bus law ch 17 [part 1 exam #3]

the 3 principal remedies in the event of a breach consist of: 1. 2. 3.

recovery of damages, recovery of profits earned by the breach, and recission of any transaction

An employer is liable for a physical tort negligently committed by an employee acting within the scope of employment

true

When is an agent liable on a contract that the agent entered into in the business of the agent's principal? Choose 3 answers. when the principal is not satisfied with the terms of the contract when the principal is undisclosed when the agent is acting without authority if the agent entered into the contract in a personal capacity

when the principal is undisclosed when the agent is acting without authority if the agent entered into the contract in a personal capacity

For what terminations does a principal NOT have a duty to notify third parties? Agencies in which a third party has dealt with the agent Agencies terminated by operation of law Agencies with apparent authority

Agencies terminated by operation of law

Who can terminate an agency relationship? Only the agent may terminate. Either the agent or the principal may terminate. Only the principal may terminate. Neither may terminate the agency until the terms of the agreement have transpired.

Either the agent or the principal may terminate.

What are the two types of actual authority? Choose 2 answer choices. Express authority Fiduciary relationship authority Apparent authority Implied authority

Express authority, Implied authority

Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus that she has been taking care of its whole life. Quinn was working for the seller. Which of the following statements is true? Quinn must pay Kurt the amount of money she received from the Ford's prior owner. After buying the car, Kurt finds out that it needs $1,000 in repairs. He can recover that amount from Quinn, but only if Quinn knew about the needed repairs before Kurt bought the car. Kurt cannot recover anything because Quinn had no obligation to reveal her relationship with the car's seller. Kurt cannot recover anything because he had not paid Quinn for her help.

Quinn must pay Kurt the amount of money she received from the Ford's prior owner.

What must a principal do to terminate an agency at will? Simply notify the agent of the termination. Get a court order to terminate the agency. Pay a severance payment to the agent. Give express written notification to the agent.

Simply notify the agent of the termination.

Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct? Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence. Since Jim is a gratuitous agent, he has no liability for the car. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car.

Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence.

Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate, acting as a prudent person." On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29. The contract is void since the agency terminated May 29. The contract is valid since the agency's purpose was achieved before Jenna was notified of Mrs. O'Leary's death. The contract is voidable at the option of Mrs. O'Leary's estate. The contract is voidable at the option of Brandon.

The contract is void since the agency terminated May 29.

Which of the following scenarios illustrates a business world without agency relationships? Hiring an expert as an independent contractor. Hiring an expert as an employee. A corporation with only one employee. The owner prepares the tax returns.

The owner prepares the tax returns.

What does agency by ratification require? Choose 2 answer choices. The principal affirms the agent's entire act, not just a portion. The principal must have the legal capacity to contract. The agent must have followed all of the principal's rules in negotiating and signing the contract. The principal must have hired the agent before the contract was signed.

The principal affirms the agent's entire act, not just a portion. The principal must have the legal capacity to contract.

What is the key factor in apparent authority? Apparent authority is dictated by operation of law in case of emergencies. The actions of both the principal and the agent The agent's actions The principal's actions

The principal's actions

While drunk, the driver of a subway car plows into the back of the car ahead of him, killing a passenger. It was against the rules for the driver to be drunk. Is the subway authority liable for the negligence of its employee?

The subway authority is liable.

At Business University, semester enrollment begins at midnight on April 1. Jasper asked his roommate, Alonso, to register him for an important required course as a favor. Alonso agreed to do so but then overslept. As a result, Jasper could not enroll in the required course he needed to graduate and had to stay in school for an additional semester. Is Alonso liable to Jasper? No because an agency agreement is invalid unless the agent receives payment. No because Alonso was not grossly negligent. No because the agreement was not in writing. Yes because Alonso was negligent.

Yes because Alonso was negligent.

An _______ relationship can exist without either a written agreement, a formal agreement, or compensation

agency

Both the agent and the principal have the power to terminate an _________ relationship, but they may not have the right

agency

In the case of an unidentified or undisclosed principal, both the _____ and the _____ are liable on the contract

agent, the principal

this describes a principal that is liable for the acts of an agent who is not acting with authority if the principal's conduct causes a third-party reason to believe that the agent is authorized

apparant

if the principal or agent no longer can perform the required duties or if a change in circumstances renders the agency relationship pointless describes what

automatic agency termination

Who is liable to third parties for damage caused by an agent's tortious conduct if the principal had directed the agent to take that action? only the principal both the agent and the principal neither the agent nor the principal if the principal has insurance coverage only the agent

both the agent and the principal

the 3 principals' duties to the agent consists of: 1. 2. 3.

compensate as provided by the agreement, indemnify reasonable expenses, cooperate w the agent

agency relationships require _____ control and _______ relationship

consent, fiduciary

A principal is liable for nonphysical torts of an employee (whether intentional or unintentional) only if the employee was acting with _______, _______, or _______ authority

express, implied, apparent

A principal is liable for the contracts of the agent if the agent has ______, ______, or ______ authority

express, implied, apparent

A ______ and an ______ mutually consent that the agent will act on behalf of the principal and be subject to the principal's control

principal, agent

When a principal is partially disclosed: the agent and principal will be jointly and severally liable on the contract. the agent and principal will be only jointly liable on the contract. only the principal can be liable. only the agent is liable.

the agent and principal will be jointly and severally liable on the contract.

Dr. James Leonard wrote Dr. Edward Jacobson to offer him the position of chief of audiology at Jefferson Medical College in Philadelphia. In the letter, Leonard stated that this appointment would have to be approved by the promotion and appointment committee. Jacobson believed that the appointment committee acted only as a rubber stamp, affirming whatever recommendation Leonard made. Jacobson accepted Leonard's offer and proceeded to sell his house and quit his job in Colorado. You can guess what happened next. Two weeks later, Leonard sent Jacobson another letter, rescinding his offer because of opposition from the appointment committee. Did Leonard have apparent authority?

No. Leonard had told Jacobson that he did not have authority. If Jacobson chose to believe otherwise, that was his problem.

What does the ratification of an agency relationship include? A party affirms the contract another person made with a third party. The law creates an agency relationship in the case of an emergency. The principal led a third party to believe someone was an agent. There is an agreement between the principal and the agent.

A party affirms the contract another person made with a third party.

An agency will be terminated in all but which one of the following situations? The principal and agent agree on an agency relationship to sell a boat, and the boat is sold. A travel agent files for individual bankruptcy under Chapter 13. The agent violates his duty of loyalty. An electrician, an agent of a contractor, has her license revoked.

A travel agent files for individual bankruptcy under Chapter 13.

What authority is ended with the termination of an agency relationship? Actual authority Apparent authority All agency authorities Notice authority

Actual authority

How do agency relationships affect businesses and the business world? Choose 2 answer choices. Businesses can grow by hiring employees. Agency relationships eliminate legal concerns. Workers can specialize and become experts.

Businesses can grow by hiring employees. Workers can specialize and become experts.

Is a principal liable for the tortious actions of the principal's agent? No, only the agent is liable for the agent's torts. No, unless the principal authorized the tortious conduct. Yes, but the agent must reimburse the principal. Yes, but only if the principal authorized the tortious conduct.

Yes, but the agent must reimburse the principal.

Is a principal under a duty to compensate an agent who works on the principal's behalf? Yes, if the contract requires compensation. No, an agent is never paid. No, if a salary has not been agreed on. Yes, if the agent does a really good job above and beyond what is expected.

Yes, if the contract requires compensation.

who is ALWAYS liable for their own torts?

agents

this authority includes authority to do acts that are incidental to a transaction or are reasonably necessary to accomplish it

implied

A principal will not be liable to a third party for a tort committed by an agent: unless the principal instructed the agent to commit the tort. unless the tort was committed within the scope of the agency relationship. if the agency agreement limits the principal's liability for the agent's tort. if the tort is also regarded as a criminal act.

unless the tort was committed within the scope of the agency relationship.

The principal grants express authority by ______ or ______

words, conduct

Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co., so he decides to start his own company. During his last month on the Barry payroll, he tells all of his clients about his new business. He also tells them that Barry is a great company, but his fees will be lower. After he opens the doors of his new business, most of his former clients move with him. Is Finn liable to Barry? No because he has not been disloyal to Barry—he praised the company. No because Barry was underpaying him. No because his clients have the right to hire whichever company they choose. Yes, Finn has violated his duty of loyalty to Barry.

Yes, Finn has violated his duty of loyalty to Barry.

Luther (principal) and Marcia (agent) have an agency relationship. Under which circumstances will the relationship end "at will." Luther and Marcia agree their agency relationship will last two years. At the end of that time, the agency relationship is terminated. Luther and Marcia made no agreement in advance about the term of the agreement. One afternoon, Marcia is tragically killed in an automobile accident. Luther and Marcia agree their agency relationship will last two years. One year into the relationship, they meet for lunch and decide the relationship isn't working and both agree to end it. Luther and Marcia made no agreement in advance about the term of the agreement. One day, Luther calls Marcia and tells her he no longer wishes her to be his agent.

Luther and Marcia made no agreement in advance about the term of the agreement. One day, Luther calls Marcia and tells her he no longer wishes her to be his agent.

If an agent makes a contract on behalf of a fully disclosed principal, the agent is _____ on the contract, but the _______ is

not liable, principal

If harm is done by an agent, and it is discovered that this agent has been convicted of the same harm before at a previous job, what might a principal be liable for? breach of fiduciary duty gratuitous hiring negligent retention negligent hiring

negligent hiring

HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct? Denise is a gratuitous agent and has a duty not to commit gross negligence. Denise is a gratuitous agent and has a duty not to commit ordinary negligence. Denise, as a CPA, is an agent with special skills. She is held to a higher standard than ordinary negligence. Denise, as a CPA, is an agent with special skills. She is held to a lower standard than ordinary negligence.

Denise, as a CPA, is an agent with special skills. She is held to a higher standard than ordinary negligence.

What is the term for the act of terminating an agency relationship? Choose 2 answers. revocation, if done by the agent revocation, if done by the principal renunciation, if done by the agent renunciation, if done by the principal

revocation, if done by the principal renunciation, if done by the agent

In deciding whether workers are employees or independent contractors, courts have considered: the impact of their decision on the national economy. the impact of their decision on tax revenues. the amount of control that an employer exercises over its workers. whether workers in these companies are earning at least the minimum wage.

the amount of control that an employer exercises over its workers.

The principal is liable for both the intentional and negligent physical torts of an independent contractor only if ?

the principal has been negligent in hiring or supervising him

What will terminate an agency relationship? Choose 3 answers. mutual agreement between agent and principal lapse of a pre-specified time achievement of the purpose of the agency passage of one year, as agency agreements must be updated annually

mutual agreement between agent and principal lapse of a pre-specified time achievement of the purpose of the agency

Figgins is the dean of a college. He appointed Sue as acting dean while he was out of the country and posted an announcement on the college website announcing that she was authorized to act in his place. He also told Sue privately that she did not have the right to make admissions decisions. While Figgins was gone, Sue overruled the admissions committee to admit the child of a wealthy alumnus. Does the child have the right to attend this college? No because Sue was not authorized to admit him. No because Figgins did not ratify Sue's decision. Yes because Figgins was a fully disclosed principal. Yes because Sue had apparent authority.

Yes because Sue had apparent authority.

Becky asks her friend Maggie to walk her dog for her, and Maggie agrees. While out walking, the dog gets away from Maggie and runs into Mr. Edwards' garden, digging up some expensive plants. Which statement best characterizes this situation? Becky is liable for the damages to Mr. Edwards' garden, because she exercised control over her agent, Maggie. Maggie is liable for the damages to Mr. Edwards' garden, because she was walking the dog at the time of the damage. Neither Becky nor Maggie is liable for the damages to Mr. Edwards' garden because no agency relationship existed between Becky and Maggie. Both Becky and Maggie are equally liable for the damages to Mr. Edwards' garden--the dog belongs to Becky, but Maggie was walking him at the time of the damage.

Becky is liable for the damages to Mr. Edwards' garden, because she exercised control over her agent, Maggie.

Cox engaged Datz as her agent. It was mutually agreed that Datz would not disclose that he was acting as Cox's agent. Instead, he was to deal with prospective customers as if he were a principal acting on his own behalf. This he did and made several contracts for Cox. Assuming Cox, Datz, or the customer seeks to avoid liability on one of the contracts involved, which of the following statements is correct? Cox must ratify the Datz contracts to be held liable. Datz has no liability once he discloses that Cox was the real principal. The third party can avoid liability because he believed he was dealing with Datz as a principal. The third party may choose to hold either Datz or Cox liable.

The third party may choose to hold either Datz or Cox liable.

An agent owes these duties to the principal: duty of _____, duty to _______, duty of ______, and duty to _____ information

loyalty, obey instructions, care, and information

A principal is not liable for the intentional physical torts of an employee unless: the employee intended to ______ some purpose of the employer or the employer was _______ in hiring or supervising this employee.

serve, negligent