ch 14 true/false
1. Agency relationships used to be common in decades past, but in recent years they have fallen out of favor. (A) True (B) False
False
11. A general power of attorney is usually given to a special agent. (A) True (B) False
False
12. A principal may designate someone to do all acts that can be legally delegated to an agent. That agent is called a general agent. (A) True (B) False
False
13. Gratuitous agents are appointed by other agents to undertake some work for the principal. (A) True (B) False
False
18. A subagent is an agent of an agent, not an agent of the principal, so owes no duty to the principal, only to the agent. (A) True (B) False
False
19. Agency relationships must be evidenced by a written contract. (A) True (B) False
False
20. All valid agency relationships are contracts. (A) True (B) False
False
24. The legal document intended for the purpose of expressly establishing an agency is the attorneyin- fact. (A) True (B) False
False
27. Power of attorney may only be held by a licensed attorney. (A) True (B) False
False
3. In an agency relationship, the agent is a neutral party regarding contracts between the principal and third parties. (A) True (B) False
False
32. An express ratification takes place when the principal behaves as if she has the intention of ratifying an unauthorized agreement. (A) True (B) False
False
37. Agents rarely can change a principal's legal obligations. (A) True (B) False
False
38. The two general classifications of authority an agent can possess are general authority and implied authority. (A) True (B) False
False
40. Express or actual authority may only be created by written instruction or written contract. (A) True (B) False
False
44. Apparent authority arises when agent concludes that there is an appearance of authority from the principal to act on behalf of the principal in dealing with third parties. (A) True (B) False
False
47. In Town Center Shopping Center v. Premier Mortgage, a lease for office space, made by a manager of a mortgage company, was negated by the courts because the manager did not have authority to commit her company to that. (A) True (B) False
False
48. In Town Center Shopping Center v. Premier Mortgage, a lease for office space, made by a manager of a mortgage company, was negated by the courts because the leasing company should have known that a person in the position of the manager would not have such authority. (A) True (B) False
False
49. Principals are presumed at common law to have no duties to their agents. (A) True (B) False
False
5. An agent may not legally bind a principal to contracts without the principal agreeing to each contract. (A) True (B) False
False
50. Legal obligations in an agency run from agent to principal, not principal to agent. (A) True (B) False
False
52. Principals only duty to agents is to compensate. (A) True (B) False
False
56. Fiduciary duties apply to principals: agents have only non-fiduciary duties. (A) True (B) False
False
58. An agent is expected to perform responsibilities with the degree of care that is called ordinary care under the circumstances. (A) True (B) False
False
59. In her relations with her principal, an agent must meet the "ordinary standard of conduct" imposed on people engaged in business dealings. (A) True (B) False
False
6. A principal may designate someone to execute all transactions connected with running a business. Such a person is known as a special agent. (A) True (B) False
False
63. If money is commingled (funds of agent mixed with funds of the principal), a violation of duty to account occurs only if the principal can show actual harm. (A) True (B) False
False
65. In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was not liable because it had no way to know of his actions. (A) True (B) False
False
68. An agent makes a contract with a third party on behalf of the disclosed principal. The principal then breaches the contract. The third party may sue the agent to recover damages. (A) True (B) False
False
72. A contract made by an agent on behalf of an undisclosed principal is never binding on a third party who did not know about the principal. (A) True (B) False
False
73. In Yin v. J's Fashion Accessories, the court found that Yim was an agent for his company, Hosung, so was not liable for debts owed by Hosung, the principal. (A) True (B) False
False
76. If either the principal or agent dies, the agency relationship is suspended until replacements continue the agency's purpose. (A) True (B) False
False
81. If the subject matter of an agency agreement is destroyed, the agency relationship continues until new subject matter is found. (A) True (B) False
False
85. An independent contractor is an agent and an employee of the person who hired her. (A) True (B) False
False
92. One factor that courts may consider when trying to decide if an independent contract or employee relationship exists is whether or not the contractor has the right to direct or control the work of the employer. (A) True (B) False
False
93. In France v. Southern Equipment, where a worker was seriously hurt on a roofing job, the courts held that the owner of the building being roofed was liable for the injuries suffered by the worker. (A) True (B) False
False
96. Geary was fired by his supervisor for revealing to higher management a serious problem with a company product. He sued for wrongful dismissal. You would expect the court to hold that Geary would be successful because he proved that if the product had gone to market it could have cost many lives. (A) True (B) False
False
10. A general power of attorney is usually given to a universal agent. (A) True (B) False
True
100. Some state courts hold that employment contracts contain implied covenants of good faith and fair dealing. (A) True (B) False
True
14. If Hilda volunteers to sell Heidi's horse for her, because Hilda knows lots of potential buyers, and Heidi agrees, Hilda is a gratuitous agent. (A) True (B) False
True
15. If someone volunteers to act as a gratuitous agent, and performs a task, such as selling a car, for a principal, the legal consequences are the same as if the agent were paid. (A) True (B) False
True
16. When an agent is authorized to execute all transactions connected with a business, the person is a general agent. (A) True (B) False
True
17. When an agent is allowed to delegate duties to other agents, the other agents are subagents who assist the agent. (A) True (B) False
True
2. The agency relationship is a key part to most business operations. (A) True (B) False
True
21. Agency relationships may be based on an oral agreement. (A) True (B) False
True
22. An agency that is for the sale of land usually must be evidenced by a written contract. (A) True (B) False
True
23. An agency that is to last more than one year usually must be evidenced by a written contract. (A) True (B) False
True
25. Power of attorney is based on a legal document. (A) True (B) False
True
26. Power of attorney is given to an agent called an attorney-in-fact. (A) True (B) False
True
28. Ratification is an affirmation by the principal of an unauthorized agreement by a person acting as an agent with a third party. (A) True (B) False
True
29. An express ratification takes place when the principal gives a clear signal to be bound by an action that would otherwise be unauthorized. (A) True (B) False
True
30. If a principal behaves as if he intended to ratify an unauthorized agreement between his agent and a third party, a court will find that implied ratification has occurred. (A) True (B) False
True
31. An implied ratification takes place when the principal behaves as if she has the intention of ratifying an unauthorized agreement. (A) True (B) False
True
33. When a principal's conduct appears consistent with the existence of an agency relationship, an agency by estoppel may be created. (A) True (B) False
True
34. In an emergency, when someone acts on behalf of someone else in order to avoid a loss, the law may create an agency by operation of law. (A) True (B) False
True
35. If a hurricane is coming and you spend $800 to buy supplies to protect your neighbor's house against storm damage, when they are gone and cannot be reached, you may have created an agency by operation of law. (A) True (B) False
True
36. An agent's authority is the power to change the principal's legal obligations. (A) True (B) False
True
39. The two general classifications of authority an agent can possess are actual authority and implied authority. (A) True (B) False
True
4. A principal's major reason for developing agency relationships is to expand business opportunities. (A) True (B) False
True
41. Actual authority involves powers given by the principal to the agent. (A) True (B) False
True
42. When an agent has the power to do whatever is reasonable and customary to carry out the agency purpose, the agent has implied authority. (A) True (B) False
True
43. Apparent authority arises when the principal creates an appearance of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal. (A) True (B) False
True
45. Principals may be bound by the unauthorized acts of agents if the agent appears to third parties to have the authority to act. (A) True (B) False
True
46. In Town Center Shopping Center v. Premier Mortgage, a manager of a mortgage company was held to have apparent authority when she entered into a lease for office space, even though she did not have authority to commit her company to that. (A) True (B) False
True
51. Principals are presumed to have a duty to cooperate with their agents. (A) True (B) False
True
53. Principals have an obligation to reimburse their agents for their normal business expenses related to the agency, unless otherwise agreed. (A) True (B) False
True
54. A major duty of principals to their agents is to indemnify them under most circumstances for liabilities incurred in completing the purpose of the agency. (A) True (B) False
True
55. If an agency relationship did not establish a rate of compensation for the duties of the agent, the principal must pay the "customary" rate for such services. (A) True (B) False
True
57. Agents have a fiduciary duty to their principals. (A) True (B) False
True
60. If an agent is discovered to be representing conflicting interests, she has violated her duty of loyalty. (A) True (B) False
True
61. Agents have a duty of obedience to their principals, which means that if the agent ignores the principal's instructions, she violates her duty. (A) True (B) False
True
62. Agents have no obligation to engage in activity on behalf of principals that could lead to personal liability. (A) True (B) False
True
64. An agent has a duty to notify his principal of all facts relevant to the purpose of the agency. (A) True (B) False
True
66. In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was liable for his actions because it failed to monitor Gritton's improper actions sufficiently. (A) True (B) False
True
67. In Bearden v. Wardley Corp., where real estate agent Gritton cheated Bearden on a house deal, the court held that his employer, Wardley, was liable for breach of fiduciary duty. (A) True (B) False
True
69. A principal is contractually liable to a third party if that party enters into a contract presented by an agent with apparent authority to act for the principal. (A) True (B) False
True
7. When an agent pays for the right to exercise authority for a business, there is an agency coupled with an interest. (A) True (B) False
True
70. An undisclosed principal is a principal whose identity is unknown to the third party with whom the agent is involved. (A) True (B) False
True
71. In the case of an undisclosed principal, a third party is unaware of the identity of the principal as well as the existence of an agency relationship. (A) True (B) False
True
74. In Yin v. J's Fashion Accessories, the court found that Yim was an undisclosed agent for his company, Hosung, but was liable for debts owed by Hosung, the principal. (A) True (B) False
True
75. In Yin v. J's Fashion Accessories, the court stated that in most cases if an agent makes a contact without identifying his principal, the agent incurs personal liability for the contract. (A) True (B) False
True
77. The death of a principal would affect the validity of contracts then made by the agent for the principal. (A) True (B) False
True
78. An agency relationship may terminate by lapse of time. (A) True (B) False
True
79. Destruction of the subject matter of an agency ends an agency relationship. (A) True (B) False
True
8. A person appointed by an agent to help the agent for certain specific transactions is a special agent. (A) True (B) False
True
80. Agencies may be terminated by operation of law, without either party taking any action. (A) True (B) False
True
82. A check-out clerk at the grocery store is typically in a master-servant relationship, not an agency relationship. (A) True (B) False
True
83. Traditionally, employees did not act as agents for their principals, but today employees may well also be agents. (A) True (B) False
True
84. An independent contractor is not an employee of the person who hires her. (A) True (B) False
True
86. A stocker in a grocery store is an employee but not an agent for the store. (A) True (B) False
True
87. A senior manager at a car dealership is likely both an agent and employee. (A) True (B) False
True
88. A real estate agent who sells a house on commission is an agent, not an employee of the home owner. (A) True (B) False
True
89. An auctioneer who sells goods is likely an agent and independent contractor. (A) True (B) False
True
9. A principal may designate someone to do all acts that can be legally delegated to an agent. That agent is called a universal agent. (A) True (B) False
True
90. If you hire a builder to build a home, he is likely an independent contractor for you. (A) True (B) False
True
91. An independent contractor is usually not an agent of the principal who hired her, but can have that role too. (A) True (B) False
True
94. In France v. Southern Equipment, where a worker was seriously hurt on a roofing job, the courts held that the owner of the building being roofed was not responsible for the injury suffered by an employee of an independent contractor doing the roof work. (A) True (B) False
True
95. Employment-at-will means that, unless a contract holds otherwise, employers are free to fire workers at any time for any reason and employees are free to quit their jobs at any time for any reason. (A) True (B) False
True
97. Geary was fired by his supervisor for revealing to higher management a serious problem with a company product. He sued for wrongful dismissal. You would expect the court held that Geary's dismissal was proper under employment-at-will despite his good motives. (A) True (B) False
True
98. If an American company sends an American employee to work in its office in France, the employee may be under French employment law. (A) True (B) False
True
99. European nations generally have more detailed rules regarding employees than does the U.S. (A) True (B) False
True
