Ch 14 Agency Law 2

If a contractor does not have authority to enter into contracts for the principal then: A. he is not an agent B. he is also an agent C. he is also an agent if he thinks he has the authority to enter into contracts D. he is still considered an agent in most, but not all, states E. none of the other choices are correct

A. he is not an agent

If an agent claims to have authority but in fact has none, the principal is: A. not responsible for the agent's dealings with third parties who have no reason to think the agent has authority B. responsible for the agent's dealings with third parties who have no reason to think the agent has authority C. responsible for up to 50% of the monetary value of any contracts entered into by third parties and the agent D. responsible for up to 25% of the monetary value of any contracts entered into by third parties and the agent E. none of the other choices are correct

A. not responsible for the agent's dealings with third parties who have no reason to think the agent has authority

A(n) ____ relationship is one in which an agent acts on behalf of or for the principal, with a degree of personal discretion. A. principal-agent B. master-servant C. employer-employee D. employer-independent contractor E. none of the other choices are correct

A. principal-agent

Carla agrees to try to sell Frank's prize dog Spike for him. Carla does this as a favor to Frank because she knows many professional dog breeders. Carla may be best described as: A. a universal agent B. a gratuitous agent C. an agent who has an agency coupled with an interest D. a special agent E. none of the other choices

B. a gratuitous agent

An agency coupled with an interest is created: A. when the principal provides the agent with a general power-of-attorney B. by an agent who has paid for the right to exercise authority with regard to a business C. when a person volunteers her services out of interest in the business D. when the agent is authorized to delegate any authority to an interested party E. none of the other choices

B. by an agent who has paid for the right to exercise authority with regard to a business

A UPS package sorter is an example of a(n): A. agent B. employee C. employee with agency powers D. independent contractor E. agent and independent contractor

B. employee

The duty of ____ requires an agent to place the principal's interests before the agent's personal interests or those of any third party: A. accounting B. loyalty C. performance D. reasonable care E. none of the other choices; there is no such duty

B. loyalty

An agency is created when an agent agrees to act for, or in place of, the: A. third party B. principal C. shareholder D. attorney E. representative

B. principal

Through an agency relationship, the agent becomes a representative of the: A. third party B. principal C. customer or supplier of the principal D. shareholder E. all of the other choices

B. principal

The duty of an agent to perform responsibilities with the degree of care that a reasonable person would exercise under the circumstances is: A. the duty to cooperate B. the duty of reasonable care C. the duty of realistic care D. the duty of obedience E. the duty of reasonable obligation

B. the duty of reasonable care

In Yim v. J's Fashion Accessories, Inc., where J's Fashion sued Yim for failing to pay for goods he bought under the name Ho Tae and Yim denied liability on the grounds that he had been acting as an agent for Hosung Enterprise, Inc which also did business under the name Ho Tae, the courts held that: A. Yim was not liable because he was an agent of Hosung Enterprise, Inc. B. Yim was not liable, even though he was an agent of Hosung Enterprise, Inc. C. Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal D. Yim was not liable because he had apparent authority E. Yim was liable because he disclosed Hosung Enterprise, Inc. as the principal

C. Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal

An agent is trying to sell a house for $100,000 for her principal. The principal will sell the house for as little as $80,000, but wants to get as much as possible. The agent tells her cousin to offer $81,000. The agent's actions are: A. a legitimate effort to get the deal done that will benefit everyone involved B. a violation of the duty of accounting C. a violation of the duty of loyalty D. a violation of the duty of notification to let the principal know he can counter-offer at a higher price E. unethical, but it does not violate legal duties

C. a violation of the duty of loyalty

An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n): A. third party relationship B. principal relationship C. agency relationship D. real relationship E. representative relationship

C. agency relationship

Kurt works for Jeris. One evening Kurt decides to use the company truck to pick up his date. On his way home from the movies, after dropping his date off, Kurt runs a red light and smashes into Bob. Is Jeris liable to Bob? A. yes, because Kurt was her agent B. yes, because Kurt was driving her truck C. no, because Kurt was acting outside the scope of his employment D. no, because Kurt was an independent contractor when not on the job E. no, because Kurt's actions negligent, not intentional

C. no, because Kurt was acting outside the scope of his employment

For an agent to be a fiduciary means to: A. indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees B. have the right and obligation to sell goods belonging to a principal C. occupy a position of trust, honesty, and confidence with respect to the principal D. indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees and have the right and obligation to sell goods belonging to a principal E. indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees and have the right and obligation to sell goods belonging to a principal and occupy a position of trust, honesty, and confidence with respect to the principal

C. occupy a position of trust, honesty, and confidence with respect to the principal

When liability is imposed on an employer for a tort committed by an employee, the liability is based on the rule of law known as: A. contractor liability B. tortious liabilitius C. respondeat superior D. principal duty E. there is no such rule as the employee only is responsible

C. respondeat superior

Lisa works for Sally. Lisa's jobs include selling the folk-art Santa Claus statutes that Sally hand-makes, as well as purchasing the wood for the statutes. In this case Lisa is: A. a servant only B. an agent only C. an independent operator D. a servant and an agent E. a master

D. a servant and an agent

Which of the following determines the scope of authority given to an agent: A. statements of the principal B. the principal's conduct C. the trade customs in business D. all of the other specific choices are correct E. none of the other specific choices are correct

D. all of the other specific choices are correct

Which of the following is a common problem with employee handbooks: A. listing specific offenses for which people may be fired can create the impression those are the only offenses that matter B. failing to change the handbook to comply with state and federal laws as they change C. not giving a clear at-will employment statement D. all of the other specific choices are correct E. none of the other specific choices are correct

D. all of the other specific choices are correct

Operation of law provides agents with the authority to act beyond the authority granted by the principal when: A. an agent has a good idea B. an agent has an opportunity to make a profit for the principal through his actions C. an agent understands all the risks D. an emergency exists E. the principal fails to make the right decision

D. an emergency exists

In Bearden v. Wardley Corp., where Gritton's real estate agent cheated her in a deal, the court held that Wardley, Gritton's employer, violated its ____ to Bearden: A. duty to inform B. duty of performance C. duty to account D. duty of care E. none of the other choices; Wardley was not responsible

D. duty of care

A person authorized to execute all regular transactions connected with a business is called a: A. universal agent B. special agent C. gratuitous agent D. general agent E. none of the other choices

D. general agent

Geary was an employee of U.S. Steel. His concerns about the safety of a new product were ignored by his superior. He went to higher management to let them know of the problem. The product was withdrawn from the market, but Geary was fired by his superior. Geary sued the company for wrongful dismissal. The Pennsylvania court held that Geary: A. wins because he was protecting the public against harm, which outweighs the private interest here B. wins because his employment rights can be lost only after due process C. wins because management agreed with Geary's assessment of the product; the supervisor was wrong D. loses because of the employment-at-will doctrine E. none of the other choices

D. loses because of the employment-at-will doctrine

Employment-at-will: A. allows employees to quit their jobs for any reason at any time B. allows employers to discharge employees for any reason at any time subject to contract obligations C. has been restricted by the courts or legislatures in some states that recognize some public policy limitations on the employer's right to fire an employee D. a and b E. a, b and c

E. a, b and c

Anna hires Jack to paint her house. He supplies his equipment and buys the paint for which he will be paid by Anna. One day while Jack is painting Anna invites Tom for lunch. As Tom is walking into the house Jack accidentally drops a can of paint on his head. With respect to agency law, is Anna liable for the harms Jack causes Tom? A. yes, because Jack is a servant B. yes, because Jack is a master C. yes, because Jack is an employee D. no, because respondeat superior applies E. no, because Jack is an independent contractor

E. no, because Jack is an independent contractor

A disclosed principal is a principal whose identity is: A. known to the agent B. unknown to the agent C. unknown to third parties to contracts entered into with the agent D. known to partners E. none of the other choices

E. none of the other choices

Terry hires an agent, Janet, to sell a piece of property for no less than $50,000 with Janet to receive a 6% commission upon sale. Which of the following is Janet legally permitted to do without Terry's consent? A. Janet can sell the property to her brother for $50,000 B. Janet discovers land values in the area are falling rapidly and, not having a chance to consult with Terry, sells the property for $45,000 C. Janet discovers land values in the area are likely to jump up soon and so purchases the property for herself D. any of the other specific choices E. none of the other choices

E. none of the other choices

You hire an agent to sell your house for you. Typically, such an agent receives a fee only if they actually sell the house. This person is most likely: A. a universal agent B. a gratuitous agent C. an agent who has an agency coupled with an interest D. a general agent E. none of the other choices

E. none of the other choices

A(n) ____ is one whose identity is known by the third party at the time a contract is entered into with an agent. A. undisclosed principal B. clear principal C. specific principal D. legitimate principal E. none of the other choices are correct

E. none of the other choices are correct

Scott is an agent for Lee and his duties require him to fly to Chicago from Cleveland. Scott gets up late and misses his flight to Chicago so he has to buy a second plane ticket. As principal, Lee: A. has a duty to reimburse Scott for the second plane ticket B. does not have a duty to reimburse Scott for the ticket because he had no duty to reimburse Scott for a plane ticket to Chicago anyway C. has a duty to reimburse Scott for half the plane ticket D. has a duty to reimburse Scott for 1/3 of the plane ticket E. none of the other choices are correct

E. none of the other choices are correct

All employee handbooks are held to create binding contractual obligations on the part of employers who use them.

False

In Cove Management v. AFLAC, Galgano, an independent contractor who solicited insurance business for AFLAC, rented office space from Cove under AFLAC's name. When Galgano defaulted on payments, Cove sued AFLAC contending that Galgano was its agent when he rented the office, so AFLAC was liable. The appeals court held that AFLAC was liable as it had given Galgano apparent authority to make the lease.

False

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his dismissal breached an implied contract to be terminated only for cause.

False

Principals are liable for all torts committed by their agents.

False

A principal held responsible for the torts of an agent is said to have vicarious liability.

True

An employer could be liable for acts of an employee based on negligent hiring.

True

An employer should be cautious about hiring persons with criminal backgrounds that mean they could pose a threat to others as the employer could be liable for unauthorized torts that occurred on the job.

True

An express contract for certain terms of employment can restrict employment at-will.

True

If an agent commits a tort outside the agent's scope of employment, the agent is liable to the third party for damages incurred.

True

Some state courts hold that employment contracts contain implied covenants of good faith and fair dealing.

True