Law Ch. 14 & 15 Questions

______ is when an agency is created because the actions of the principal may lead one to reasonably believe that the presumed agent has the authority to act for the principal.

Agency by estoppel

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

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

a general power of attorney

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:

a gratuitous agent

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, or. expanded business opportunities

Fiduciary duties include:

accounting, notification, performance, loyalty and reasonable care

Agency by estoppel means:

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

_____ is the authority given by the principal to the agent.

actual authority

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:

actual authority, or special authority

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

actual or apparent authority

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

When an agent pays for the right to have authority for a business, a(n)___ is created.

agency with coupled with an interest

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

allowing the agent "significant discretion"

When you go on vacation you give your neighbor authority to pick up your mail and watch for burglars for you. You tell the neighbor not to go into the house or let anyone else in. A fire on the hills threatens your house. The neighbor goes in to carry out valuables before the house burns. This action is:

an agency through operation of law

A key element of an agency relationship is:

an agent's ability to transact business for the principal

Operation of law provides agents with the authority to act beyond the authority granted by the principal when:

an emergency exists

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:

apparent authority

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 principal

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

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

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

Exceptions to the presumption of at-will employment come from:

c. both courts and legislation

In addition to the contractual agreements that place limits on employment relationships, there are public policy exceptions that come from:

c. both statutes and application of common law rules

In Ballalatak v. All Iowa Agriculture Association, where Ballalatak contended that he was fired for inquiring into whether the company was fulfilling its workers' compensation obligation and the general manager claimed he was fired for insubordination, the Iowa State Supreme Court held that Ballalatak:

c. could not sue for wrongful discharge because Iowa does not protect an employee who advocates internally for another employee's workers' compensation claims

Which of the following is not an exception to the employment-at-will doctrine, for which workers may not be fired, at least in some states:

c. disloyalty toward the public image of the employer

About one in ______ working-age people have, at some point, a substance-abuse problem

c. eight

Employees may be required to sign, as a condition of employment, an agreement that they will not sue the employer in case they are injured on the job. This is called:

c. exculpatory agreement

Under the whistle-blower exception to the general rule of employers having the right to dismiss employees:

c. private employers are less likely to be subject to whistle-blower exceptions than are public sector employees

When an employer fires an employee in violation of a public policy exception to the presumption of at-will employment, the employee may sue for:

c. wrongful discharge

Which of the following is not a duty owed by the agent to the principal:

compensation

In Zambelli Fireworks Manufacturing Co. v. Wood, where Zambelli sued Wood for violating the non-compete agreement in his contract, the appeals court held that:

d. Wood's specialized knowledge from working at Zambelli in addition to customer goodwill constituted legitimate business interests that Zambeli had a right to protect through a reasonable restrictive covenant

Anti-raiding covenants are:

d. held to be a violation of public policy in some states and enforced in others

Wrongful discharge is a:

d. tort

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:

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

Because of the _______ principal. an agent may not represent another party whose interests are in conflict with those of the principal.

duty of loyalty

If an agency agreement did not specify how much an agent would be paid for his work, the principal has a the "customary" amount.

duty to compensate

The principal has a _____ with her agent by performing responsibilities defined in the agreement forming the agency.

duty to cooperate

Insuring an agent against losses suffered during the course of authorized transactions is part of the principal's:

duty to indemnify

The principal is under a _____for damages to cover the agent's losses (such as from litigation) suffered while undertaking authorized transactions for the principal.

duty to indemnify

A principal has a ____ the agent for reasonable expenses incurred in carrying out the duties of the agency.

duty to reimburse

In varying degrees across the states, the courts do no look with favor on certain contracts that at times are made part of the employment arrangement, which of the following is in that category:

e. NCA, Anti-raiding covenants & exculpatory agreements (not substance abuse)

consists of oral or written instructions given by the principal to an agent.

express authority

A(n)______ is a principal's clear signal to be bound to the otherwise unauthorized agreement.

express ratification

Implied ratification of an agency occurs when the principal:

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

An agent is a(n)______of the principal, which means that the agent occupies a position of trust, honesty, and confidence for the principal.

fiduciary

If a payment amount is not specified in the agency agreement, a principal's duty to compensate means that the principal must pay the agent:

for the reasonable value of the services provided

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

foreign agent

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

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

gratuitous agent

If an agent competes with his principal without the principal's consent:

he is violating his duty of loyalty

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 of dollars, what will the consequences of Lyle's actions be?

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

The power of an agent to do whatever is reasonable and customary to carry out the agency purpose is given by:

implied authority

______ takes place when the principal behaves as if he has the intent of ratifying an unauthorized agreement.

implied ratification

The principal's duty to reimburse does not cover expenses:

incurred due to the agent's misconduct or negligence

The principal's duty to indemnify the agent means the principal must:

insure the agent against losses suffered during the course of authorized transactions

Power of attorney:

is a document that creates an agency

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:

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

The duty of _______ requires an agent to place the principal's interests before the agent's personal interests or those of any third party:

loyalty

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

more than one year

Ratification of an agreement that is required by law to be in writing:

must be in writing

If an agent claims to have authority but in fact has none, the principal is:

not responsible for the agent's dealings with third parties who have no reason to think the agent has authority

For an agent to be a fiduciary means to:

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

An agency may be established by:

operation of law or by oral agreement of the parties or by written agreement of the parties

The scope of an agent's authority is determined from the:

oral or written expressions of the principal or the principal's conduct or the customs in the business for which the agent is employed

A legal document that establishes some agency relationships is known as:

power of attorney

The legal document that authorizes a person or a company to act as an agent for a principal is called:

power of attorney

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:

principal

In an agency the principal:

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 court would be likely to hold that ITC:

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:

ratifies the agency

An alleged principal becomes a real principal by:

ratifying the agreement

The duty of loyalty:

requires an agent to place the principal's interests before the agent's personal interests or those of any third party

Many states require agencies for _____ to be established in writing.

sale of land

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

Implied ratification usually occurs when:

the agent accepts the benefits of the agreement

For an agency to be valid in most states:

the agent must be subject to the principal's control

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

the agent owes to the principal

. 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:

the district court was correct in its ruling that AFLAC was bound by the contract because Galgano had apparent authority

To ratify an agreement a principal must know:

the important facts of the agreement

Actual authority give the agent:

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

Implied authority consists of:

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

To establish an agency relationship:

the principal and agent must agree to form an agency

Apparent authority arises when:

the principal creates an appearance of authority in an agent that leads a third party to conclude reasonably that the agent has authority to act for the principal

A principal's ratification is:

the principal's acceptance of responsibility for an agent's activities

Which of the following would not be a factor in determining a ratification:

the third party wishes for the principal to be a party to a contract

Which of the following can determine the scope of authority given to an agent:

the trade customs in business, the principals conduct, & statements of the principal

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

third parties

In most states, which agencies must be in writing:

those that are for the sale of land

A person designated by a principal to do all acts that can be legally delegated to an agent is a:

universal agent

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

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:

was not obligated to the lease because Galgano did not have apparent authority to sign a lease that would bind AFLAC

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:

ways that an agency may be established

An agency through operation of law is established:

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

Express authority consists of the agent's:

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.

you can accept the deal by express or implied ratification