BLAW 235 Chapter 19: Agency Relationships

9. A court can apply the doctrine of ________ when a principal has given a third-party reason to believe that an agent has authority to act.

agency by estoppel

9. Which of the following is NOT one of the four ways in which an agency relationship can arise?

agency by federal law

4. With respect to their employers, employees who deal with third parties are generally deemed to be

agents

11. If the two parties in the agency agreement disagree about how much the principal owes the agent, the agent may suspend performance and demand

an accounting

3. Match the words on the left to their appropriate definitions on the right.

Express authority: Power given by one party to another in clear and definite terms to act on that person's behalf. Notary public: A public official authorized to attest to the authenticity of signatures. Power of attorney: A written document authorizing another to act as one's agent. This may be special, permitting the agent to do specified acts only, or general, permitting the agent to transact all business for the principal. Equal dignity rule: In most states, a rule stating that authority given to an agent must be in writing if the contract to be made on behalf of the principal is also required to be in writing.

12. When the principal-agent relationship is not contractual, the agent may receive an order for specific performance from the court to ensure that the agency relationship may continue.

False

4. If an agent has authority to sign a contract on behalf of a disclosed principal, the third party may hold either the principal or the agent responsible to perform.

False

6. If the third party knows at the time the contract is made that the agent does not have authority, the principal nonetheless remains liable.

False

6. When an agency is terminated, all of the agent's authority is terminated as well.

False

5. _______ is required to inform any third parties who know of the existence of an agency that the agency has been terminated.

The principal

1. Agency law is similar to contract law in that both an agency and a contract may be terminated by the parties or by operation of law.

True

1. Generally, the liability of the principal will depend on whether the agent was authorized to form a contract.

True

1. In an agency relationship involving two parties, the agent agrees to represent or act for the principal.

True

1. Liability for contracts formed by an agent depends on how the principal is classified and on whether the actions of the agent were authorized or unauthorized.

True

1. The agency relationship is a fiduciary relationship based upon trust, and each party owes the other the duty to act with the utmost good faith.

True

4. Generally, the liability of the principal will depend on whether the agent was authorized to form a contract.

True

5. A gratuitous agent may be held liable for breach of contract by committing gross negligence.

True

5. Agency relationships can exist outside an employer-employee relationship, and thus agency law has a broader reach than does employment law.

True

5. If an agent has no authority but nevertheless contracts with a third party, the principal generally cannot be held liable on the contract.

True

8. A principal who authorizes an agent to commit a tort may be liable to persons or property injured, because the act is considered to be that of the principal.

True

8. Agency relationships are normally consensual, coming about through voluntary consent and agreement between the parties.

True

8. Apparent authority usually comes into existence through a principal's pattern of conduct over time.

True

7. When a third party reasonably believes a person has authority to act on another's behalf, even if that person does not have such authority, the situation is known as

apparent authority

2. A familiar example of an agent is a:

corporate officer who serves in a representative capacity for the owners of the corporation.

11. If an agent is on a _______, the principal will be liable, but if the agent is on a ________, the principal will not be liable.

detour, frolic

11. Agency by ________ is created when the ________ causes a third party to reasonably believe that an agency relationship exists.

estoppel, principal

9. When the principal grants an agent an exclusive territory, we say that the principal has created a(n)

exclusive agency

12. A principal will be liable for the intentional torts of an employee-agent in all of the following situations, except:

if the agent committed the intentional tort while on a frolic.

12. In which situations may the courts find an agency relationship in the absence of a formal agreement? Choose two.

in family relationships, in emergency situations

6. Whether a worker is an employee or an independent contractor can affect the employer's _________ for workers' actions. If the Internal Revenue Service decides that an employee is misclassified as an independent contractor, the employer will be _________ for paying Social Security, withholding, and unemployment taxes.

liability, responsible

2. Which of the following is not a classification of a principal?

materially disclosed

2. An agent's authority to act for a principal:

may be actual or apparent.

9. A principal is always responsible for an agent's ________ made within the scope of the agent's authority.

misrepresentations

7. To give adequate notice of the termination of the agency relationship, the principal (select two):

must directly contact all persons the principal knows interacted with the agent. may give constructive notice, such as through publication in a newspaper, to any person who has not yet dealt with the agent but who may have heard about the agency relationship.

3. Either party has the _______ to terminate the agency agreement, but they may not have the ________ to do so without legal consequence.

power, right

10. In agency law, ratification occurs when:

principal, by words or by actions, affirms a contract made by a person who in fact is not an agent.

8. Which of the following is NOT a valid reason for a termination of an agency by operation of law?

prior engagement

7. A principal may be liable for the tortious conduct of an agent based on the principal's own actions in all of the following scenarios EXCEPT:

providing explicit accurate written instructions to the agent.

3. The degree of skill or care required of an agent is usually that expected of a(n) ________ person under similar circumstances.

reasonable

4. With an agency at will, the principal who wishes to terminate must give the agent _______.

reasonable notice

11. Before a principal ratifies an unauthorized contract, the third-party can:

revoke the offer without liability.

7. An agent's actions must be strictly for the benefit of the principal and must not result in any _______ profit for the agent.

secret

6. The agent has the duty to act _________ for the benefit of the principal and not in the interest of the agent or a third party.

solely

8. Which of the following is NOT a duty the principal owes the agent?

substantial ownership in the business

2. Which of the following is NOT a duty the agent owes the principal?

superior competence

4. An ordinary power of attorney ends when:

the person giving the power dies or becomes incapacitated.

6. An agent's implied authority can be inferred by

the position the agent occupies

10. An agent will have emergency powers:

to protect the principal's property and rights when the agent is unable to communicate with the principal.

10. When an agent fails to perform his or her duties, for what may the agent be liable to the principal? Choose two.

tort liability, breach of contract

7. Any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is called a

work for hire

3. Match each term on the left to the correct definition on the right.

Partially disclosed principal: A principal whose identity is unknown by a third person, but the third person knows that the agent is or may be acting for a principal at the time the agent and the third person form a contract. Undisclosed principal: A principal whose identity is unknown by a third person, and the third person has no knowledge that the agent is acting for a principal at the time the agent and the third person form a contract. Disclosed principal: A principal whose identity is known to a third party at the time the agent makes a contract with the third party.

10. Match each term to the correct definition.

Respondeat superior: A doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency or employment. Vicarious liabilty: Legal responsibility placed on one person for the acts of another.

2. Match the term with the correct definition

Revocation: The unilateral termination of the agency agreement by the principal. Renunciation: The unilateral termination of the agency agreement by the agent.

5. Match the words on the left to their appropriate definitions on the right.

Implied authority: Authority that is created not by an explicit oral or written agreement but by implication. In agency law, implied authority of the agent can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority. Apparent authority: Authority that is only apparent, not real. In agency law, a person may be deemed to have had the power to act as an agent for another party if the other party's manifestations to a third party led the third party to believe that an agency existed when, in fact, it did not. Ratification: The act of accepting and giving legal force to an obligation that previously was not enforceable.

3. Match the words on the left to their appropriate definitions on the right.

Independent Contractor: One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent. Fiduciary: As a noun, a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking. As an adjective, a relationship founded on trust and confidence. Agency: A relationship between two parties in which one party, the agent, agrees to represent or act for the other, the principal.