Business Law Ch. 29 MC

An express agency requires: a. A written agreement between the principal and agent. b. An oral or written agreement between the principal and agent. c. No agreement if the conduct indicates an implied agreement. d. An ongoing arrangement for a reasonable period of time.

b

An express written agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal is know as a(n): a. Exclusive agency contract. b. Power of attorney. c. Employer-employee relationship. d. Employer-independent contractor relationship.

b

A principal gives an agent express authority to "get his car running right." The authority that the agent has to enter into contracts for the purchase of auto parts is: a. Apparent authority. b. Authority by estoppel. c. Inherent authority. d. Express authority. e. Implied authority.

e

An agency always requires: a. Both an agent and principal who are adults. b. A written contract. c. Consideration on the part of both the principal and the agent. d. An identified underlying transaction. e. Intent by both the principal and agent to be in the arrangement.

e

An agency arrangement can be terminated by: a. Achievement of the agency's purpose. b. Mutual agreement. c. Occurrence of a specified event. d. Both A and B. e. A, B, and C.

e

Ms. Principal and Mr. Agent sign an agency contract under which Agent will sell Principal's house for a fee of $10,000. Assume that the contract is valid in all respects and that on the third day of the contract period, Ms. Principal tells Mr. Agent that she has changed her mind and doesn't want him to sell the house. The next day Mr. Agent goes to Ms. Principal with a ready, willing, and able buyer. Ms. Principal: a. Must sell to the buyer because the agency is still in existence. b. Cannot sell to the buyer because the agency is no longer in existence. c. Can recover damages from Mr. Agent because the agency had ended. d. Is not obligated to sell to the buyer because her renunciation had terminated the agency arrangement. e. May sell to the buyer even though the agency arrangement was no longer in existence.

e

In an agency for a fixed term, such as 1 year, prior to the end of the stated period, the agent has: a. The power, but not the right, to terminate the arrangement. b. The right, but not the power, to terminate the arrangement. c. Both the power and the right to terminate the arrangement. d. Neither the power nor the right to terminate the arrangement.

a

Bob enlists the help of his son to buy a new car. On the way to test-drive several models, Bob tells his son, "I'm leaving this entire decision up to you except that you are not to spend over $20,000 on whatever car you decide on." At the Toyota dealer, Bob tells the salesperson, "I'm turning this whole decision over to my son, so deal with him even though it will be my car." Later, the son returns to the dealership and negotiates the purchase of a Toyota Camry for $21,500. What type of authority, if any, existed for the son to purchase this car? a. Apparent. b. Implied. c. Actual. d. Dependent. e. No authority existed here.

a

Jack hires Frankie, who is 13 years old, to buy a computer on Jack's behalf. Which of the following is true? a. This is a valid agency relationship even though Frankie is a minor, and Jack would be bound by authorized contracts entered into on Jack's behalf. b. This is a valid agency relationship even though Frankie is a minor, but Jack would be able to disaffirm any contracts entered into on Jack's behalf. c. This agency arrangement is not valid because the agent lacks contractual capacity. d. If Frankie buys the computer on Jack's behalf, Frankie would not be entitled to payment under the terms of the agency arrangement because of his lack of capacity.

a

Someone authorized to act on behalf of another is generally known as a(n): a. Agent. b. Independent contractor. c. Employee. d. Surety.

a

The bankruptcy of which party(ies) will cause an agency to terminate? a. The principal only. b. The agent only. c. Either the principal or the agent. d. Neither the principal nor the agent.

a

The principal hires an agent to manage his restaurant. As a result, the agent hires two people to serve as waitstaff. The hiring of the waitstaff is an example of what type of authority? a. Implied. b. Express. c. Apparent. d. Ratified. e. No authority.

a

When a principal terminates an agency arrangement, the principal's action is called: a. Revocation of authority. b. Rejection of authority. c. Renunciation of authority. d. Reaffirmation of authority. e. Reacquisition of authority.

a

Where an employer makes use of a job title in an employment situation, which kind of authority can arise in the employee based on the job title? a. Apparent authority. b. Authority by estoppel. c. Inherent authority. d. Express authority. e. Implied authority.

a

Where the principal makes representations to a third party about the role that an agent is to play, which kind of authority can be created? a. Apparent authority. b. Authority by estoppel. c. Inherent authority. d. Express authority. e. Implied authority.

a

You have contracted orally with Patty to buy some real estate on her behalf. The only limitations are that she wants a vacant lot in a residential area for less than $100,000. If you find such a residential lot costing $85,000, what type of authority do you have to enter into this transaction on Patty's behalf? a. Express. b. Apparent. c. Implied. d. Ratification.

a

An agency arrangement based on the conduct of the two parties is what type of agency? a. Express. b. Implied. c. Inherent. d. Apparent.

b

Apparent authority can be best described as a situation where: a. The principal and agent undertake actions in accordance with their earlier agreement that one act as agent for the other. b. The principal has made representations to a third party that someone is to act as her agent. c. The agent has made representations to a third party that he is acting as an agent for another. d. The conduct of two parties indicates that they are acting in a principal and agent capacity. e. Both B and C.

b

Charlie Customer goes to Kim, a local travel agent, and buys an airline ticket on BartAir. In this transaction: a. Charlie is the principal, Kim is his agent. b. BartAir is the principal, Kim is its agent. c. Kim is the agent of neither BartAir nor Charlie. d. Kim is the agent of both Charlie and BartAir.

b

Incidental authority is a kind of: a. Express authority. b. Implied authority. c. Apparent authority. d. Authority by ratification. e. Authorization without authority.

b

Pam and Alex enter into a contract for an agency agreement that states that Alex is Pam's agent to sell Pam's house. The term of the agency is from January 1 to April 1, 2002. Which is true as of February 29, 2002? a. Neither Pam nor Alex has the power to end this agency. b. Both Pam and Alex have the power to end this agency. c. Pam has both the right and power to end this agency;Alex has neither. d. Alex has both the right and power to end this agency; Pam has neither.

b

Principal has entered into a 6-month contract during which Agent will sell Principal's products on a commission basis. Although Agent is complying with all terms of the agreement, during the third month Principal tells Agent she is no longer going to sell his products and will receive no further commissions if she does. Which of the following is true? a. Agent continues to have a duty to sell because the 6 months are not yet over. b. Principal has the power, but not the right, to terminate the agency. c. Principal has the right, but not the power, to terminate the agency. d. Principal has both the right and the power to terminate the agency. e. Principal has neither the right nor the power to terminate the agency.

b

Susan Marie works as a receptionist for a computer software company. Susan Marie works from 8 a.m. to 5 p.m. on Monday through Thursday, and from 8 a.m. to noon on Friday. Susan Marie is paid $15 per hour, and is told how to do her job and what she should be working on at any particular time. The software company and Susan Marie have executed an "independent contractor agreement" in which the terms of this arrangement are specified. Which of the following is true? a. Susan Marie would be treated as an employee because she is paid for the work that she does. b. Susan Marie would be treated as an employee because of the control exercised by the software company over her work and because of the manner in which she is paid. c. Susan Marie would be treated as an independent contractor because of the terms of the express agreement with the software firm. d. Susan Marie would be treated as an independent contractor because of the irregular working hours of working only part of the day on Fridays.

b

The primary function of an agent in a principal-agent relationship is to: a. Protect the principal from legal liability. b. Conduct business on behalf of the principal. c. Enter into contracts with the principal. d. Operate as a partner with the principal. e. Maintain the principal's status quo.

b

What is the significance of an agency coupled with an interest? a. Only apparent authority can exist. b. The agency cannot be terminated unilaterally by the principal. c. The agent must be compensated for the agent's efforts. d. The agency cannot be terminated by agreement of the principal and agent. e. Both B and D.

b

Which is true about agency agreements? a. A minor may generally be a principal. b. A minor may generally be an agent. c. An agency agreement must have consideration on both the principal's and agent's side. d. Agents must disclose their agency status to those with whom they are dealing.

b

Which of the following would not terminate an agency by operation of law? a. A real estate agent loses his license. b. A principal hires another agent with similar duties. c. The principal is declared bankrupt. d. A lightning bolt kills the principal.

b

A principal and agent enter into an agency agreement under which the agent has a fixed 90-day period to sell the principal's house. Which of the following will end the agency arrangement prior to the end of the 90-day period? a. Notification by the principal that the arrangement is over. b. Notification by the agent that the arrangement is over. c. Notification by either the agent or the principal that the arrangement is over. d. Neither the agent nor the principal can unilaterally end the arrangement prior to the expiration of the 90-day period.

c

An agency coupled with an interest typically arises in which situation? a. The agent is compensated for the performance of the duties. b. The principal would likely suffer a loss if the agent's duties are not properly performed. c. The principal gives the agent authority to sell collateral owned by the principal in the event that the principal defaults on a loan payable to the agent. d. The agent is hired to perform personal services on behalf of the principal. e. All of the above.

c

An express agency arrangement can be formed with which types of agreements? a. Written only. b. Oral only. c. Oral or Written. d. An agreement is not necessary to form an express agency.

c

Assuming that any minor who is involved is old enough to understand the terms of a transaction, which of the following is generally true in order to create a contract that cannot be disaffirmed? a. A minor can act as an agent on behalf of another minor. b. An adult can act as an agent on behalf of a minor. c. A minor can act as an agent on behalf of an adult. d. An adult can act as an agent on behalf of a minor if the minor waives his right to disaffirm. e. The principal can disaffirm all contracts that involve a minor as either principal or agent.

c

Compared to an employee, an independent contractor is characterized by: a. Not being paid as much for the work performed. b. A lack of liability for her own actions. c. More freedom to do her work in the manner she determines. d. Less ability to hire others to assist her.

c

If the law changes such that the actions called for in an agency arrangement become illegal after the agency has been carried on legally for some period of time, what is the consequence? a. The agency is terminated retroactively and the parties are left where they are. b. The agency is terminated retroactively and the parties must each return any consideration received from the other. c. The agency is terminated effective upon the change in law taking effect. d. The agency is not terminated, but the principal and agent will each become liable for his or her own illegal actions. e. The agency is not terminated, but the principal and agent will each become liable for the illegal actions of the other.

c

In the context of agency, ratification refers to: a. Reaffirming a contract to which one previously agreed. b. Agreeing, after reaching majority, to be bound by a contract entered into as a minor. c. Agreeing to be bound to a contract entered into by an agent that exceeded the agent's authority at the time the agent entered into it. d. Getting the appropriate agency to agree to take steps to reduce an excessively large rodent population.

c

The death of which party(ies) will cause an agency to terminate? a. The principal only. b. The agent only. c. Either the principal or the agent. d. Neither the principal nor the agent.

c

The general reference source for agency law is: a. Article 4 of the Uniform Commercial Code. b. United States Supreme Court opinions. c. The Restatement (Second) of Agency. d. The Restatement (Second) of Contracts. e. State constitutions.

c

The principal hires an agent to manage her boutique. After several months, the principal fires this agent. To avoid liability for any further acts done by this agent, the principal must give: a. Direct notice to all persons who knew of the agency. b. Direct notice to those who dealt with the agent, and no notice to anyone else. c. Direct notice to those who dealt with the agent, but only constructive notice to those who knew of the agency but did not deal with the agent. d. Constructive notice to all persons who knew of the agency, and no notice to anyone else. e. No notice of the termination is required in order to avoid

c

What is the effect of an agent terminating a fixed-term agency prior to the expiration of the stated period of time? a. The agency is terminated without further legal consequences. b. The attempted termination of the agency is not effective. c. The agency is terminated, but the agent might be liable for damages to the principal. d. Any contracts previously formed by the agent can be disaffirmed by the third party. e. The authority of the agent changes from express to apparent.

c

When an agent terminates an agency arrangement, the agent's action is called: a. Revocation of authority. b. Rejection of authority. c. Renunciation of authority. d. Reaffirmation of authority. e. Reacquisition of authority.

c

Which of the following is true? a. All employees are agents, and no independent contractors are agents. b. All employees are agents, and some independent contractors are agents. c. Some employees are agents, and some independent contractors are agents. d. Some employees are agents, and no independent contractors are agents. e. No employees are agents, and no independent contractors are agents.

c

An agent negotiates a contract with a third party, for which the agent did not have express authority. Which of the following is true? a. The principal can never be held liable on the contract because the agent exceeded his authority. b. The principal can be liable on the contract only if the agent had implied authority to enter into the contract. c. The principal can be liable on the contract only if apparent authority was present. d. Either implied or apparent authority might cause the principal to be liable on the contract.

d

Bob, owner of a small business, goes to Sally to negotiate the purchase of some inventory. Bob has Paul with him, who he introduces to Sally as "Paul, my purchasing manager." A short while later, Bob says he must leave and says, "You two can conclude this deal." Paul signs a contract to buy 2,500 units of her product. Paul tells Bob, and Bob then says, "You know you weren't supposed to buy more than 1,000 units!" Assume that Bob, in fact, had instructed Paul, prior to meeting with Sally, not to buy more than 1,000 units. Can Sally hold Bob to the contract? a. No, because Paul did not have authority to buy 2,500 units. b. No, but she can hold him to a purchase of 1,000 units. c. Yes, because there was implied authority for the transaction. d. Yes, because there was apparent authority for the transaction.

d

Implied authority can be best described as a situation where: a. The principal and agent undertake actions in accordance with their earlier agreement that one act as agent for the other. b. The principal has made representations to a third party that someone is to act as her agent. c. The agent has made representations to a third party that he is acting as an agent for another. d. The conduct of two parties indicates that they are acting in a principal and agent capacity. e. Both B and C.

d

John is hired at minimum wage in a fast-food restaurant. John works at the counter taking customer orders, accepting payment, and giving the orders to the customer. John must work in accordance with a detailed procedures manual. John is: a. An independent contractor, but not an agent. b. An employee, but not an agent. c. An independent contractor as well as an agent. d. An employee as well as an agent.

d

Which of the following is generally true about a relationship where one party works for another? a. A party can simultaneously be an employee and an independent contractor. b. A party can simultaneously be an employee and an agent. c. A party can simultaneously be an independent contractor and an agent. d. Both B and C are true. e. A, B, and C are true.

d

Which of the following is not one of the common types of agent authority? a. Apparent. b. Implied. c. Actual. d. Dependent. e. Agency by ratification.

d

Which of the following is true about determining whether someone working for another is an independent contractor or an employee? a. The classification of the person doing the work depends on that person's job title. b. The classification of the person doing the work depends on whether the parties to the arrangement consider the person doing the work to be an employee or independent contractor. c. The classification of the person doing the work depends on if the person is also an agent. d. The classification of the person doing the work depends on a number of factors, with no single factor being any more important than the others. e. The classification of the person doing the work depends on a number of factors, with the degree of control over that person's work by the person who is paying for the work being the most important factor.

e