ACCT CH. 33 HW
Which of the following is required for agency by estoppel?
A reasonable belief by the third party that an agency relationship existed
If an agent fails in his or her duties to the principal, that failure provides the basis for which of the following?
A tort or contract action against the agent
Which of the following is a recognized form of agency authority?
Agency by agreement
Which of the following is not a recognized form of agency authority?
Agency by revocation
Which of the following is not a type of business relationship to which agency laws are relevant?
Agent-incidental beneficiary
Which are the following remedies are potentially available when a principal violates agency agreement?
Both tort and contract remedies
In an agency relationship, the person who hires the agent is known as the: ___________.
Principal
Sondra works as an employee for a computer company. She has created a new software program that will revolutionize the way computers are used in the future. Who owns the rights to the software program Sondra has developed?
Her employer
Identify the main remedies a principal has for an agent's breach of fiduciary duties in a principal-agent agency relationship. (Check all that apply.)
Indemnification Avoidance Constructive trust
Select all that apply Which of the following are correct statements regarding a durable power of attorney? (Check all that apply.)
It can be enacted preemptively by the principal. It becomes active only after a principal becomes incapacitated in any matter.
Which of the following is correct regarding agency law?
It is primarily state law and can vary from state to state.
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?
It must be in writing.
Cheryl is 16 years old. Can she hire Jerry, a 20-year-old, as an agent to make contracts on her behalf?
No, because Cheryl is a minor and thus cannot hire an agent.
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?
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
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?
The right of avoidance
Generally, an employer is liable for which of the following?
The torts of its employees
Which of the following is correct regarding agency relationships?
They can be formed by formal written contracts.
Which of the following is correct if an employer has some control over the operations of a contractor?
This control does not always mean that the contract is an employee.
The remedies available to an agent when a principal violates an agency agreement include the standard tort and contract remedies.
True
Agency law is especially important for: _________.
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?
When the agent breaches his or her fiduciary duties
Which of the following is correct regarding an agent's rights and remedies against a principal?
While agency relationships are intended to benefit the principal, agents are not without rights and remedies.
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?
Yes, because Arthur is Gabriel's agent and as such, he is entitled to reimbursement.
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: ___________.
accounting
The duty of __________ requires the agent to keep an accurate account of the transactions of money and property made on behalf of the principal.
accounting
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.
agency
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: __________.
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: __________.
agency by ratification
Employees are _________ of the employer.
agents
If the Internal Revenue Service (IRS) determines that an independent contractor is really an employee, the employer will be liable for: ___________.
all applicable taxes, such as Social Security and unemployment taxes
If the agent breaches his or her duties to the principal, the principal: _________.
can terminate his or her relationship with the agent and seek remedies
A principal must authorize the power of attorney while he or she is: __________.
competent
An agency relationship can be formed through the implied _________ of the parties.
conduct
Because of their fiduciary relationship, the agent has a responsibility to act in the interest of the principal including avoiding: _________.
conflicts of interest and protecting the principal's confidentiality
Agency relationships are: __________.
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.
constructive
Agency relationships are contractual relationships and the kind of remedies that are available are _________ remedies.
contract
Unless they have the authority to do so by the principal, independent contractors are not allowed to enter into: __________.
contracts for the principal
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: ___________.
cooperation
Whenever a duty is imposed on the principal, a(n) __________ right exists for the agent.
corresponding
In an agency by estoppel, the important factor is whether the principal acts to: ___________.
create the impression that the agent has the authority to act on behalf of the principal
A(n) __________ agent is one who acts without consideration.
gratuitous
Powers of attorney are often given for: ___________.
health care and business purposes
To conduct business more effectively around the world, businesses will hire agents from the host country to: ___________.
help guide the business with respect to local laws and customs
An agency relationship that is formed through the conduct of the parties is known as an agency by _________ authority.
implied
Agency through _________ authority cannot conflict with any _________ authority that has been given.
implied; express
A principal has the duty of reimbursement and: ___________.
indemnification of the agent
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): ____________.
independent contractor
In a principal-agent relationship, the duty of loyalty requires that the agent: ___________.
keep confidential any information about the principal
Courts suggest that the most important duty that an agent owes to a principal is the duty of: __________.
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: __________.
loyalty
When an agent is given the power of attorney, the agreement: _________.
must be in writing
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: ___________.
notification
An agent who makes an unauthorized agreement may have violated his or her duty of: __________.
obedience
The principal's duty __________ means to assist the agent in the performance of his or her duties.
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: __________.
perform the contract as specified
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: __________.
performance
The duty that requires an agent to perform his or her duties as required by the agency agreement is known as the duty of: ___________.
performance
A sports company has hired a very famous athlete to endorse a line of sports products. The relationship between the sports company and the athlete is: ___________.
principal-agent
When an employer hires an employee to enter into contracts on its behalf, this is known as a(n) ___________ relationship.
principal-agent
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: _____________.
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: ____________.
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: __________.
recover for services rendered and future damages
Generally, gratuitous agents function much like __________ agents.
regular
A(n) _________ power of attorney gives authority only for the designated areas or purposes listed in the agreement.
specific
Agency law is primarily _________ law.
state
A principal owes specific duties to: __________.
the agent
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: __________.
the customary fee for Taylor's work
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: ___________.
the customary fee for Taylor's work
Agency relationships are for the benefit of: __________.
the principal
In an agency relationship, the agent is authorized to act for and on behalf of: __________.
the principal
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: ___________.
to perform
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: ___________.
to recover the amount assessed to the third party
The law typically assumes that a principal is aware of all of the information that: _________.
was revealed to the agent
The principal has the duty to indemnify or reimburse the agent for any losses the agent incurs: __________.
while working within the scope of authority on the principal's behalf
Agency agreements usually do not need to be in writing unless the agent: __________.
will enter into a contract that the statute of frauds requires to be in writing
Which of the following is not a recognized component of an agency relationship?
Subrogation
A third party who believes that an agent is acting with actual or apparent authority may do which of the following?
Sue the principal for any breach of contract
Which federal agency is particularly interested in determining whether workers are employees or independent contractors?
The IRS
Which of the following laws is consistent with the principals' duty to provide safe working conditions for the agent?
The Occupational Safety and Health Act
Which of the following is a recognized source for the definition of agency?
The Restatement of Agency
If the employer has the right to substantially control the worker's day-to-day operations, the worker is generally considered a(n): _____________.
employee
When an employer hires an employee to perform some sort of physical service where the employee is under the control of the employer, this relationship is known as a(n) ___________ relationship.
employer-employee
When an agent is given broad authority to sign legal documents for the principal, this is known as a(n): __________.
general power of attorney
A principal's obligation to pay an agent for his or her services is called the _______________________.
Duty of Compensation
Which of the following are agents of an employer?
Employees
Select all that apply Which of the following are types of business agency relationships? (Check all that apply.)
Employer-employee Principal-agent Employer-independent contractor
Employers are generally liable in tort for the actions of their employees and independent contractors.
False
Under the duty of obedience, the agent must follow the lawful or unlawful instruction and direction of the principal.
False
A(n) __________ is a person who has a duty to act primarily for another person's benefit.
Fiduciary
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?
Yes, because Sally was acting within the scope of her authority and it was Joe's fault for failing to submit the assignment.
Providing safe working conditions is: __________.
a duty of the principal to the agent
An agency relationship, like a contract, can only be made for: _________.
a lawful purpose
The duty of performance requires the agent to act with the same skill, care, and professionalism as: __________ would provide.
a reasonable person in the same situation
If a principal fails to fulfill his or her duties to the agent, that provides the basis for: ___________.
a tort or contract action against the principal
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 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 written contract specifying the agreement between them
If the agent breaches his or her duties to the principal and a third party sues the principal for damages, the agent: ___________.
can be sued by the principal for tort and contract damages
Agents who work on commission have a right to demand a(n) __________ of funds.
accounting
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: ___________.
an agency relationship by ratification
Powers of _________ can be given for business and health care purposes.
attorney
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: __________.
can put a constructive trust on the property
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): ____________.
employer-employee relationship
Suppose a principal falsely leads a third party to believe a person is his or her agent. The principal has created an agency by __________.
estoppel
Agency by implied authority cannot conflict with agency by: __________.
express authority
When parties form an agency relationship through a written or an oral agreement, this is known as an ___________ agency.
expressed
Bobby and Dustin entered into an agency agreement using a written agreement. This kind of agency relationship is known as an: __________.
expressed agency
A person who has the duty to act primarily for the benefit of another person is known as a(n) ____________.
fiduciary
An agency relationship is a(n) ___________ relationship.
fiduciary
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.
first refusal
