business law 2

Agents also have implied power, also called _________ power, to act for a principal in emergencies.

inherent agency

An agent who, without authority, represents to a third party that she is making a contract on behalf of a principal: _______.

is liable to the third person for damages if the principal refuses to perform the contract

A principal is _______ by representations made within the agent's ______ authority that are customarily made in the kind of business being transacted by the agent.

liable, apparent

The fact that an agent may have some implied or apparent authority does not end the inquiry regarding a third party's duty to determine the extent, if any, of the agent's authority. The specific question is whether the agent or purported agent had implied or apparent authority to _____.

make the particular agreement

A principal is ________ when the third person knows he is dealing with an agent but does not know the identity of the principal.

partially disclosed

If Joe plans to be on a business trip and leaves his minor child Marla with a trusted family, he would be wise to give his friend Bob a written ______ for any emergency issues that may arise with Marla while he is away.

power of attorney

Many agents use a(n) ________ with the words "subject to approval by the home office" usually has a(n) _________ clause limited the salespersons's authority.

preprinted form, exculpatory

Since the principal rather than the agent is the intended party to the contract, the ______ has the right to: ______.

principal, enforce it

When the principal is disclosed, all parties intend the contract to be between: __________.

the principal and the third party

When an agent commits a _____ or crime while working for the principal, the agent is ______ for the consequences of his actions.

tort, personally liable

Actual authority is the ______ authority granted to the agent by the principal. (Check all that apply)

true proper implied

When a principal instructs her agent to commit a crime, the agent is: ______.

under no legal obligation to do so

True or false: Generally, the agent rather than the principal is liable on the contract.

False

__________ authority may arise from customs in the trade.

Apparent

One of the primary elements of ratification is that the principal must have had knowledge of: __________.

all the material facts, although it is not necessary that she fully understand the legal significance of those facts to ratify the action

Under ______ liability the principal basically is liable because of her own tortious conduct.

direct

Courts often use the justifiable belief test to determine the extent of an agent's ________.

implied authority

If a principal has been judged insane or is a minor, the law imposes a(n) ______ by the agent that the principal has the capacity to be bound by the transaction.

implied warranty

A principal may be bound on a contract by an agent with which of the following types of authority? (Check all that apply)

ratification Actual authority Apparent authority

On behalf of the principal, an agent can delegate _______ acts to employees that involve no judgment or discretion.

ministerial

A principal will ________ to a third party if an agent _____ with the third person to withhold knowledge or money from the principal.

not be bound, colludes

When a corporation is appointed an agent, of necessity it must act through its officers who then become _______ of the principal, because a corporation can act only through its own agents.

subagents

True or false: If an agent intends to act for a principal and not be held personally liable, she should fully disclose the identity of the principal

True

In order to avoid ________ authority, a principal should impose limitations on an agent's authority that are not ________ and clearly communicate those limitations to third parties.

apparent, customary in the trade

A principal who is bound to a contract with a third person based on an agent's _____ authority ______.

apparent, may sue the agent for damages

A(n) ______ is an agent whose authority is in writing.

attorney-in-fact

Generally, people who deal with an agent or a purported agent have a duty to determine the extent, if any, of the agent's _____.

authority

Any act that the principal could have authorized at the time the act was done may ______.

be ratified

A(n) __________ agent is a person who acts for the principal in a number of transactions over a period of time.

general

A(n) ______ agent acts for the principal in a number of transactions over a period of time while a(n) ______ agent is authorized to do a specific transaction.

general, special

An agent possesses the Blank 1 of 1 authority to do whatever else is reasonably necessary to accomplish the objectives of the agency.

implied

If express authority does not cover contingency that may arise, an agent also possesses the ______ authority to do whatever else is reasonably necessary to accomplish the objectives of the agency.

implied

A principal is _______ when an agent signs a negotiable instrument indicating her status as an agent, but forgets to identify the principal to the third party.

partially disclosed

An agent who acts for a corporation that is not yet formed, or for an entity that has no legal existence, such as an unincorporated association, is: ______.

personally liable on the contract

An agent has no duty to comply with a principal's orders that are ______, because his duty to ______ is greater than the duty to the principal.

wrongful, society

Suppose Barbara is the owner of a hardware and lumber business and she is away for an extended vacation. During a torrential downpour the roof begins to leak and threatens to dump water on inventory and bags of concrete in the warehouse. Mark, the assistant manager, cannot get a hold of Barbara and instead calls Sam at Roofers-R-Us, to fix the roof, who estimates the repairs will cost $2,500 which Mark accepts. Sam completes the work and saves the inventory. Did Mark have the authority call Sam and have the roof repaired?

Yes, Mark had the implied inherent agency power to call Sam and pay for fixing the roof.

If a corporation is an agent, it always has ______ authority to hire ______.

implied, subagents

The ______ doctrine means that notice to the agent is notice to the principal if it relates to the business of the agency.

imputation

Under the _______ doctrine, an agent has a duty to inform the principal of knowledge the agent gains: ______.

imputation, in the course of her responsibilities

Generally, ratification is basically a question of the principal's ______, which may be _______ by his acts or failure to act.

intent, express or implied

If an agent becomes a party to a contract along with the principal, she will assume: ______.

joint liability

To determine the extent of an agent's implied authority, courts often use the ______.

justifiable belief test.

A principal is normally not bound by the ________ acts of employees of agents unless these employees are also subagents whose appointment by the agent has been authorized.

ministerial

A principal's intent to ratify an agency may be inferred if the principal ________. (Check the two correct answers)

fails to repudiate the unauthorized contract after becoming aware of it accepted the benefits of the unauthorized contract

True or false: An agent may not make a contract in her own name while being employed as an agent.

False

Even though an agent may not have ______ authority, she may have _______ authority if the principal does - or fails to do - something that causes a third party to reasonably believe the agent can do business for the principal.

actual, apparent

The words or actions of a(n) Blank 1 of 1 alone cannot create apparent authority.

agent

______ authority can either be express or implied.

Actual

Once a principal ratifies the agent's action, the principal is: ______.

bound in the same manner as if the agent had been fully authorized from the beginning.

The principal must have had legal ______ to do the act - both at the time it was done by the agent in the principal's name, and when the principal ______.

capacity, ratified the agency

Ratification gives both: (1) the agent the same right to ________ that she would have had if there had been prior authorization, and (2) the principal to ________ of the contract.

compensation, the full benefits

If an agent ______ her authority and contracts with ABC Corp. on behalf of the principal, the principal can avoid liability to ABC if: ______.

exceeds, he gives actual notice to ABC Corp about the agents exceeding her authority.

The ______, ______, and ______ of the agent are immaterial in deciding whether the implied warranty of authority applies. (Check the three correct answers)

good faith knowledge intent

Once a principal ratifies the agent's action, the agent is: ______.

released from liability to both the principal and the third person for any and all damages

A third party's knowledge that the agent is not authorized to make the guaranty: ________.

relieves the agent of liability

Many courts permit a third party to ______ a contract when the third party has relied on an agent's misrepresentation by the agent even though the contract contains a(n) ______ clause.

rescind, exculpatory

An agent acting within her ______ authority is not in violation of her agency duty to the principal.

actual

An agent's ______ authority may be either express or implied.

actual

An gent has ________ authority to receive payment on an instrument she negotiates for a loan and has been permitted by the principal to keep.

apparent

Even if an agent does not have actual authority, she can have _______ authority if the principal fails to inform third persons that the relationship is not what it appears to be.

apparent

A person can become a(n) _________ from the principal's failure to inform third persons that the relationship is not what it appears to be.

apparent agent

A principal may be bound on a contract by an agent with _________ who appeared to have been given authority by a principal to enter into the contract.

apparent authority

An agent has _____ authority when the principal does something that causes a third party to ______ the agent has authority to conduct business for the principal.

apparent, reasonably believe

A principal can be ______ liable when she is ______ in the hiring and/or the supervision of the agent.

directly, negligent

A debt of $10,000 owing to the principal is ______ if the agent has authority to collect the debt and is paid the $10,000.

discharged

A debt owed to the principal is ______ if the agent has authority to collect the debt, and steals the $10,000 without paying the principal.

discharged

If a salesman comes to your door offering to sell products from ABC Corp, legally that principal is: ______.

disclosed

Usually, a person who is dealing with an agent of a(n) ______ is aware of the fact and knows for whom the agent is acting.

disclosed principal

With a few exceptions, agents for: ________ on contracts they make for principals.

disclosed principals cannot bring suit

One can assume that general agents to have a broader range of _________ than special agents.

implied authority

Liability is imposed on an agent who has exceeded his authority on the basis of a(n) ______ and the agent is treated as if he had guaranteed to the third party that he had authority to make the contract.

implied warranty of authority

If an agent justifiably believed she had authority, her authority would be _____, not ______.

implied, apparent

The rights and duties of the parties when the principal is _______ basically are the same as when the principal is undisclosed.

partially disclosed

An agent who is signs a contract for a principal who is non-existent at the time, is: ______.

personally liable on the contract

The principal may also be liable for the torts and crimes committed by his agent under the doctrine of ______.

respondeat superior liability

Between the agent and the principal, the agent is ultimately liable for the acts of its _______, although the agent can limit her liable through the use of a(n) _______ clause.

subagent, exculpatory

In which of the special situations below may an agent become personally liable for a contract with the third person? (Check all that apply)

unauthorized actions by the agent an undisclosed principal nonexistent or incompetent principals

If a large and well-known company wishes to purchase land to develop for a new manufacturing plant, it could approach the transaction as a(n) ______ to keep costs down.

undisclosed principal

The identity of a(n) _____ would be known only to the agent.

undisclosed principal

If an agent represents a(n) _______, the agent is personally liable for any contract she signs on the principal's behalf.

undisclosed principal partially disclosed principal

True or false: Historically, it has been relatively easy to convict a principal for the crimes committed by her agent within the scope of employment.

False

True or false: A conflict of interest occurs when an agent colludes with the third person to withhold knowledge or money from the principal.

True

Today, revised criminal codes have made it ______ to impose criminal liability on principals if the agent's criminal behavior occurred: ______.

easier, within the scope of employment

If an agent wishes to not confuse a third party and avoid personal liability the agent should sign all documents by fully __________ and clearly ______.

disclosing the identify of the principal, indicating her capacity as an agent

A person who represents that she is making a contract on behalf of a principal but who has no authority to do so: ______.

does not bind the principal

Because an agent is liable on contracts entered into on behalf of a(n) ________, the agent is also _________ on such a contract as a party to it.

undisclosed principal, permitted to sue

A(n) _______ principal may enforce a contract, and if the the third party to the contract discovers the principal's true identity, she may elect to: ______.

undisclosed, sue the principal instead of the agent

When the principal is _______, the third party who deals with the agent believes the agent is acting personally and accordingly expects: ______.

undisclosed, the agent to be a party to the contract

Essentially, a principal ____________ if the agent had performed the act herself.

will be liable for the acts of an agent's employees only

If the agent has signed the contract __________, the agent has no liability on the contract.

within her authority

For a(n) ______ to be effective, the agent or purported agent must have acted on behalf ofthe principal who must ________.

ratification, be disclosed to the third party

If a principal ______ the act of her agent who has exceeded her given authority, or even an act by someone who has not been appointed an agent at all - she may become liable.

ratifies

A(n) ______ clause gives third parties notice that the agent lacks authority to make binding contracts.

exculpatory

An agent has ______ authority when the principal either ______ or by a writing, specifically describes the extent of the agent's powers.

express, orally

In a situation involving an undisclosed principal, if the third person elects to recover from the agent, the principal _____ required to _____ the agent.

is; indemnify

Courts often use the ______ test for determining the extent of an agent's apparent authority based on the _______ who is dealing with the agent.

justifiable belief, third party

A principal is ______ for representations that are within her agent's ______ authority to make and are reasonably necessary to accomplish the purpose of the agency.

liable, implied

Principals often are liable for the torts of their agents under the doctrine of ______, which means "let the master answer."

respondeat superior