to her. While Judy is gone, Skip forgets about the agreement and does not attempt to sell the car. Judy: a. can sue Skip for breach of contract for failure to perform. b. cannot recover anything from Skip because he had no duty to perform since he was a gratuitous agent. c. cannot sue Skip because they are cousins. d. can sue Skip under tort law because he was negligent in not selling the car.
b. cannot recover anything from Skip because he had no duty to perform since he was a gratuitous agent.
Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf. In this relationship, Jewelry & Coin is a. an agent. b. a principal. c. an employee. d. an independent contractor.
b. a principal.
Ralphy is a minor. In most states, Ralphy may not be a. an employee. b. a principal. c. an agent. d. an independent contractor.
b. a principal.
Watercraft, Inc., employs Vladimir as a sales agent for a trial period. At the end of the period, Watercraft and Vladimir disagree on the amount of the commissions Vladimir is due for sales that he made. Watercraft, Inc. may demand a. nothing. b. an accounting. c. a constructive trust. d. specific performance.
b. an accounting.
Faye works as an administrator and receptionist for Garage Door Store. The store withholds federal taxes from Faye's pay, and controls the methods and details of the performance of her work. Faye is not authorized to modify the prices or other terms of a sale at the store. Homer installs Garage Door products at the buyers' locations. Refer to Fact Pattern 32-2. Garage Door hires Janitorial Service Company to clean the store. Garage Door gives Janitorial Service instructions as to what needs to be cleaned and when. With respect to Garage Door, Janitorial Service is a. an employee and agent. b. an independent contractor. c. an employee only. d. an principal.
b. an independent contractor.
Investment Holdings Corporation hires Jeri, a business appraiser, to locate investment possibilities for Investment Holdings. Jeri learns of a salsa and hot sauce manufacturing company available for a reasonable price, but neglects to tell Investment Holdings. Most likely, Jeri a. assumed that the information was confidential. b. breached the agent's fiduciary duties to the principal. c. failed to take advantage of a business opportunity. d. did nothing wrong
b. breached the agent's fiduciary duties to the principal.
Eli and Marilyn ask Gracie to be the administrator of their will and the guardian of their children if they pass away before their children reach the age of majority. Gracie agrees. Fiduciary relationships such as this one: a. are legal only between family members. b. typically exist only between employees in government agencies. c. involve a high degree of trust and confidence. d. allow the parties to legally avoid their obligations to one another.
c. involve a high degree of trust and confidence.
Sarah has to move from the East Coast to the West Coast for her job. Elmo agrees to act as Sarah's agent to sell her New York condo. As her agent, Elmo owes Sarah all of the following duties except: a. performance. b. notification. c. payment. d. loyalty.
c. payment.
Mitchell hires Christina to go from Florida to New York and negotiate a contract for his company. He gives her specific instructions on what should be in the contract, and a written letter that gives her authority to sign on his behalf. Christina books a plane ticket, flies to New York, hires a cab, and successfully negotiates the contract. If Christina is paid for the plane ticket and cab fare, as well as meals while in New York, it is most likely under the principal's duty of: a. travel coverage. b. cooperation. c. reimbursement. d. compensation.
c. reimbursement.
Robert attempts to avoid paying Andrew a commission on the sale of his house to a buyer procured by Andrew. He does so by waiting until after the listing agreement has expired. Andrew finds out about this after Robert sells his house. Andrew can: a. sue Robert for indemnification. b. sue Robert for avoidance. c. sue Robert for breach of contract. d. sue Robert for a constructive trust.
c. sue Robert for breach of contract.
Jill agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jill to so act. This describes a relationship between a. a work for hire and a worker. b. an employee and an agent. c. a principal and an agent. d. an employer and an independent contractor.
c. a principal and an agent.
Faye works as an administrator and receptionist for Garage Door Store. The store withholds federal taxes from Faye's pay, and controls the methods and details of the performance of her work. Faye is not authorized to modify the prices or other terms of a sale at the store. Homer installs Garage Door products at the buyers' locations. Refer to Fact Pattern 32-2. Garage Door authorizes Homer to sell garage door upgrades and accessories at the buyers' locations at prices that Homer negotiates with those buyers. With respect to sales at those locations, Homer is a. an employee only. b. a principal. c. an employee and agent. d. an independent contractor.
c. an employee and agent.
Reynaldo is a delivery driver for Southeast Asian Noodle Company. Reynaldo follows detailed instructions of the company in carrying out his work. Reynaldo is a. a principal. b. an independent contractor. c. an employee. d. an employer.
c. an employee.
Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales's right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of a. nullification. b. termination. c. avoidance. d. indemnification.
c. avoidance.
Nadine and Orin work at Pumps & Pipes Inc. Nadine is a sales representative who works with Pumps's customers, including contractors, government agencies, farmers, and others, as well as individual consumers. Pumps closely supervises all of its sales reps, and dictates their schedules. Orin is an engineer who works in Pumps's water treatment plant, but does not deal with third parties. Refer to Fact Pattern 32-1. With respect to third parties, Orin is Pumps's a. employee and agent. b. employee, agent, and independent contractor. c. employee but not agent. d. independent contractor.
c. employee but not agent.
Dakota Energy Company employs Evan to negotiate the purchase of mineral rights for future mining projects. Evan secretly buys some of the property and sells it to Dakota at a profit. Evan has breached a. no duty. b. the agent's duty of accounting. c. the agent's duty of loyalty. d. the principal's duty of compensation.
c. the agent's duty of loyalty.
Jamel hires independent contractor Stevenson to create users' manuals for Jamel's small appliances. Jamel: a. will violate Stevenson's rights if he requires a work for hire document. b. automatically owns the copyright to the manuals because he paid Stevenson to create them. c. cannot own the copyright to the manuals because Stevenson created them. d. can create an agreement in writing that designates Stevenson's work as work for hire.
d. can create an agreement in writing that designates Stevenson's work as work for hire.
Kris represents Josh in the sale of his house as his real estate agent. Kris is entitled to: a. confidentiality. b. loyalty. c. daily updates. d. compensation.
d. compensation.
Cheryl knows that Jake is looking to buy a new scooter. She sees one that would be perfect and negotiates with the seller on Jake's behalf. She signs a contract for the scooter using her name but clearly indicating that she is working for Jake. She actually is not. When Jake sees the scooter, he loves it and agrees to pay the contract price. If agency exists in this situation, it is agency by: a. agreement. b. operation of law. c. estoppel. d. ratification.
d. ratification.
Emery is a corporate officer of Frakking Mining Corporation. With respect to binding Frakking Mining to contracts, Emery is a. an independent contractor and does not have the authority. b. not an agent, an employee, or an independent contractor but does have the authority. c. an employee and does not have the authority. d. an agent and has the authority
d. an agent and has the authority
Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to hosts of banquets, corporate meetings, concerts, weddings, and other events. In this capacity, Rosario is a. an employee. b. a principal. c. an agent. d. an independent contractor.
d. an independent contractor.
Global Games Corporation employs Heidi as an agent. Global Games gives Heidi an exclusive territory in which to sell its products. Global Games cannot compete with Heidi in that territory under the duty of a. reimbursement. b. indemnification. c. compensation. d. cooperation
d. cooperation
John contracts with Kelly to buy a certain number of cattle for Kelly's Circle K ranch. John makes a deal with Lawson, the owner of a local herd, and makes a down payment. Kelly fails to pay the rest of the price. Lawson sues John for breach of contract. John's right to hold Kelly liable for any damages that he has to pay is the right of a. compensation. b. reimbursement. c. cooperation. d. indemnification.
d. indemnification.
Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a contract on her behalf on Tuesday. Largo has breached a. the duty of loyalty. b. the duty of performance. c. the duty of obedience. d. no duty.
d. no duty.
Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires Bernard to order exotic flowers for its arrangements. Bernard does not examine the quality of the flowers he orders on behalf of Custom Floral. Bernard has breached a. the duty of loyalty. b. no duty. c. the duty of notification. d. the duty of performance
d. the duty of performance
Quince owns a used-car lot where Ray works as a salesperson. Quince tells Ray not to make any warranties for the cars. To make a sale to Sylvia, however, Ray adds a 50,000-mile warranty. Later, Sylvia sues Quince for breach of warranty. Quince's right to hold Ray liable for any damages arises from the following a. avoidance. b. cooperation. c. reimbursement. d. the unauthorized act.
d. the unauthorized act.