Ch 33: Agency Formation & Duties

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Which of the following is the most basic type of agency relationship? a. Principal-agent b. Employer-employee c. Employer-independent contractor d. Agent-incidental beneficiary

a. Principal-agent

Which of the following is not a type of business relationship to which agency laws are relevant? a. Employer-employee b. Employee-independent contractor c. Principal-agent d. Agent-incidental beneficiary

d. Agent-incidental beneficiary

When an agent breaches an agency contract or his fiduciary duties, which of the following remedies may the principal may use to nullify at her discretion any contract the agent negotiated? a. The right to compensation b. The right to indemnification c. The invocation of a constructive trust d. The right of avoidance

d. The right of avoidance

When an employer hires an employee to enter into contracts on its behalf, this is known as a(n) ______ relationship. a. delegator-delegatee b. third-party beneficiary c. employer-independent contractor d. principal-agent

d. principal-agent

The law typically assumes that the principal is aware of all information revealed to the agent, regardless of whether the agent shares it with the principal. true false

true Reason: The law typically assumes that the principal is aware of all information revealed to the agent, regardless of whether the agent shares it with the principal.

The remedies available to an agent when a principal violates an agency agreement include the standard tort and contract remedies. true false

true Reason: The standard tort and contract remedies are among the remedies available to an agent when a principal violates an agency agreement.

An employer can gain ownership of the work of an independent contractor only by an agreement between both parties that a specific work is a work for hire. true false

true Reason: Generally, an independent contractor maintains ownership of copyrights for his or her work product. Only by an agreement of both parties that a specific work is a work for hire may an employer gain copyright ownership of the work of an independent contractor.

A(n) ______ agent is one who is not paid for his or her services. a. express b. professional c. formal d. gratuitous

d. gratuitous

Courts suggest that the most important duty that an agent owes to a principal is the duty of: ______. a. reimbursement b. notification c. ratification d. loyalty

d. loyalty

Garth hired Marco to sell his house. If Garth refuses to allow Marco to show his house to interested buyers, Garth has failed in his duty of: ______. a. reimbursement b. loyalty c. cooperation d. indemnification

c. cooperation

Which of the following is not a recognized form of agency authority? a. Agency by revocation b. Apparent agency c. Expressed agency d. Implied authority

a. Agency by revocation

Select all that apply Identify the main remedies a principal has for an agent's breach of fiduciary duties in a principal-agent agency relationship. a. Constructive trust b. Indemnification c. Avoidance d. Punitive damages

a. Constructive trust b. Indemnification c. Avoidance

Liz worked on commission at a local store. The commission that was to be paid to a salesperson at the store was 10 percent of the total sales made by that person. Liz looked at her paycheck and noticed that the amount of money was far less than she had anticipated. Liz should do which of the following? a. Request that her employer obtain an auditor to perform an audit and determine whether she was, in fact, paid the proper amount for her sales b. Demand that her employer pay the proper commissions and pay her punitive damages c. Demand that her employer pay the proper commissions and pay her damages for intentional infliction of emotional distress d. Sue her employer immediately without demanding an accounting

a. Request that her employer obtain an auditor to perform an audit and determine whether she was, in fact, paid the proper amount for her sales

A third party who believes that an agent is acting with actual or apparent authority may do which of the following? a. Sue the principal for any breach of contract b. Sue the principal for punitive damages c. Sue the principal for subornation d. Sue the principal for lack of loyalty

a. Sue the principal for any breach of contract

Which of the following is a recognized source for the definition of agency? a. The Restatement of Agency b. The Uniform Commercial Code c. The Uniform Contracts Code d. The Restatement of Contracts

a. The Restatement of Agency

Tom hired Taylor to rake his leaves. When Taylor finished, Tom thanked him and shook his hand. Since nothing was said between the two parties about payment, agency theory indicates that Tom owes Taylor: ______. a. the customary fee for Taylor's work b. nothing c. triple the customary fee for Taylor's work, as punitive damages d. double the customary fee for Taylor's work, as punitive damages

a. the customary fee for Taylor's work

If the employer has the right to substantially control the worker's day-to-day operations, the worker is generally considered a(n): ______. a. incidental beneficiary b. employee c. third-party beneficiary d. independent contractor

b. employee

A principal always has the right of ______, so agents may not use the agency relationship to obtain goods or property for themselves if the principal desired to obtain the same goods or property. a. confidentiality b. ratification c. parley d. first refusal

d. first refusal

If an agent fails to communicate to the principal any offers from third parties or any information that the agent thinks could be important to the principal, that agent has failed in the duty of: ______. a. indemnification b. loyalty c. compensation d. notification

d. notification

The duty that requires an agent to perform his or her duties as required by the agency agreement is known as the duty of: =______. a. reimbursement b. indemnification c. loyalty d. performance

d. performance

In an agency relationship, the person who hires the agent is known as the: ______. a. agent b. third-party beneficiary c. attorney-in-fact d. principal

d. principal

Agency relationships are for the benefit of: ______. a. the agent b. stakeholders c. incidental beneficiaries d. the principal

d. the principal

An agency relationship can be formed through the implied ______ of the parties. a. conduct b. authorization c. ratification d. novation

a. conduct

In an agency by estoppel, the important factor is whether the principal acts to: ______. a. create the impression that the agent has the authority to act on behalf of the principal b. discourage the impression that an agency relationship exists between the parties c. create the impression that an incidental beneficiary will receive a direct contractual benefit via the agent d. articulate that there is an express agency agreement

a. create the impression that the agent has the authority to act on behalf of the principal

When parties form an agency relationship through a written or an oral agreement, this is known as an ______ agency. a. expressed b. equitable c. apparent d. implied

a. expressed

When an agent is given broad authority to sign legal documents for the principal, this is known as a(n): ______. a. general power of attorney b. implied power of attorney c. specific power of attorney d. expressed agency arrangement

a. general power of attorney

A(n) ______ agent is one who acts without consideration. a. gratuitous b. formal c. express d. professional

a. gratuitous

Gabriel sent Arthur on a trip to San Diego to purchase some antique furniture that Gabriel planned to resell. Arthur paid for his own airline ticket, lodging, and meals. Is Gabriel required to reimburse Arthur for his trip expenses? a. No, because Gabriel is not required to pay anyone for their personal travel expenses. b. No, because even though the trip was for business purposes, all travel expenses must be paid by the agent. c. Yes, because Arthur is Gabriel's agent and as such, he is entitled to reimbursement. d. Yes, because Arthur is Gabriel's agent and as such, he is entitled to rescission.

c. Yes, because Arthur is Gabriel's agent and as such, he is entitled to reimbursement.

An agency relationship, like a contract, can only be made for: ______. a. business purposes b. buying and selling goods c. a lawful purpose d. the benefit of a third-party beneficiary or an incidental beneficiary

c. a lawful purpose

The principal has the duty to indemnify or reimburse the agent for any losses the agent incurs: ______. a. any time the agent is acting outside the scope of his or her authority b. for any activity the agent carries out, regardless of whether performance of the activity is in accordance with the principal's express instructions c. if the agent loses any money due to the agent's fault d. while working within the scope of authority on the principal's behalf

d. while working within the scope of authority on the principal's behalf

A principal's obligation to pay an agent for his or her services is called the ______________ ________________ ________________

duty to compensate

Employers are generally liable in tort for the actions of their employees and independent contractors. true false

false Reason: Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors.

Under the duty of obedience, the agent must follow the lawful or unlawful instruction and direction of the principal. true false

false Reason: Under the duty of obedience, the agent must follow the lawful instruction and direction of the principal. If the principal gives unlawful or unethical instructions, the agent is not required to behave in accordance with them.

A person who has the duty to act primarily for the benefit of another person is known as a(n) ____________________.

fiduciary

Agency relationships are: ______. a. consensual b. void per se c. illusory d. voidable per se

a. consensual

Peggy made a contract on behalf of Kay to purchase some sports equipment for Kay. Kay had never formally entered into an agency agreement with Peggy, but Peggy claimed she was the agent for Kay. If Peggy negotiates an order for the sports equipment, shows that agreement to Kay, and Kay signs the contract, Kay and Peggy have: ______. a. an agency relationship by ratification b. an agency relationship by estoppel c. no agency relationship d. an agency relationship by apparent authority

an agency relationship by ratification

Agency by implied authority cannot conflict with agency by: ______. a. equitable authority b. express authority c. default d. estoppel

b. express authority

Bobby and Dustin entered into an agency agreement using a written agreement. This kind of agency relationship is known as an: ______. a. agency by estoppel b. expressed agency c. implied agency d. agency by ratification

b. expressed agency

Employees are ______ of the employer. a. third-party beneficiaries b. subrogees c. agents d. independent contractors

c. agents

Agency law is primarily ______ law. a. uniform b. state c. Uniform Commercial Code (UCC) d. federal

b. state

In an agency relationship, the agent is authorized to act for and on behalf of: ______. a. an incidental beneficiary b. the principal c. another agent d. a third party

b. the principal

Which are the following remedies are potentially available when a principal violates agency agreement? a. Neither tort nor contract remedies b. Tort, but not contract, remedies c. Contract, but not tort, remedies d. Both tort and contract remedies

d. Both tort and contract remedies

Which of the following are agents of an employer? a. Independent contractors b. Principals c. Incidental beneficiaries d. Employees

d. Employees

Which of the following is not a recognized component of an agency relationship? a. Confidence b. Good faith c. Trust d. Subrogation

d. Subrogation

Providing safe working conditions is: -_____. a. not a duty of the principal or the agent b. not a duty of the principal to the agent c. a duty of both the principal and the agent d. a duty of the principal to the agent

d. a duty of the principal to the agent

An agency relationship is a(n) ______ relationship. a. third-party beneficiary b. equitable c. incidental beneficiary d. fiduciary

d. fiduciary

Agents who work on commission have a right to demand a(n) ______ of funds. a. revocation b. accounting c. subrogation d. ratification

b. accounting

Which of the following is the most important factor in deciding whether a person is an employee or an independent contractor? a. The degree of control the employer has over the individual's work b. Whether the person has his or her own tools or has to use the employer's tools c. Whether the person works during the week or on weekends d. Whether the person has high-level skills or low-level skills

a. The degree of control the employer has over the individual's work

When an agent breaches an agency contract or his fiduciary duties, which of the following remedies may the principal may use to nullify at her discretion any contract the agent negotiated? a. The right of avoidance b. The right to compensation c. The right to indemnification d. The invocation of a constructive trust

a. The right of avoidance

Generally, an employer is liable for which of the following? a. The torts of its employees b. The employee benefits of its independent contractors c. The unemployment insurance premiums of its independent contractors d. The worker's compensation insurance premiums of its independent contractors

a. The torts of its employees

Which of the following is correct regarding agency relationships? a. They can be formed by formal written contracts. b. An individual who does not have contractual capacity can hire an agent to make contracts on his or her behalf. c. They cannot be formed by informal oral agreements. d. They can be created for an unlawful purpose.

a. They can be formed by formal written contracts.

Which of the following is correct regarding an agent's rights and remedies against a principal? a. While agency relationships are intended to benefit the principal, agents are not without rights and remedies. b. Since agency relationships are intended to benefit the principal, agents have remedies but are without rights. c. Since agency relationships are intended to benefit the agent, agents are not without rights and remedies. d. Since agency relationships are intended to benefit the principal, agents have rights but are without remedies.

a. While agency relationships are intended to benefit the principal, agents are not without rights and remedies.

Sally was the agent of Joe, a freelance writer. It was her task to find writing assignments for Joe at various magazines and newspapers. Sally was authorized to form contracts with these outlets and on one particular occasion, she made a lucrative deal with a local newspaper. She showed Joe the contract, but Joe was so busy that he forgot to write the article. The newspaper was so angry that it sued Sally for the losses they incurred as a result of Joe's negligence. Does Joe have a duty to indemnify Sally for these losses? a. Yes, because Sally was acting within the scope of her authority and it was Joe's fault for failing to submit the assignment. b. No, because even though Sally was working within the scope of her authority, she was the one who made the contract, not Joe. c. No, because Sally should have known that Joe would forget the assignment. d. Yes, because Sally was not responsible for Joe forgetting the assignment.

a. Yes, because Sally was acting within the scope of her authority and it was Joe's fault for failing to submit the assignment.

Kyle is on the faculty of a major university. He was directed by his dean to travel to a conference and interview possible candidates for various faculty positions. When Kyle returned, his dean demanded the receipts for his trip. The dean is allowed to request this information and Kyle must comply under the duty of: ______. a. accounting b. performance c. indemnification d. loyalty

a. accounting

If the Internal Revenue Service (IRS) determines that an independent contractor is really an employee, the employer will be liable for: ______. a. all applicable taxes, such as Social Security and unemployment taxes b. the fee associated with changing the status of that person to employee c. a fine to be determined on a case-by-case basis by the IRS d. all applicable back pay that is due the independent contractor

a. all applicable taxes, such as Social Security and unemployment taxes

If the agent breaches his or her duties to the principal and a third party sues the principal for damages, the agent: ______. a. can be sued by the principal for tort and contract damages b. cannot be liable for any loss by the principal, since the principal has a duty of loyalty to the agent c. is entitled to either qualified or absolute immunity, depending on whether the purpose of the agency was commercial or non-commercial d. cannot be sued, since the agent has been indemnified against loss

a. can be sued by the principal for tort and contract damages

A principal must authorize the power of attorney while he or she is: ______. a. competent b. in the physical presence of at least three disinterested witnesses c. in the physical presence of at least two disinterested witnesses d. in the physical presence of a state district court judge

a. competent

An agency relationship that is formed through the conduct of the parties is known as an agency by ______ authority. a. implied b. apparent c. gratuitous d. express

a. implied

A principal has the duty of reimbursement and: ______. a. indemnification of the agent b. rescission of the agency contract c. professional certification of the agent d. revocation of the agency contract

a. indemnification of the agent

In a principal-agent relationship, the duty of loyalty requires that the agent: ______. a. keep confidential any information about the principal b. communicate any information he or she thinks could be important to the principal c. perform the duties as specified in the agency agreement d. keep an accurate account of all financial transactions made on the behalf of the principal.

a. keep confidential any information about the principal

The principal's duty ______ means to assist the agent in the performance of his or her duties. a. of cooperation b. to ratify the contract c. of loyalty d. of notification

a. of cooperation

If a contract exists and the principal agrees to certain conditions but fails to perform them, the agent may seek court assistance in forcing the principal to: ______. a. perform the contract as specified b. create another contract with the agent c. pay punitive damages to the agent d. terminate the agency relationship

a. perform the contract as specified

An agency by agreement that gives an agent the authority to sign legal documents on behalf of the principal is known as a power of: ______. a. representation b. attorney c. principal d. fiduciary

b. attorney

ACME Construction Company hired Janelle as a clerical worker. Janelle began to cough and have headaches during work hours, and it was discovered that her symptoms were caused by various toxic substances that were present at the company's facility. ACME Construction Company has breached its duty: ______. a. to provide safe working conditions b. of loyalty c. to indemnify its workers if they are working within the course and scope of their employment d. of reimbursement for all of Janelle's medical costs

a. to provide safe working conditions

Suppose an agent negotiates a contract on behalf of a principal. The contract is breached through the agent's negligence, and the principal is then sued by the third party. The principal can sue the agent: ______. a. to recover the amount assessed to the third party b. only for the court costs involved in the third party's litigation against the principal c. for any property the agent acquired during the agency relationship d. for any and all monies provided to the agent during the agency relationship

a. to recover the amount assessed to the third party

Which of the following is required for agency by estoppel? a. A reasonable belief by the agent than an agency relationship existed b. A reasonable belief by the third party that an agency relationship existed c. A reasonable belief by the principal that an agency relationship existed d. Proof beyond reasonable doubt that an agency relationship existed

b. A reasonable belief by the third party that an agency relationship existed

Select all that apply Which of the following are types of business agency relationships? a. Payor-payee b. Employer-employee c. Offeror-offeree d. Employer-independent contractor e. Principal-agent

b. Employer-employee d. Employer-independent contractor e. Principal-agent

Select all that apply Which of the following are correct statements regarding a durable power of attorney? a. It is no longer valid after the principal's subsequent incapacity. b. It becomes active only after a principal becomes incapacitated in any matter. c. It can be enacted by the principal after he or she becomes incompetent. d. It can be enacted preemptively by the principal.

b. It becomes active only after a principal becomes incapacitated in any matter. d. It can be enacted preemptively by the principal.

Donny was Sara's employee. Sara had provided a computer tablet for Donny to use during his work activities. Donny left his employment with Sara to pursue another job. Does the tablet belong to Donny or Sara? a. It belongs to Donny, since Donny was given the tablet by Sara and therefore, according to common law, it belongs to Donny. b. It belongs to Sara, since she was the principal and the principal owns anything the agent may possess through the agency relationship. c. It belongs to Sara, since she purchased it before Donny became her employee. d. It belongs to Donny, since Donny was using the tablet in performing his work activities and therefore, Donny gets to keep it when he leaves.

b. It belongs to Sara, since she was the principal and the principal owns anything the agent may possess through the agency relationship.

Simon hired Becky as his agent. Becky's responsibilities included making real estate contracts on behalf of Simon. Which of the following is correct regarding the agency agreement between Simon and Becky? a. It may be either a written or an oral agreement. b. It must be in writing. c. It must be an oral agreement. d. It must be approved by a state district court judge.

b. It must be in writing.

If a principal fails to fulfill his or her duties to the agent, that provides the basis for: ______. a. only a tort action against the principal b. a tort or contract action against the principal c. only a contract action against the principal d. a criminal action against the principal

b. a tort or contract action against the principal

Dee works for a software development company. She creates software codes that adhere to specific standards set by the company. She has to go to her office for 9 hours every day and is expected to follow the company's policies and code of conduct. She receives a fixed pay that meets industry standards and she is eligible for all benefits that a full-time worker at a company receives. The relationship between Dee and the company is best described as a(n): ______. a. principal-agent relationship b. employer-employee relationship c. employer-independent contractor relationship d. agency by estoppel

b. employer-employee relationship

To conduct business more effectively around the world, businesses will hire agents from the host country to: ______. a. immunize them from tort liability b. help guide the business with respect to local laws and customs c. offer a goodwill gesture to the host country d. immunize them from contract liability

b. help guide the business with respect to local laws and customs

When an agent is given the power of attorney, the agreement: ______. a. is automatically considered invalid if the principal regains capacity b. must be in writing c. is valid if it is oral d. must be expressly ratified by a state superior court judge

b. must be in writing

An agency by ratification is made when a third party reasonably believes that the "agent" is acting on behalf of the principal and that the principal accepts the acts of the agent. Additionally, the principal must know all the material facts regarding the contract and the principal must: ______. a. announce to the third party that the agency relationship exists b. ratify the entirety of the agent's act c. be present when the terms of the contract are formalized in writing d. ratify at least part of the agent's act

b. ratify the entirety of the agent's act

Regarding an apparent agency, if the principal attempts to deny that an agency relationship existed, the third party must demonstrate that he or she: ______. a. was involved in previous litigation in which the judge and/or jury had determined that an agency relationship existed b. reasonably believed, on the basis of the principal's conduct, that the agency relationship existed c. was expressly informed by the principal that the agency relationship existed d. acted as if the relationship was an express agency

b. reasonably believed, on the basis of the principal's conduct, that the agency relationship existed

If there is no agency agreement or the contract is for personal services and the principal fails to perform as agreed, the agent may: ______. a. not recover anything without a contract b. recover for services rendered and future damages c. only force the employer to perform any implied duties that existed up until the time the agent filed an action with the court d. have the court force the principal to perform his or her duties as understood through the conduct of the parties

b. recover for services rendered and future damages

The law typically assumes that a principal is aware of all of the information that: ______. a. the third-party beneficiary knew b. was revealed to the agent c. the incidental beneficiary knew d. was either revealed to the agent or should have been revealed to the agent

b. was revealed to the agent

Agency agreements usually do not need to be in writing unless the agent: ______. a. does not have the contractual capacity to understand an oral agreement b. will enter into a contract that the statute of frauds requires to be in writing c. will enter into any contract d. is under the age of majority

b. will enter into a contract that the statute of frauds requires to be in writing

If an agent fails in his or her duties to the principal, that failure provides the basis for which of the following? a. Indemnification of the agent b. Ratification of the agent c. A tort or contract action against the agent d. Reimbursement of the agent for any adverse action initiated by a third party

c. A tort or contract action against the agent

Which of the following is a recognized form of agency authority? a. Symbolic agency b. Constructive agency c. Agency by agreement d. Agency by rescission

c. Agency by agreement

Which of the following is not a remedy or right available to an agent? a. Tort b. Demand for an accounting c. Demand for rehabilitation d. Contract

c. Demand for rehabilitation

Which of the following is correct regarding agency law? a. It is primarily state law but is uniform from state to state, since every state has adopted the Uniform Agency Code (UAC). b. It is primarily federal law but can vary from state to state. c. It is primarily state law and can vary from state to state. d. It is primarily state law but is uniform from state to state, since every state has adopted the Uniform Commercial Code (UCC).

c. It is primarily state law and can vary from state to state.

Cheryl is 16 years old. Can she hire Jerry, a 20-year-old, as an agent to make contracts on her behalf? a. Yes, since there are no age limitations regarding the ability to hire an agent. b. No, because Jerry is too young to act as an agent. c. No, because Cheryl is a minor and thus cannot hire an agent. d. Yes, since Cheryl is 16 years old and therefore over the legal age for hiring an agent.

c. No, because Cheryl is a minor and thus cannot hire an agent.

Which federal agency is particularly interested in determining whether workers are employees or independent contractors? a. The FTC b. The SEC c. The IRS d. The FBI

c. The IRS

Which of the following laws is consistent with the principals' duty to provide safe working conditions for the agent? a. The Securities Exchange Act b. The Securities Act c. The Occupational Safety and Health Act d. The Fair Labor Standards Act

c. The Occupational Safety and Health Act

Gloria entered a contract with a fencing company. The company saw that this particular job was going to require more workers, so the company hired more workers from another fencing company to help with the job. The fencing company failed to pay the extra workers for their work. Who is liable for paying the extra workers? a. The answer is uncertain, since a court would have to determine who is liable for paying them. b. Gloria, since they are working on her job c. The fencing company d. The other fencing company that actually employs these workers

c. The fencing company

Which of the following is incorrect regarding the employer-employee relationship? a. Generally, all employees are considered agents of their employer. b. Not all agents are employees. c. There is no legal distinction between the employer-employee relationship and the employer-independent contractor relationship. d. Generally, even employees who are not legally authorized to enter into contracts binding their employer or to interact with third parties are considered agents of their employer.

c. There is no legal distinction between the employer-employee relationship and the employer-independent contractor relationship.

Agency law is especially important for: ______. a. multinational corporations doing business domestically b. closely-held corporations c. United States firms doing business globally d. corporations doing business locally

c. United States firms doing business globally

When may a principal use the right of avoidance to nullify, at his or her discretion, any contract the agent negotiated? a. When the agent illegally benefits from the agency agreement b. When the principal is sued by a third party because of the agent's negligence c. When the agent breaches his or her fiduciary duties d. When the agent obtains and retains benefits acquired through the agency

c. When the agent breaches his or her fiduciary duties

A(n) ______ is defined as the fiduciary relationship that results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act. a. third-party beneficiary contract b. independent contractor agreement c. agency d. novation

c. agency

Powers of ______ can be given for business and health care purposes. a. representation b. promissory estoppel c. attorney d. fiduciary

c. attorney

If the agent breaches his or her duties to the principal, the principal: ______. a. must honor the agency relationship until the court officially declares termination of the agency relationship b. can do nothing until the agent is served with process in litigation c. can terminate his or her relationship with the agent and seek remedies d. can terminate his or her relationship with the agent only

c. can terminate his or her relationship with the agent and seek remedies

Whenever a duty is imposed on the principal, a(n) ______ right exists for the agent. a. subrogation b. equitable c. corresponding d. subordinate

c. corresponding

Ted hired three men from the Trim-a-Tree Company to take a large, dead tree down in his back yard. The men came to Ted's house with their own tools and proceeded to cut the tree down. The relationship between Ted and the men he hired is: ______. a. employer-employee b. agent-third party beneficiary c. employer-independent contractor d. agent-incidental beneficiary

c. employer-independent contractor

Agency through ______ authority cannot conflict with any ______ authority that has been given. a. apparent; equitable b. express; implied c. implied; express d. equitable; apparent

c. implied; express

The Restatement of Agency defines a person who contracts with another to do something for him, but is not controlled by him nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking, as a(n): ______. a. incidental beneficiary b. employee c. independent contractor d. principal

c. independent contractor

The duty that requires the agent to to keep all information about the principal confidential both during the agency relationship and after is known as the duty of: ______. a. indemnification b. care c. loyalty d. reimbursement

c. loyalty

The duty that requires the agent to to keep all information about the principal confidential both during the agency relationship and after is known as the duty of: ______. a. indemnification b. reimbursement c. loyalty d. care

c. loyalty

An agent who makes an unauthorized agreement may have violated his or her duty of: ______. a. reimbursement b. indemnification c. obedience d. ratification

c. obedience

Jean wants to file a discrimination case against her employer, and she retains Daryl as her employment law attorney. Daryl agrees that she has a case and assures her he will file the case for her. If Daryl fails to file the action on time, Daryl will fail in his duty of: _____. a. loyalty b. indemnification c. performance d. confidentiality

c. performance

A principal owes specific duties to: ______. a. the Uniform Commerce Commission (UCC) b. the incidental beneficiary c. the agent d. another principal

c. the agent

Principals are the legal owners of anything an agent may come to possess through: ______. a. any activities of the agent outside the agency relationship b. any loans the agent obtained for his or her personal benefit c. the employment or agency relationship d. his or her personal purchases during the agency relationship

c. the employment or agency relationship

Raj informs his insurance agent that he wishes to purchase a comprehensive insurance policy for his house and all of the contents. The agent forgot to process the insurance. The following week, Raj's home caught on fire and suffered extensive damage. Raj could bring a claim against the agent for failure to honor his duty: ______. a. of loyalty b. of reimbursement c. to perform d. of indemnification

c. to perform

Which of the following is correct regarding an agent's rights and remedies against a principal? a. Since agency relationships are intended to benefit the principal, agents have rights but are without remedies. b. Since agency relationships are intended to benefit the agent, agents are not without rights and remedies. c. Since agency relationships are intended to benefit the principal, agents have remedies but are without rights. d. While agency relationships are intended to benefit the principal, agents are not without rights and remedies.

d. While agency relationships are intended to benefit the principal, agents are not without rights and remedies.

The duty of performance requires the agent to act with the same skill, care, and professionalism as: ______ would provide. a. the most accomplished individual in his or her profession b. any individual juror in the same situation c. any person exercising a minimal amount of effort d. a reasonable person in the same situation

d. a reasonable person in the same situation

According to the Copyright Act of 1976, an employer can order an employee to complete work at the request of the employer. This product is known as: ______. a. freelance work b. an accord and satisfaction c. a novation d. a work-for-hire

d. a work-for-hire

Arlene wants to give her friend, Marion, the power of attorney over her affairs. To do that, Arlene and Marion will need: ______. a. an oral agreement indicating that Marion will act as Arlene's agent b. two or more disinterested witnesses to attest to the legitimacy of the power of attorney c. to petition to the court for formal approval of the power of attorney d. a written contract specifying the agreement between them

d. a written contract specifying the agreement between them

The duty of ______ requires the agent to keep an accurate account of the transactions of money and property made on behalf of the principal. a. notification b. loyalty c. obedience d. accounting

d. accounting

Bill announced to an automobile salesperson that he represented Harold for the purpose of buying Harold a new car. Bill negotiated with the salesperson on the price of a new car and even went so far as to sign a contract of sale. Harold had never authorized Bill to represent him in anything, but he was so happy with the deal that Bill expressed that he accepted the contract for the car. Harold and Bill have an: ______. a. agency by estoppel b. express agency c. implied agency d. agency by ratification

d. agency by ratification

If a person represents himself as an agent for an individual and that individual accepts the act of the person representing himself as the agent, this relationship is known as an: ______. a. employer-employee contract b. agency by apparent authority c. agency by estoppel d. agency by ratification

d. agency by ratification

Bert was Myra's real estate agent. Bert purchased a piece of property for Myra, but when it came time to turn over the property, Bert retained the property. In this scenario, Myra: _____. a. can do nothing. Although Bert has breached his fiduciary duty to Myra, there is no recognized remedy in this case b. can purchase comparable property and sue Bert for three times the purchase price of the substitute property c. cannot get the property back, but she can terminate her relationship with Bert d. can put a constructive trust on the property

d. can put a constructive trust on the property

Because of their fiduciary relationship, the agent has a responsibility to act in the interest of the principal including avoiding: ______. a. conflicts of personality b. conflicts in the duty of indemnification and the duty to reimburse c. duties that would further the ability for the agent to act on the principal's behalf d. conflicts of interest and protecting the principal's confidentiality

d. conflicts of interest and protecting the principal's confidentiality

Agency relationships are: ______. a. void per se b. illusory c. voidable per se d. consensual

d. consensual

If the agent illegally benefits from the agency relationship, the principal may enact a(n) ______ trust on the goods, profits, or property in question. a. living b. resulting c. actual d. constructive

d. constructive

Suppose a principal falsely leads a third party to believe a person is his or her agent. The principal has created an agency by ______. a. ratification b. due process c. due diligence d. estoppel

d. estoppel

A(n) ______ is a person who has a duty to act primarily for another person's benefit. a. subrogee b. incidental beneficiary c. third-party beneficiary d. fiduciary

d. fiduciary


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