Chapter 8

Which of the following is not a way by which an agency can be created? Agency by principal Ratification Agency by estoppel Operation of law

Agency by principal

True or false: A principal is not required by law to provide an agent with safe working conditions.

False

True or false: In order to be compensated, an agent's actions must always be within the scope of the agency.

False

Which of the following is not a duty owed to a principal by an agent? Reimbursement Performance Loyalty Notification

Reimbursement

Which of the following is not true regarding a principal's duty to an agent? -An agent's negligence with funds expended does not create a duty for the principal to pay. -If an agent takes actions outside the scope of an agency to further the principal's interest with no payment amount previously agreed upon, the principal must pay market rates for such services. -A principal owes an agent reimbursement for personal expenses. -A principal owes the agent a duty of cooperation.

A principal owes an agent reimbursement for personal expenses.

An agent owes a principal a duty of _________________, which requires him or her to keep truthful and accurate financial records related to the agency. Performance Obedience Accounting Loyalty

Accounting

Which of the following is not a way an agency may be created? Although no contract exists, an agent attempts to bind a principal to a contract, to which the principal agrees. An agent uses express authority to bind the principal to a contract. A principal ratifies an agent's actions and agrees to a contract. Both parties agree to enter into a contract.

An agent uses express authority to bind the principal to a contract.

The _________________ rule shields employers from the acts or omissions of employees while commuting to work. Dual-purpose Vicarious liability Coming and going Frolic and detour

Coming and going

Which of the following is not a duty owed to a principal by an agent? Loyalty Performance Accounting Compensation

Compensation

Agency is a(n) _________________ relationship between a principal and an agent. Circumstantial Estoppel Authority Contract

Contract

A principal has the duty to provide _________________ to the agent, which means paying for liabilities arising from the agent's lawful and approved acts while pursuing the principal's interests. Cooperation Indemnification Compensation Reimbursement

Indemnification

Which of the following is not true of an agency relationship? It is a legally binding agreement. It is formed only by written agreement of both parties. The agent has the power to act only to the extent authorized by the principal. The principal authorizes the agent to work on his or her behalf.

It is formed only by written agreement of both parties.

An agent owes a principal a duty of _________________, which prohibits him or her from acting in any party's interest that would conflict with those of the principal. Performance Loyalty Notification Obedience

Loyalty

An agent owes a principal a duty of _________________, which means informing the principal of any information relevant to the agency relationship. Performance Obedience Accounting Notification

Notification

Which of the following is not a duty owed to an agent by a principal? Reimbursement Compensation Obedience Cooperation

Obedience

An agency may be created by _________________, in which circumstances necessitate the recognition of a binding relationship in the absence of an agreement. Operation of law Agreement Ratification Agency by estoppel

Operation of law

An agent owes a principal a duty of _________________, which means using reasonable diligence and skill to complete the assigned tasks. Performance Loyalty Accounting Notification

Performance

Agency is a contract relationship between a(n) _________________ and a(n) _________________. Delegator; assignee Principal; agent Offeror; offeree Adviser; investor

Principal; agent

True or false: An agent has implied authority to effectuate the purposes of the contract according to the rules of custom and position.

True

True or false: An employer is liable for the torts of an employee performed within the scope of employment.

True

True or false: If the agent discovers any information relevant to the agency relationship or the principal's interest, he or she must inform the principal.

True