BUL3310 Unit 9 Chapter 24 & 25

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If an agency agreement does not state how much an agent is to be paid, what happens? The agency agreement is void. The agency agreement is voidable by the agent, but not by the principal. The agent is assumed to be a gratuitous agent. A court will read in a reasonable amount based on the customary rate in the business community.

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

Pat hired Mike to manage his deli, but the agency agreement did not state how much Mike is to be paid. In this situation, Mike is a gratuitous agent until a salary is negotiated. The agreement is voidable by Pat. The agreement is voidable by Mike. A court will read in a reasonable salary based on comparable positions in the business community.

A court will read in a reasonable salary based on comparable positions in the business community.

Apparent authority can only be created by the actions of which of the following? The agent himself A disclosed principal A disclosed agent An undisclosed principal

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 analyzedS

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

Rhonda Realtor was hired to find Client an undeveloped lot that met the following requirements: the lot must be in the mountains, on a pristine lake, consist of at least 10 acres, and be available for no more than $500,000. Rhonda found a property that met all these requirements for only $425,000. Enchanted, she bought the property for herself. She did not tell Client about her find and is still diligently seeking another property that meets Client's needs. Which, if any, agency duties has Rhonda violated? Duty of loyalty Duty to inform Duty to obey instructions 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

Which of the following is not an element of ratification? The principal was fully disclosed at the time the contract was formed. The principal is aware of all of the terms of the agreement The third party has not withdrawn from the contract All of the above are requirements for ratification

All of the above are requirements for ratification

An agent's actual authority may be _________. express implied ostensible Both a and b

An agent's actual authority may be both express & implied

A person who is given power of attorney is called an______________. Attorney at law Attorney in fact Factor General Agent

Attorney in fact

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. Both A and B

Both -The instructions require the agent to perform duties that are not in the agency agreement. & The instructions are to perform an illegal act.

In determining the rights and duties of the parties to an agency relationship, the courts look to Case law The Uniform Commercial Code The National Labor Relations Act Federal common law

Case Law

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? Vicarious liability rule Durham rule Complicity rule Transferred liability rule

Complicity rule

A principal whose identity is known to a third party is an _____________principal. Disclosed Undisclosed Partially disclosed Transparent

Disclosed

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 Partially undisclosed Undisclosed Special

Disclosed

In order to ratify an agent's contract, the principal must have been __________at the time the contract was formed. Disclosed Partially disclosed Either disclosed or partially disclosed Undisclosed

Disclosed

The only principal who can ratify a contract is an _____________ principal. Disclosed Undisclosed Partially disclosed Both a and c can ratify a contract.

Disclosed

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. True False

False

A multiple listing agreement lists real property with several brokers, but only the selling broker earns a commission on the sale. True False

False

A store manager is an example of a special agent. True False

False

Agency agreements must always be in writing.

False

An agent operating under a written power of attorney is called an attorney-at-law. True False

False

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

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. True False

False

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. True False

False

Employers have greater liability for employee torts in states that have adopted the complicity rule than in those states that follow vicarious liability. True False

False

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. True False

False

Masters and servants ONLY have joint liability for torts committed by the servant in the strict course of his employment. True False

False

Officers of corporations have unlimited actual authority to sell the real property and intangible assets of the corporation. True False

False

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. True False

False

Undisclosed principals have no liability to third parties for contracts negotiated by their agents. True False

False

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. True False

False

Matt is employed as the manager of Local Steak House, with wide-ranging responsibilities for all aspects of the business. In this position, Matt is an________ General agent Special agent Broker Factor

General agent

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 ______________. Disclosed Undisclosed Partially disclosed Transparent

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 ______________. Disclosed Undisclosed Partially disclosed Transparent

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? Yes, because third parties have a duty to verify that agents are acting within the scope of their authority. Yes, because a payment to Al stopped being a payment to Raines when Al's actual authority to accept payments ended. No, because Al still had implied authority to collect the rents until Raines told the tenants otherwise. No, because Al still had apparent authority to collect the rents until Raines told the tenants otherwise.

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.

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. Because Peg is not compensated for the activities she is performing on her brother's behalf, she owes him Only the duty of loyalty. Only the duties of loyalty and information. Only the duties of loyalty, information and the duty to account Peg owes Jim all the duties of an agent to a principal.

Peg owes Jim all the duties of an agent to a principal.

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. Indemnifies Reforms Ratifies Restores

Ratifies

The well-established legal principal that employers are liable for the torts committed by employees while acting within the scope of their employment is _____________________. The rule of transferred intent The rule of ultra vires The rule of corporate complicity. Respondeat superior

Respondeat superior

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 General power of attorney Factors letters of appointment Broker Authority

Special power of attorney

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. The agency terminates by operation of law thirty days after the trustee takes over the debtor's assets. The agency terminates by operation of law sixty days after the trustee takes over the debtor's assets. The agency terminates by operation of law ninety days after the trustee takes over the debtor's assets.

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

Sue hired Harry to sell her prized racing filly, YouGoGirl. Harry's commission was to be 20% of the selling price. Before a buyer could be found, YouGoGirl died of an equine virus. What is the status of the agency agreement between Sue and Harry? The agency terminates by operation of law. The agency continues unless the principal, Sue, takes a unilateral action to end it. The agency continues unless the agent, Harry, takes a unilateral action to end it. The agency continues unless is it terminated by the mutual agreement of Sue and Harry.

The agency terminates by operation of law.

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 will continue under the same terms when Pat acquires a new herd. The agency was terminated by operation of law The agency was terminated by a unilateral action. The agency was terminated by mutual agreement.

The agency was terminated by operation of law

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.

The death of the principal, The death of the agent, & The destruction of the goods that the agent was hired to sell would terminate an agency by operation of law.

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 The duty not to be negligent The duty to account Dual agencies pose no particular problems in carrying out agency duties.

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.

Which of the following is not a duty of the principal to the agent? The duty to reimburse The duty to indemnify The duty to obey instructions The duty to compensate

The duty to obey instructions

Which of the following events would not terminate an agency by operation of law? The principal breaches his or her duty to reimburse the agent. The agent dies. The principal dies. The purpose of the agency becomes illegal.

The principal breaches his or her duty to reimburse the agent.

A person who breaches a duty that is neither a contractual duty nor a crime commits a ____________. Tort Misdemeanor Malum in se Malum prohibitum

Tort

. A principal whose identity is known to a third party is a disclosed principal. True False

True

A master can normally avoid liability for damages caused by a servant if he can show that the servant misunderstood his instructions.

True

A minor may act as an agent for an adult principal True False

True

A minor may act as an agent for an adult principal. True False

True

A person who enters into a contract with an independent contractor is called a proprietor. True False

True

A plaintiff who sues the employer and the employee in joint and several liability is limited to only one recovery. True False

True

A principal has the duty to notify third parties when an agency terminates. True Fakse

True

A principal may ratify a contract by accepting the benefits of the contract. True False

True

A proprietor will be liable for the torts of an independent contractor if the duties that the contractor is hired to perform are inherently dangerous to the public. True False

True

Agents of undisclosed principals are entitled to be indemnified if held personally liable on contracts that were within the scope of their authority. True False

True

An agency will terminate by operation of law if the principal files for Chapter 7 Bankruptcy. True False

True

An agent is a fiduciary of the principal True False

True

An agent is a fiduciary of the principal. True False

True

An agent who is wrongfully terminated may sue the principal for damages. True False

True

An agent will not be indemnified for injuries caused to third parties if the agent's negligence caused the injury. True False

True

An agent's knowledge is imputed to the principal. True False

True

If a principal ratifies the unauthorized act of an agent, he releases the agent from any liability for the unauthorized act. True False

True

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 False

True

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 False

True

If the principal dies, the agency agreement terminates by operation of law. True False

True

In a multiple listing agreement, real estate is listed with several brokers who divide the commission on the sale. True False

True

Normally a master is not liable for torts committed by a servant while traveling from his home to the workplace. True False

True

Respondeat superior is a firm of vicarious liability. True False

True

Respondeat superior is a form of vicarious liability. True False

True

The principal is a fiduciary of the agent. True False

True

The principal is a fiduciary of the agent. False True

True

ents are personally liable to third parties on contracts when the principal was undisclosed. True False

True

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 Complicity rule Transferred liability rule Durham rule

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?

When will a principal not have a duty to reimburse an agent? When the principal is disclosed When the principal is undisclosed When the expenses were the result of the agent's negligence When the expenses are for food or travel

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

Parker is a dealer in Oriental antiques and rugs. A sign in his store recommends that customers bring in their rugs to him for cleaning and repair. In fact, Parker does none of the cleaning or repair work himself. He sends the rugs to Local Cleaners, for whom he works as an agent making a 20 commission. Due to a mishap at Local's plant, the rug belonging to Parker's customer was damaged. Is Parker liable to the customer for the damage? No, Parker is Local's agent and has no fiduciary duties to third parties. No, Parker has no liability because he was acting within the scope of this authority as Local's agent. No, Parker has no liability because agents are not responsible for the torts of the principal. Yes, Parker is liable because he is the agent of an undisclosed principal.

Yes, Parker is liable because he is the agent of an undisclosed principal.

The Principal and Agent have __________ relationship with each other. an arms length a statutory a fiduciary an equitable

a fiduciary

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

a frolic

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

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; judge law; judge fact; jury law; jury

fact; jury

Whether or not a principal has, through his actions, ratified a contract is a question of _________to be decided by the _________. Fact.judge Law.judge Fact.jury Law.jury

fact;jury

An employer is responsible for the torts committed by an employee while the employee is on a frolic, but not for those torts committed while the employee is on a detour

false

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

family car

Implied authority is also known as ____________ authority. apparent ostensible incidental constructive

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 ___________. reimburse indemnify compensate account

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. indemnifies reforms ratifies restores

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 _____________. quid pro quo respondeat superior caveat emptor alter ego liability

respondeat superior

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 _______________ respondeat superior vicarious liability primary liability transferred liability

vicarious liability


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