Chapter 14
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 special Agent
Which of the following is an advantage to having the ability to use agents:
Access to the expertise of agents
An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n):
Agency Relationship
An agent's ____ is the power to change the principal's legal obligations.
Authority
Subagents work for the agent and owe duties to:
Both the agent and the subagent
Which of the following is an advantage to having the ability to use agents:
Expanded business opportunities
A manager who runs all aspects of a hotel is most likely what kind of agent:
General Agent
A person authorized to execute all regular transactions connected with a business is called a:
General Agent
To carry out their duties, universal agents are typically granted:
General power of attorney
A person who volunteers with no expectation of being paid for her services is a(n):
Gratuitous 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:
Gratuitous agent
An agency is created when an agent agrees to act for, or in place of the
Principal
Through an agency relationship, the agent becomes a representative of the:
Principle
An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):
Special Agent
Persons appointed by an agent delegated some authority are known as:
Subagents
An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following:
Third Parties
A check-out clerk at the grocery store is typically in a master-servant relationship, not an agency relationship.
True
A company hired independent contractors to sell their products door-to-door. One sales rep, who had a criminal history, assaulted a customer, who sued the parent company. You would expect the court to hold the company liable for negligence.
True
A general power of attorney is usually given to a universal agent.
True
A person appointed by an agent to help the agent for certain specific transactions is a special agent.
True
Principals may be bound by the unauthorized acts of agents if the agent appears to third parties to have the authority to act.
True
Ratification is an affirmation by the principal of an unauthorized agreement by a person acting as an agent with a third party.
True
Some state courts hold that employment contracts contain implied covenants of good faith and fair dealing.
True
The agency relationship is a key part to most business operations.
True
The death of a principal would affect the validity of contracts then made by the agent for the principal.
True
The rule of law imposing vicarious liability on an innocent principal for the torts of an agent is respondeat superior.
True
The two general classifications of authority an agent can possess are ACTUAL authority and IMPLIED authority.
True
Traditionally, employees did not act as agents for their principals, but today employees may well also be agents.
True
When a principal's conduct appears consistent with the existence of an agency relationship, an agency by estoppel may be created.
True
In which of the following situations can an agency relationship be created?
X hires Y to buy some property on X's behalf and X makes an oral agreement that Y will work for X's company as the company's general manager and X and Y enter into a written agreement that Y will work for X as the general manager of X's company
An agency coupled with an interest is created:
by an agent who has paid for the right to exercise authority with regard to a business
Which of the following is NOT a category of agents covered in the text:
foreign agent
An agency may be established by:
operation of law or by oral agreement of the parties or by written agreement of the parties
In an agency the principal
provides the agent with authority
To establish an agency relationship:
the principal and agent must agree to form an agency
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.
True
A principal held responsible for the torts of an agent is said to have vicarious liability.
True
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.
True
A principal may designate someone to do all acts that can be legally delegated to an agent. That agent is called a universal agent.
True
A principal's major reason for developing agency relationships is to expand business opportunities.
True
A real estate agent who sells a house on commission is an agent, not an employee of the home owner.
True
A senior manager at a car dealership is likely both an agent and employee.
True
A stocker in a grocery store is an employee but not an agent for the store.f
True
Actual authority involves powers given by the principal to the agent.
True
Agencies may be terminated by operation of law, without either party taking any action.
True
Agency relationships may be based on an oral agreement.
True
Agents have a duty of obedience to their principals, which means that if the agent ignores the principal's instructions, she violates her duty.
True
Agents have a fiduciary duty to their principals.
True
Agents have no obligation to engage in activity on behalf of principals that could lead to personal liability.
True
An agency relationship may terminate by lapse of time.
True
An agency that is for the sale of land usually must be evidenced by a written contract.
True
An agency that is to last more than one year usually must be evidenced by a written contract.
True
An agent has a duty to notify his principal of all facts relevant to the purpose of the agency.
True
An agent's authority is the power to change the principal's legal obligations.
True
An auctioneer who sells goods is likely an agent and independent contractor.
True
An employer could be liable for acts of an employee based on negligent hiring.
True
An employer could be liable for sexual harassment by an employee using social media improperly in the workplace.
True
An employer held responsible for the torts of an employee is said to have vicarious liability.
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
An express ratification takes place when the principal gives a clear signal to be bound by an action that would otherwise be unauthorized.
True
An implied ratification takes place when the principal behaves as if she has the intention of ratifying an unauthorized agreement.
True
An independent contractor is not an employee of the person who hires her.
True
An independent contractor is usually not an agent of the principal who hired her, but can have that role too.
True
An undisclosed principal is a principal whose identity is unknown to the third party with whom the agent is involved.
True
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.
True
Destruction of the subject matter of an agency ends an agency relationship.
True
Employers may wish to state that employee handbooks are not binding contracts.
True
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.
True
European nations generally have more detailed rules regarding employees than does the U.S.
True
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.
True
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.
True
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.
True
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.
True
If an American company sends an American employee to work in its office in France, the employee may be under French employment law.
True
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.
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
If an agent is discovered to be representing conflicting interests, she has violated her duty of loyalty.
True
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.
True
If you hire a builder to build a home, he is likely an independent contractor for you.
True
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.
True
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.
True
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.
True
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.
True
In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his tenure at the company did not affect the right of the company to dismiss him without good cause.
True
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.
True
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.
True
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.
True
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.
True
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.
True
Many courts hold employee handbooks may create contractual obligations between employers and employees.
True
Power of attorney is based on a legal document.
True
Power of attorney is given to an agent called an attorney-in-fact.
True
Principals are presumed to have a duty to cooperate with their agents.
True
Principals have an obligation to reimburse their agents for their normal business expenses related to the agency, unless otherwise agreed.
True
When an agent has the power to do whatever is reasonable and customary to carry out the agency purpose, the agent has implied authority.
True
When an agent is allowed to delegate duties to other agents, the other agents are subagents who assist the agent.
True
When an agent is authorized to execute all transactions connected with a business, the person is a general agent.
True
When an agent pays for the right to exercise authority for a business, there is an agency coupled with an interest.
True
A person designated by a principal to do all acts that can be legally delegated to an agent is a:
Universal Agent
