ACCT 324 Smartbook Ch 33

Sondra works as an employee for a computer company. She has created a new software program that will revolutionize the way computers are used in the future. Who owns the rights to the software program that Sondra has developed? A. The employer B. Sondra C. No one....there are no intellectual property rights D. All of the employees at the computer company

A. The employer

If an agent fails in his or her duties to the principal, that failure provides for the basis for: _______. A. the indemnification of the agent B. a tort or contract action against the principal C. the reimbursement of the agent for any adverse action initiated by a third party D. a tort or contract action against the agent

D. a tort or contract action against the agent

The source of the definition of agency is the: _______. A. Uniform Contracts Code B. Restatement of Agency C. Restatement of Contracts D. Restatement of Fiduciaries

B. Restatement of Agency

When an agent breaches an agency contract or his fiduciary duties, which of the following remedies may the principal may use to nullify at her discretion any contract the agent negotiated? A. Constructive trust B. Right of avoidance C. Right to indemnification D. Compensation

B. Right of avoidance

Gabriel sent Arthur on a trip to San Diego to hunt down some antique furniture that Gabriel was going to sell. Arthur had paid for his own ticket. Is Gabriel required to pay Arthur for his expenses on the trip? A. No, because Gabriel is not required to pay anyone for travel expenses. B. Yes, because Arthur is Gabriel's agent and as such, he is entitled to reimbursement. C. Yes, because Arthur is Gabriel's agent and as such, he is entitled to rescission. D. No, because even though the trip was for business purposes, all travel expenses are to be paid by the agent.

B. Yes, because Arthur is Gabriel's agent and as such, he is entitled to reimbursement.

The duty of performance requires the agent to act with the same skill, care, and professionalism as: _______. A. any third party to the agent-principal relationship would B. a reasonable person in the same situation would provide C. anybody could with the minimal amount of effort D. any person in the same situation would provide

B. a reasonable person in the same situation would provide

Bill announced to a group of car salesmen that he represented Harold for the purpose of buying Harold a new car. Bill negotiated with the salesmen on the price of a new car and even went so far as to sign a contract of sale. Harold had never authorized Bill to represent him in anything, but he was so happy with the deal that Bill negotiated that he accepted the contract for the car. Harold and Bill have a(n) _______. A. apparent agency B. agency by ratification C. agency by estoppel D. express agency

B. agency by ratification

When an employer hires an employee to perform some sort of physical service where the employee is under the control of the employer, this relationship is known as: _______. A. employer-independent contractor relationship B. employer-employee relationship C. offeror-offeree relationship D. principle-agent relationship

B. employer-employee relationship

An agent who feels she is not being properly compensated, especially on commission, may demand an accounting and may withhold: ________. A. only property of the agent B. further performance of her duties until the principal supplies appropriate accounting data C. only any money that is due to the principal because of the agent's undercompensation D. any money or property from the principal until whenever the agent decides it is proper to distribute the money and property

B. further performance of her duties until the principal supplies appropriate accounting data

A(n) ______ agent is one who acts without consideration. A. free B. gratuitous C. apparent D. implied

B. gratuitous

An agency relationship that is formed through the conduct of the parties is known as an agency by ______ authority. A. gratuitous B. implied C. express D. apparent

B. implied

If a principal gives an agent an unlawful instructions, under the duty of _______ an agent is not required to carry out his agency duties. A. loyalty B. obedience C. notification D. nullification

B. obedience

A sports company has hired a very famous athlete to endorse a line of sports products. The relationship between the sports company and the athlete is: _______. A. agency relationship by ratification B. principal-agent C. employer-dependent contractor D. employer-employee

B. principal-agent

A principal owes specific duties to: _______. A. an independent contractor B. the agent C. another principal D. a third party who has no dealings with the agent

B. the agent

Identify the issues most likely to be associated with the employer-employee agency relationship? (Check all that apply.) A. Contract law B. Tax law C. Tort law D. Discrimination law

B., C., D. B. Tax law C. Tort law D. Discrimination law

Identify true statements about durable power of attorney. A. It is no longer valid after the principal's subsequent incapacity. B. It becomes active only after a principal becomes incapacitated in any matter. C. It can be enacted by the principal after he or she becomes incompetent. D. It can be enacted preemptively by the principal.

B., D. B. It becomes active only after a principal becomes incapacitated in any matter. D. It can be enacted preemptively by the principal.

Sally was the agent of Joe, a freelance writer. It was her task to find writing assignments for Joe at various magazines and newspapers. Sally was authorized to form contracts with these outlets and on one particular occasion, she made a lucrative deal with a local newspaper. She showed Joe the contract, but Joe was so busy that he forgot to write the article. The newspaper was so angry that they sued Sally for the losses they incurred as a result of Joe's negligence. Does Joe have a duty to indemnify Sally from these losses? A. No, because even though Sally was working within the scope of her authority, she was the one who made the contract, not Joe. B. Yes, because Sally was not responsible for Joe forgetting the assignment. C. Yes, because Sally was acting within the scope of her authority and it was Joe's fault for failing to submit the assignment. D. No, because Sally should have known that Joe would forget the assignment.

C. Yes, because Sally was acting within the scope of her authority and it was Joe's fault for failing to submit the assignment.

An agency relationship, like a contract, can only be made for: _______. A. buying and selling B. sports-related purposes C. a lawful purpose D. business purposes

C. a lawful purpose

If the IRS determines that an independent contractor is really an employee, the employer will be liable for: _______. A. the fee that is associated with changing the status of that person to that of employee B. a fine to be determined only by the IRS C. all applicable taxes, such as Social Security and unemployment taxes D. all applicable back pay that is due to the independent contractor

C. all applicable taxes, such as Social Security and unemployment taxes

Suppose a principal falsely leads a third party to believe a person is his or her agent. That relationship will be called an agency by ______. A. due diligence B. identification C. estoppel D. due process

C. estoppel

Agency by implied authority cannot conflict with agency by: _______. A. default B. ratification C. express authority D. estoppel

C. express authority

Bobby and Dustin entered into an agency agreement using a written agreement. This kind of agency relationship is known as a(n): _______. A. agency by estoppel B. implied agency C. expressed agency D. agency by ratification

C. expressed agency

A principal always has the right of ______ so agents may not use the agency relationship to obtain goods or property for themselves if the principal desired to obtain the same goods or property. A. communication B. loyalty C. first refusal D. confidentiality

C. first refusal

Powers of attorney are often given for: _______. A. familial and business purposes B. child custody and divorce purposes C. health care and business purposes D. legal and creative purposes

C. health care and business purposes

Agency relationships are consensual relationships formed by: _______. A. the Restatement of Agency and the UCC. B. only formal written contracts. C. informal oral agreements or formal written contracts. D. only informal oral agreements.

C. informal oral agreements or formal written contracts.

A principal must authorize the power of attorney while she: _______. A. has two attorneys who draw up the contract B. is of legal age C. is competent D. has 5 witnesses to the contract

C. is competent

In a principal-agent relationship, the duty of loyalty requires that the agent ______. A. communicate any information he or she thinks could be important to the principal B. perform the duties as specified in the agency agreement C. keep confidential any information about the principal D. must keep an accurate account of all the transactions of money made on the behalf of the principal.

C. keep confidential any information about the principal

In an agency relationship, the person who hires the agent is known as the: _______. A. third party B. agent C. principal D. recruitment officer

C. principal

Janelle was hired to work for the ACME construction company as a clerical worker. Janelle started getting a cough and headaches during work hours, and it was discovered that various toxic substances were present in the air. The ACME construction company has breached its duty: _______. A. to indemnify its workers as long as they are working within the course and scope of their employment B. of reimbursement for all of Janelle's medical costs C. to provide safe working conditions D. of loyalty

C. to provide safe working conditions

If a third party successfully demonstrates that he or she reasonably believed there was an actual agency relationship between two persons that had an apparent agency, then the principal must: _______. A. tell the third party that the agent had no real authority to enter into the agreements B. declare the agreements to be null and void and sue the agent for misrepresentation C. uphold any agreements made by the agent D. refuse to uphold the agreements made by the agent

C. uphold any agreements made by the agent

Identify the principal's duties in a principal-agent agency relationship. A. Performance B. Loyalty C. Compensation D. Indemnification

C., D. C. Compensation D. Indemnification

Employees are: _______. A. agents of the employer by ratification B. apparent agents of the employer C. independent contractors of the employer D. agents of the employer

D. agents of the employer

Gloria entered a contract with a fencing company. The company saw that this particular job was going to require more workers, so the company hired more workers from another fencing company to help with the job. The fencing company failed to pay the extra workers for their work. Who is liable for paying the extra workers? A. The fencing company B. Gloria...since they are working on her job C. The other fencing company that actually employs these workers D. Uncertain...the courts will have to determine liability

A. The fencing company

Bert was a real estate agent for Myra. Bert had purchased a piece of property for Myra, but when it came time to turn over the property, Bert held on to the property. In this case, Myra: _______. A. can put a constructive trust on the property B. can do nothing. Although Bert has breached his fiduciary duty to Myra, there is nothing she can do C. cannot get the property back, but she can terminate the relationship with Bert D. can purchase comparable property and sue Bert for three times the purchase price of the substitute property

A. can put a constructive trust on the property

Because of their fiduciary relationship, the agent has a responsibility to act in the interest of the principal including avoiding: _______. A. conflicts of interest and protecting the principal's confidentiality B. duties that would further the ability for the agent to act on the principal's behalf C. conflicts in the duty of indemnification and the duty to reimburse D. conflicts of personality

A. conflicts of interest and protecting the principal's confidentiality

Agency by implied authority cannot conflict with agency by: _______. A. express authority B. ratification C. default D. estoppel

A. express authority

In order to conduct business more effectively around the world, businesses will hire agents from the host country to: _______. A. help guide the business with respect to local laws and customs B. provide a goodwill gesture to the host country C. work at the company like the U.S. employees D. work in the U.S. branch of the company

A. help guide the business with respect to local laws and customs

The Restatement of Agency defines a person who contracts with another to do something for him, but is not controlled by him nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking, as an: _______. A. independent contractor B. employer principle C. employee D. agent

A. independent contractor

When an agent is given power of attorney, the agreement ______. A. must be in writing. B. needs to be ratified by the court. C. is considered invalid once the principal becomes competent. D. is valid if it is oral.

A. must be in writing.

If a contract exists and the principal agrees to certain conditions, but fails to perform them, the agent may seek court assistance in forcing the principal to: _______. A. perform the contract as specified B. create another contract with the agent C. pay punitive damages to the agent D. terminate the agency relationship

A. perform the contract as specified

The law typically assumes that a principal is aware of all of the information: ________. A. revealed to the agent B. that was actually revealed to the agent or should have been revealed to the agent C. in the Restatement of Agency D. that the third party knew

A. revealed to the agent

If an agent negotiates a contract on behalf of the principal, but the contract is breached through the negligence of the agent, and if the principal is sued by the third party, then the principal can sue the agent: _______. A. to recover the amount assessed to the third party B. for any property the agent acquired during the agency relationship C. for any and all monies given to the agent during the agency relationship D. only for the court costs involved in the third party's suit against the principal

A. to recover the amount assessed to the third party

Agency agreements usually do not need to be in writing unless the agent: _______. A. will enter into a contract that the statute of frauds requires to be in writing B. will enter into any contract C. is under the age of majority D. does not have the contractual capacity to understand an oral agreement

A. will enter into a contract that the statute of frauds requires to be in writing

Identify the main remedies that a principal has for breach of fiduciary duties in a principal-agent agency relationship. (Check all that apply.) A. Constructive trust B. Avoidance C. Indemnification D. Reimbursement

A., B., C. A. Constructive trust B. Avoidance C. Indemnification

Identify true statements about agency relationships: A. They are consensual. B. They can be formed by formal written contracts. C. They can be formed by a minor through an agent. D. They can be formed by informal oral agreements.

A., B., D. A. They are consensual. B. They can be formed by formal written contracts. D. They can be formed by informal oral agreements.

There are three types of business agency relationships, including: _______. (Check all that apply.) A. principal-agent B. employer-employee C. payor-payee D. employer-independent contractor E. offeror-offeree

A., B., D. A. principal-agent B. employer-employee D. employer-independent contractor

Peggy made a contract on behalf of Kay to purchase some sports equipment for Kay. Kay had never formally entered into an agency agreement with Peggy, but Peggy claimed she was the agent for Kay. If Peggy negotiates an order for the sports equipment, shows that agreement to Kay, and Kay signs off on the contract, then Kay and Peggy have: _______. A. an agency relationship by estoppel B. an agency relationship by apparent authority C. no agency relationship D. an agency relationship by ratification

D. an agency relationship by ratification

Taylor was hired by Tom to rake his leaves. When Taylor was finished, Tom thanked him and shook his hand. Since nothing was said between the two about payment, then agency theory would say Tom owes Taylor: _______. A. double the fair amount of compensation for Taylor's work B. no compensation, since nothing was said about the payment C. a letter of recommendation for his good work D. fair compensation for his work

D. fair compensation for his work

Agency through ______ authority cannot conflict with any _______ authority that has been given. A. express, implied B. implied, apparent C. apparent, express D. implied, express

D. implied, express

Agency relationships are consensual relationships formed by: _______. A. the Restatement of Agency and the UCC. B. only formal written contracts. C. only informal oral agreements. D. informal oral agreements or formal written contracts.

D. informal oral agreements or formal written contracts.

A(n) ______ power of attorney gives authority only for the designated areas or purposes listed in the agreement. A. implied B. omnibus C. equitable D. specific

D. specific

The most important factor in deciding whether a person is an employee or an independent contractor is: _______. A. whether the person has high-level skills or low-level skills B. whether the person works during the week or on weekends C. whether the person has his or her own tools or has to use the employer's tools D. the degree of control the employer has over the individual's work

D. the degree of control the employer has over the individual's work

Principals are the legal owners of anything an agent may come to possess through: _______. A. any loans that the agent negotiated for the agent B. the activities of the agent outside of the agency relationship C. his or her personal purchases during the agency relationship D. the employment or agency relationship

D. the employment or agency relationship

The principal's duty _______ means to assist the agent in the performance of their duties. A. to be loyal B. of notification C. to reaffirm the contract D. to cooperate

D. to cooperate

Raj informs his insurance agent that he wishes to purchase a comprehensive insurance policy for his house and all of the contents. His agent forgot to process the insurance. The following week, Raj's home caught on fire and suffered much damage. Raj could bring a claim against the agent for failure to exercise his duty: _______. A. for indemnification B. of reimbursement C. of loyalty D. to perform

D. to perform

A person who has the duty to act primarily for the benefit of another person is known as a(n):

fiduciary or agent