Law 3220 Chapter 14 Practice Questions

Which of the following is an advantage to having the ability to use agents:

a. access to the expertise of agents/expand business opportunities

The authority given by the principal to an agent, conferring on the agent the power and right to change the principal's legal status is referred to as:

a. actual authority

A key element of an agency relationship is:

a. an agent's ability to transact business for the principal

In Guz v. Bechtel National, where Guz was fired after 22 years good service in a personnel cutback and sued for breach of implied contract and covenant of fair dealing, the California high court held that Guz:

a. had no suit against his employer

If a contractor does not have authority to enter into contracts for the principal then:

a. he is not an agent

When there is an undisclosed principal, the agent is:

a. liable to the third party for the principal's nonperformance of the contract

Many states require agencies that will exist for ________ to be established in writing.

a. more than one year/sale of land

In an agency the principal:

a. provides the agent with authority

Clark, a movie producer, was allowed to work at a movie production company's offices (ITC) out of courtesy. His business card listed the ITC address and his phone calls were handled by ITC staff. In the office, he made a deal to produce a movie for another company. When problems developed and the company, presuming Clark worked for ITC, sued ITC. The could would be likely to hold that ITC:

a. ratified Clark's actions and so became liable for his actions

When a principal accepts the consequences of the activities of a person who had previously not been the principal's agent, the principal:

a. ratifies the agency

An express contract in employment exists when:

a. the employer and employee agree on employment for a certain time

To ratify an agreement a principal must know:

a. the important facts of the agreement

Implied authority consists of:

a. the power to do whatever is reasonable and customary to carry out the agency purpose

When a liability is imposed on the principal for the unauthorized torts of an agent, it is called:

a. vicarious liability

Agreement of the parties, ratification of the agent's activities by the principal, application of the doctrine of estoppel and operation of law are all:

a. ways that an agency may be established

Cook instructs Chan, her agent, to buy a van for her business. Chan contracts for a van with a third party, who knows that Chan is an agent. If Cook does not like the van and refuses to pay for it, the seller may sue:

b. Cook because Chan has actual authority to make a contract on behalf of her principal

Juan and Marie enter into an oral agreement that Marie will sell Juan's crusty herb garlic bread to gourmet food stores in the area. This works until Juan gets sick and no longer makes his bread. Marie is furious that Juan is unable to supply her with the popular bread and sues him for lost profits. A court is likely to rule:

b. Marie's authority to act as agent for Juan lapsed and the agency relationship is terminated

To carry out their duties, universal agents are typically granted:

b. a general power of attorney

Agency by estoppel means:

b. actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf

The duties of a principal to an agent do not include:

b. allowing the agent "significant discretion"

Express ratification creating an agency by the principal occurs when the principal:

b. by action shows a clear intent to be bound by unauthorized acts of the agent

An agency coupled with an interest is created:

b. by an agent who has paid for the right to exercise authority with regard to a business

Scott is an agent for Lee and his duties require him to fly to Chicago from Cleveland. Scott gets up late and misses his flight to Chicago so he has to buy a second plane ticket. As principal, Lee:

b. does not have a duty to reimburse Scott for the second plane ticket because it was Scott's fault he had to buy it

A person who volunteers with no expectation of being paid for his/her services is a(n):

b. gratuitous agent

Bill is an attorney in Ohio. Marla hires Bill to create a trust for her children. Bill has not been keeping up with developments in trust law and so creates and inefficient trust. Under recent Ohio law, he could have created a much more beneficial trust. In this case, Bill:

b. has violated a duty of reasonable care

According to the California supreme court in Foley v. Interactive Data, employer handbooks:

b. may provide grounds for a breach of employment

Through an agency relationship, the agent becomes a representative of the:

b. principal

The law of agency places its primary emphasis on the duties:

b. the agent owes to the principal

An agent must perform instructions provided by the principal. If the agent fails to do so, he violates:

b. the duty of obedience and performance

Actual authority give the agent:

b. the power and right to change the principal's legal status

Someone designated to do all acts that can be legally granted to an agent is called a(n):

b. universal agent

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:

b. was not obligated to the lease because Galgano did not have apparent authority to sign a lease that would bind AFLAC/district court was correct

In Yim v. J's Fashion Accessories, Inc. Where J's Fashion sued Yim for failing to pay for goods he bought under the name Hoh Tae and Yim denied liability on the grounds that he had been acting as an agent for Hosung Enterprise, Inc which also did business under the name Ho Tae, the courts held that:

c. Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal

An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n)

c. agency

Subagents work for the agent and owe duties to:

c. both the agent and the principal

A senior manager at Don Reid Ford is an example of a(n):

c. employee with agency powers

Which of the following is not a category of agents covered in the text:

c. foreign agent

Power of attorney:

c. is a document that creates an agency

For an agent to be a fiduciary means to:

c. occupy a position of trust, honesty, and confidence with respect to the principal

When liability is imposed on an employer for a tort committed by an employee, the liability is based on the rule of law known as:

c. respondeat superior

Persons appointed by an agent delegated some authority are known as:

c. subagents

Implied ratification usually occurs when:

c. the agent accepts the benefits of the agreement

For an agency to be valid in most states:

c. the agent must be subject to the principal's control

To establish an agency relationship:

c. the principal and agent must agree to form an agency

An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following:

c. third parties

An undisclosed principal is:

c. unknown to third parties to contracts entered into with the agent

Express authority consists of the agent's

c. written or oral instructions from principal to agent

You post a notice at school that you will sell your laptop computer for $600. A buyer comes by your room to look at it while you are gone and your roommate sells it for $500, thinking you would be happy with that price, which you did not authorize.

c. you can accept the deal by express or implied ratification

In France v. Southern Equipment Co., where France, after falling off a roof, sued Southern Equipment Co. who had employed Quality Metal Roof, a company that contracted with France's employer, Royalty Builders, to build them a new metal roof for exposing him to the inherently dangerous job of roofing, the appeals court held that:

d. Southern Equipment was not liable because they did not engage Royalty Builders to do the work and they had no control over Royalty Builders

Fiduciary duties include:

d. accounting, notification, performance, loyalty and reasonable care

The agent's ability to transact business on behalf of an for the principal depends on whether the agent possesses:

d. actual or apparent authority

When a principal creates an impression of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal, the agent is said to have:

d. apparent authority

In Bearden v. Wardley Corp., where Griitton's real estate agent cheated her in a deal, the court held that Wardley, Gritton's employer, violated its _____ to Beardern:

d. duty of care/Gritton and Wardley violated their fiduciary obligations to Bearden, so both are liable

The principal is under a _____ for damages to cover the agent's losses (such as from litigation) suffered while:

d. duty to indemnify

Suppose a car dealership hires people to sell cars to customers at the dealership. The people who are hired are most likely to be:

d. employees and agents

Implied ratification of an agency occurs when the principal:

d. fails to object to the unauthorized activities of an agent and accepts the benefits of an unauthorized agreement with a third party

A person authorized to execute all regular transactions connected with a business is called a:

d. general agent

Lyle is Thelma's agent. Thelma has made it clear to Lyle that she does not want him to sign the contracts that he negotiates; she retains that power. If, despite Thelma's instructions, Lyle negotiates and signs a contract with Tom committing Thelma to spend thousands, what will the consequences of Lyle's actions be?

d. if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible

Suppose a hurricane is going to hit South Florida; there are two days to prepare for it and the owner of a house is on a raft trip in Brazil and cannot be reached. The next door neighbors spend $800 on plywood and other materials to protect the house from the hurricane. Legally, this expenditure is likely to be:

d. is the responsibility of the homeowner; there is agency by operation of law

In Armstrong v. Food Lion, the Artmstrongs were beaten by employees of a grocery store. They sued the store. The South Carolina high court held that the store was:

d. not liable because the assaults were outside of the employment duties

Which of the four general factors which bear upon whether a master-servant relationship exists is determinative:

d. power of control

An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):

d. special agent

An agency through operation of law is established:

d. when an emergency exists and the "agent's" actions are in the public interest

An auctioneer is an example of a(n):

e. agent and independent contractor

A disclosed principal is a principal whose identity is:

e. known to third parties to contracts entered into with the agent