BUL3310 Unit 9 Quiz

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 _______________

Vicarious liability

Which legal principal always imposes punitive damages on a master if the wrongful conduct of the servant in the course of business justifies punitive damages?

Vicarious liability rule

Which of the following is NOT a factor in determining whether a servant was acting within the scope of his employment? Was the servant carrying on the master's business when the tort was committed? Was the servant disobeying the instructions of the master when the tort was committed? Was the instrumentality of the injury furnished by the master? Did the master authorize the servant to use the instrumentality of the injury?

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

If an agency agreement does not state how much an agent is to be paid, what happens?

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

What happens if an agent acts outside the scope of his or her authority when negotiating a contract? The agent loses the right to reimbursement The agent loses the right to indemnification The agent becomes personally liable on the contract to the third party All of the above

All of the above

When does an agent incur personal liability on a contract with a third party? When he acts outside the scope of his authority in negotiating the contract. When he is an agent for an undisclosed principal. When he is an agent for a partially disclosed principal. All of the above

All of the above

A person who is given power of attorney is called an______________.

Attorney in fact

An agent is not entitled to indemnification when His own negligence caused the damage for which he is being held responsible He was acting outside the scope of his authority He committed a tort while following the instructions of the principal Both a and b

Both a and b

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?

Complicity rule

A principal whose identity is known to a third party is an _____________principal.

Disclosed

Whether or not a principal has, through his actions, ratified a contract is a question of _________ usually decided by a _________.

Fact, jury

Whether or not a servant was acting in the scope of his employment when he injured a third party is a question of __________ to be decided by the ________.

Fact, jury

Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in pottery making. He has an arrangement with K&M, a large equipment maker, to sell K&M'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 ________________.

Factor

T or F: A multiple listing agreement lists real property with several brokers, but only the selling broker earns a commission on the sale.

False

T or F: A store manager is an example of a special agent.

False

T or F: 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.

False

T or F: An agent whose agency appointment has terminated has the implied authority to continue to conduct the principal's business until third parties are notified of the termination.

False

T or F: Assume that you hire an independent contractor to transport hazardous chemicals for your company. If he negligently causes damages to a third party while carrying out the job, you will not be liable because of his status as an independent contractor.

False

T or F: Employers have greater liability for employee torts in states that have adopted the complicity rule than in those states that follow vicarious liability.

False

T or F: In contracts negotiated by an agent who is acting within the scope of his authority for a disclosed principal, the agent, the principal, and the third party are equally liable on the contract.

False

T or F: Masters and servants ONLY have joint liability for torts committed by the servant in the strict course of his employment.

False

T or F: Undisclosed principals have no liability to third parties for contracts negotiated by their agents.

False

T or F: Whether or not a principal has ratified a contract is a question of law to be decided by the judge at trial.

False

T or F: Whether or not a principal has ratified a contract is a question of law to be decided by the judge, and never a jury, at trial.

False

The Principal and Agent have __________ relationship with each other.

a fiduciary

When will a principal not have a duty to reimburse an agent?

When the expenses were the result of the agent's negligence

The well-established legal principal that employers are liable for the torts committed by employees while acting within the scope of their employment is _____________________.

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?

Roofing Company and Bill are liable in joint and several liability

What is the status of an agency agreement when a principal files for Chapter 7 Bankruptcy?

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

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?

The duty of loyalty

Which of the following statements about an agent's duty to inform is false? The duty to inform does not apply to gratuitous agents, only to compensated agents. The principal is assumed to know everything that the agent knows and can be held liable legally for this information. The agent must inform the principal if a credit customer is having financial difficulties. The agent must inform the principal about changes in market conditions.

The duty to inform does not apply to gratuitous agents, only to compensated agents.

A principal will not have a duty to reimburse an agent if

The expenses were the result of the agent's negligence

T or F: A principal may ratify a contract by accepting the benefits of the contract.

True

T or F: A principal whose identity is known to a third party is a disclosed principal.

True

T or F: Agents are personally liable to third parties on contracts when the principal was undisclosed.

True

T or F: An agency will terminate by operation of law if the principal files for Chapter 7 Bankruptcy.

True

T or F: An agent is a fiduciary of the principal

True

T or F: An agent who comingles the principal's funds with his or her own violates the duty to account.

True

T or F: An agent who is wrongfully terminated may sue the principal for damages.

True

T or F: An agent will not be indemnified for injuries caused to third parties if the agent's negligence caused the injury.

True

T or F: An agent's knowledge is imputed to the principal.

True

T or F: If a principal ratifies the unauthorized act of an agent, he releases the agent from any liability for the unauthorized act.

True

T or F: 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.

True

T or F: If the agent dies, the agency agreement terminates by operation of law.

True

T or F: If the principal dies, the agency agreement terminates by operation of law.

True

T or F: Normally a master is not liable for torts committed by a servant while traveling from his home to the workplace.

True

An agent's actual authority may be _________.

express and implied

In some states, a parent-owner is liable for any damages caused by a family member operating the vehicle. This is the __________ doctrine.

family car

A master will not be liable for the torts committed by a servant if the servant was on a ______when the tort was committed.

frolic

Implied authority is also known as ____________ authority.

incidental

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 ___________.

indemnify

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.

ratifies

The legal doctrine that holds the master liable for the torts committed by a servant while acting within the scope of this employment is _____________.

respondeat superior

Apparent authority can only be created by the actions of which of the following?

A disclosed principal

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

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

Which of the following would NOT terminate an agency by operation of law? The death of the principal The death of the agent The destruction of the goods that the agent was hired to sell All of the above would terminate an agency by operation of law.

All of the above would terminate an agency by operation of law.

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.

Disclosed

T or F: 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.

False

T or F: An agent operating under a written power of attorney is called an attorney-at-law.

False

T or F: Officers of corporations have unlimited actual authority to sell the real property and intangible assets of the corporation.

False

T or F: 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.

False

An agent has a duty to obey the principal's instructions unless which of the following is true? The instructions require the agent to perform duties that are not in the agency agreement. The instructions are to perform an illegal act. The instructions are not in the principal's best interest. First 2 options

First 2 options

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?

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 corporate officer acting on behalf of the corporation A servant following the instructions of his master An agent carrying out the orders of his principal 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.

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.

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 _______________.

Special power of attorney

Pat hired Mike, a dealer in livestock, to sell his herd of cattle. Mike was to receive a 20 percent 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?

The agency was terminated by operation of law

T or F: A minor may act as an agent for an adult principal

True

T or F: A person who enters into a contract with an independent contractor is called a proprietor.

True

T or F: A principal has the duty to notify third parties when an agency terminates.

True

T or F: 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.

True

T or F: Respondeat superior is a form of vicarious liability.

True

T or F: The principal is a fiduciary of the agent.

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 ______________.

Undisclosed

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?

Yes, the duty to account

When a servant completely abandons the master's work to pursue his own interests, the servant is on ___________.

a frolic