BULA Chapter 40
An agent is required to keep, but not render, accounts.
F pg. 732 [must also RENDER]
Madonna Company employs Cindy to market widgets. Cindy is free to start her own widget-making business as long as she does not operate it on Madonna Company time.
F pg. 732 [that would be competing with Madonna company within the scope of the agency]
A principal has a duty to reimburse an agent for any, and all, expenses incurred by the agent when going about the principal's business.
F pg. 734 [duty to reimburse for expenses reasonably and properly incurred]
Jack enters into a contract with Kate to purchase $400 worth of supplies for Pete. Kate knows that Jack is Pete's agent and that Jack is authorized to purchase the supplies. If Pete does not pay Kate for the supplies, Jack will be liable to pay the $400 amount due.
F pg. 736 ["If agent is authorized, principal is liable on contract"]
The consensual nature of an agency relationship means that either the principal or the agent have both the right and the power to terminate the relationship at any time.
F pg. 736 [Both have the POWER but not NECESSARILY the right to terminate]
A principal does not need to have contractual capacity at the time of ratification but does need to have contractual capacity at the time of the unauthorized act.
F pg. 738 [DOES need to have contractual capacity at time of ratification AND time of unauthorized act]
A principal's silence cannot serve as an indication of ratification.
F pg. 738 [Silence CAN serve as indication of ratification]
Secret limitations imposed by a Principle upon an Agent are considered binding upon third parties despite the third party having no notice of those limitations.
F pg. 740 [ NOT considered binding upon third parties if the third party has no knowledge of the secret limitations]
Apparent authority is most often inferred from the agent's conduct towards the principal.
F pg. 740 [Inferred from principal's conduct toward 3rd parties who deal w/ agent]
As a rule, an agent acting on behalf of an undisclosed principal possesses apparent authority to bind that principal to third parties.
F pg. 743 [Agent acting on behalf of undisclosed, possesses NO apparent authority to bind principal]
At common law, the employment at will doctrine would permit an employer to fire an employee at any time for any reason.
F pg. 746 [only to fire an EMPLOYEE AT WILL at any time for any reason]
As a rule, termination of an agent's actual authority will also terminate his apparent authority.
F pg. 749 [termination of an agent's actual authority DOES NOT terminate his apparent authority]
As a rule, a power given as a security is extinguished by the death or incapacity of either the principle or the agent.
F pg. 750 [given as a security is NOT extinguished by the death or incapacity of either the principle or the agent]
The formality of a writing is required if a principal wants to ratify a contract that was unauthorized.
F? [Couldn't find anything about this one?]
An agency is both a consensual and fiduciary relationship
T pg. 729
An agency relationship is consensual, but not necessarily a contractual, relationship
T pg. 729
Although agency contracts are not required to be written, the Statute of Frauds may, nevertheless, sometimes apply because of the equal dignity rule
T pg. 730
Liability for injuries or death inflicted upon an agent is governed by Workers Compensation statutes rather than by agency rules
T pg. 730
A broker is actually an agent who works for a commission.
T pg. 731
A minor may be a principal
T pg. 731
An agent's duty of obedience is subject to a standard of reasonableness.
T pg. 731
Contracts entered by an agent on behalf of a minor principal are voidable
T pg. 731
An agent hired by a principal to buy and sell land on behalf of the principal may compete with the principal for the purchase and sale of automobiles violating any fiduciary principles.
T pg. 732
The agent's duty of loyalty to the principal is actually part of the agent's fiduciary obligation to the principal
T pg. 732
The duties of a principal to an agent include those of loyalty and obedience.
T pg. 732
Implied authority extends only to those acts incident and necessary to the express authority granted.
T pg. 735
Most recently, the doctrine of election has yielded to a joint and several liability rule in some states.
T pg. 736
The liability of an undisclosed principal is governed by the doctrine of election.
T pg. 736
As a rule, a principal is liable only for the authorized acts of an agent.
T pg. 737
Ratification is the creation of agency authority after the fact.
T pg. 737
A principal who ratifies a previously unauthorized contract is liable on that contract only from the date of ratification.
T pg. 738
Apparent authority is based upon the contractual principles of estoppel
T pg. 740
The notion that an undisclosed principle possesses no apparent authority to bind the principle appears to be weakening in light of recent court decisions.
T pg. 743
Under agency principles, a principal may have notice of a fact having actual knowledge of that fact.
T pg. 744
Death of the agent will automatically terminate an agency relationship.
T pg. 746
Damage claims for employee termination resulting from violations of public policy can be based upon either contract or tort principles.
T pg. 747
Termination of a special agent's actual authority also terminates that agent's apparent authority.
T pg. 747
Written provisions in employment contracts that explicitly indicate that the employment relationship is "at will" are enforced provided such provisions are clearly written and conspicuously presented.
T pg. 747
An agency coupled with an interest is not really a true agency relationship
T pg. 750
The liability of a principal to a third party for acts committed by an agent include: A- Torts but not contracts B- Contracts but not torts C- Both torts and contracts D- Fiduciary breaches E- Both C and D, above
??? E- Both C and D, above
Contracts entered by an agent on behalf of a minor principal are best described as: A- Void B- Voidable C- Unenforceable D- Negligent E- Implied
B- Voidable pg. 731
Don hires Meryl, a sports agent, to negotiate a three-year contract with a professional sports team that has drafted Don. Meryl's duties are to negotiate Don's employment contract, to procure endorsement contracts, to invest his earnings, and to handle his business affairs. Meryl is: A- special agent B- general agent C- broker D- del credere agent E- employee
B- general agent pg. 731
Wendy is a partially disclosed principal on a contract, entered with Mike, by Trudy, her agent. Under the terms of the contract, Mike is to be paid $700. Mike could collect: A- $700 from Wendy, only B- $700 from Trudy, only C- $350 from Wendy and $350 from Trudy D- $300 from Wendy and $400 from Trudy E- All of the above F- Only A, above (lol isn't this the same option as actually choosing A?)
E- All of the above pg. 736
The parties to an agency relationship can include natural persons and corporations but not partnerships.
F pg. 729 [CAN include partnerships]
In an agency relationship, a principal agrees to act on behalf of, and under the control of, another
F pg. 729 [an AGENT agrees to act on behalf of another]
A special agent is one who is authorized to conduct a series of transactions involving a continuity of service.
F pg. 730 [a agent is the type of agent involved with a continuity of service]
A person designated as an agent under a power of attorney is required to be a properly licensed attorney.
F pg. 730 [haha very funny Dr. Naples: Power of attorney does not actually have to be an attorney]
Beth, a minor, appoints Adam, an adult, to be her agent. Any contract entered into by Adam on behalf of Beth cannot be rescinded because Adam is the age of majority.
F pg. 731
In order to be a principal, a person must have contractual capacity
F pg. 731
In order to be an agent, a person must have contractual capacity.
F pg. 731
An independent contractor is actually a servant who acts like an agent.
F pg. 731 [IC is not subject to another's right of control]
A servant acts for a master while an agent is controlled by a principal
F pg. 731 [a SERVANT is controlled by the master]
The duties of a principal to an agent include all but which of the following: A- obedience B- indemnity C- compensation D- Protection E- Only A and D, above
A- obedience pg. 734
Amy asks Sue to drop off a package at the downtown office of Federal Express for overnight delivery. Since Amy has a billing account with Federal Express, Sue was not required to pay any fees when dropping off the package. However, because the Federal Express parking lot was full, Sue incurred a $3 expense to park in a lot across the street. Sue's authority to incur the parking lot expense is said to be: A- express B- implied C- fiduciary D- apparent E- unauthorized
B- implied pg. 735
An example of a special agent would include all but which of the following: A- A real estate broker employed to sell the principal's house B- A stockbroker empowered to purchase 100 shares of Exxon corp. common stock for a customer C- A sales or purchasing agent for Wal-Mart D- An attorney hired to negotiate a contract for a client.
C- A sales or purchasing agent for Wal-Mart pg. 730
Tony is Bill's agent. On behalf of Bill, Tony enters into a contract to purchase some equipment from Sparks, Inc. Reproduced below are three possible ways by which Tony could sign the contract. For each, determine whether Tony's relationship with Bill should be considered disclosed, partially disclosed, or undisclosed: "BILL BY: TONY" A-Undisclosed B-partially disclosed C-disclosed D-both B and C, above "TONY" A- Undisclosed B- partially disclosed C- disclosed D- both A and B, above "BY: TONY A- Undisclosed B- partially disclosed C- disclosed D- both B and C, above
C- Disclosed A- Undisclosed B- Partially disclosed
Barbie is an undisclosed contract principal. Ken is Barbie's agent. When Bruno, a third party, discovers the identity and existence of Barbie, Bruno could hold: A- Only Barbie liable on the contract B- Only Ken liable on the contract C- Either Barbie or Ken liable on the contract D- Either Barbie or Ken liable on the contract
C- Either Barbie or Ken liable on the contract [Doctrine of Election] pg. 736
A del credere agent is actually a: A- Factor entrusted with possession or control of a principal's goods B- Independent contractor C- Commission merchant D- A surety E- A and C, above
D- A surety pg. 731 ?
On August 1st, and authority or permission, Timory agrees to sell her brother's car to Sandy on August 10th. Timory tells her brother, Dirk, about the sale on August 5th and he goes ballistic over the news. When Timory tells Dirk about how much Sandy is willing to pay for the car, Dirk changes his mind and agrees to sell the car to Sandy. On August 10th, the sale is completed. On August 11th, Sandy telephones Dirk and asks for the new windshield wipers that Timory promised to sandy as an inducement to purchase the car. Since Dirk knew nothing of this inducement, he refused Sandy's request. Despite the refusal, Dirk will be liable for the windshield wipers under the theory of: A- Apparent Agency B- Implied Authority C- Undisclosed agency D- Ratification E- None of the above
D- Ratification
The duty of loyalty by an agent to a principal includes the duty to: A- commingle the principal's funds B- Compete with the principal when necessary C- disclose confidential information D- account for profits arising out of the agency E- none of the above
D- account for profits arising out of the agency pg. 732
The duties imposed upon an agent, to a principal, include those that require the agent to do all but which of the following: A- to act with care and skill B- to keep and to render accounts C- to give information D- to act as a surety E- to act as a fiduciary
D- to act as a surety pg. 731-732
An agency relationship will automatically terminate upon the happening of which of the following: A- Death of the agent B- Incapacity of the principal C- Withdrawal of consent by the Principal D- Expiration of the term of the agency E- All of the above
E- All of the above
Chet hired Brenda as his agent to purchase a new truck with specific instructions that Brenda is not to spend more than $40,000 for the vehicle. Brenda goes to Trucks, Inc. and purchases a truck that is promptly delivered to, and accepted by, Chet. When Chet gets the invoice for the truck it shows the actual cost to be $52,000. Chet pays Trucks, Inc. $40,000 but refuses to pay the additional $12,000 claiming that Brenda had exceeded her authority. Trucks, Inc. might seek to hold Chet, liable for the $12,000 based upon all but which of the following theories: A- Ratification B- Apparent Authority C- Lack of notice regarding the spending limit D- Estoppel E- All of the above are valid theories
E- All of the above are valid theories