BLAW CHAPTER 14

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Which of the following is an advantage to having the ability to use agents: (A) expanded business opportunities (B) reduced tax burden (C) exemption from income tax (D) creation of many small companies within one larger company (E) easier organization of a company

(A) expanded business opportunities

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: (A) for the reasonable value of the services provided (B) at least half the customary rate (C) for the rational value of the services provided (D) however much the agent demands (E) however much the agent's attorney demands

(A) for the reasonable value of the services provided

If a contractor does not have authority to enter into contracts for the principal then: (A) he is not an agent (B) he is also an agent (C) he is also an agent if he thinks he has the authority to enter into contracts (D) he is still considered an agent in most, but not all, states (E) none of the other choices are correct

(A) he is not an agent

If an agent competes with his principal without the principal's consent: (A) he is violating his duty of loyalty (B) he is violating his duty of cooperation (C) he is violating his duty to reimburse (D) he is violating his duty to play fair (E) he is violating his duty of obedience and performance

(A) he is violating his duty of loyalty

When there is an undisclosed principal, the agent is: (A) liable to the third party for the principal's nonperformance of the contract (B) not liable to the third party for the principal's nonperformance of the contract (C) liable to the undisclosed principal for the third party's nonperformance of the contract (D) liable for only half of the damages incurred by the principal's nonperformance of the contract (E) none of the other choices are correct

(A) liable to the third party for the principal's nonperformance of the contract

The principal's duty to reimburse dose not cover expenses: (A) incurred during business hours (B) incurred due to the agent's misconduct or negligence (C) incurred by the agent while conducting business for the principal (D) incurred while traveling to do business for the principal (E) none of the other choices are correct

(B) incurred due to the agent's misconduct or negligence

Attorneys, auctioneers, and other such persons who conduct business on behalf of the principal are examples of: (A) agents who are also employees (B) independent contractors who are also agents (C) independent contractors who are also employers (D) agents who are also employers (E) none of the other choices are correct

(B) independent contractors who are also agents

The principal's duty to indemnify the agent means the principal must: (A) pay reasonable wages to the agent (B) insure the agent against losses suffered during the course of authorized transactions (C) pay for expenses incurred by agent that result from negligent behavior (D) refrain from providing the agent with inferior goods (E) pay reasonable wages to the agent and refrain from providing the agent with inferior goods

(B) insure the agent against losses suffered during the course of authorized transactions

Ratification of an agreement that is required by law to be in writing: (A) need not be in writing (B) must be in writing (C) must be witnessed by a court official (D) must be in writing unless both parties agree that it need not be (E) must be verbal

(B) must be in writing

A legal document that establishes some agency relationships is known as: (A) articles of incorporation (B) power of attorney (C) partnership agreement (D) decree of guardianship (E) motion to represent

(B) power of attorney

An agency is created when an agent agrees to act for, or in place of, the: (A) third party (B) principal (C) shareholder (D) attorney (E) representative

(B) principal

The law of agency places its primary emphasis on the duties: (A) the principal owes to the agent (B) the agent owes to the principal (C) the agent owes to the subagent (D) the universal agent owes to the general agent (E) all of the other choices have equal standing

(B) the agent owes to the principal

When an agency is terminated: (A) the agent's authority to act for the principal does not end (B) the agent's authority to act for the principal ends (C) the agent's authority to act for the principal is reduced to very limited conditions (D) the agent may never work with the principal again (E) the agent may not work for someone who is in competition with the principal

(B) the agent's authority to act for the principal ends

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: (A) the district court was correct in its ruling that AFLAC was not bound by the contract because Galgano did not have apparent authority (B) the district court was correct in its ruling that AFLAC was bound by the contract because Galgano had apparent authority (C) the district court was incorrect in its ruling that AFLAC was bound by the contract because Galgano did not, in fact, have apparent authority (D) the district court was incorrect in its ruling that AFLAC was not bound by the contract because Galgano had express authority (E) none of the other choices are correct

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

An agent must perform instructions provided by the principal. If the agent fails to do so, he violates: (A) the duty of cooperation (B) the duty of obedience and performance (C) the duty to reimburse (D) the duty of loyalty (E) the duty of accounting

(B) the duty of obedience and performance

Actual authority give the agent: (A) no real authority (B) the power and right to change the principal's legal status (C) the power and right to make all decisions for the principal, even on matters where the agent does not have authority (D) a 50% ownership share in all the principal's assets (E) none of the other choices are correct

(B) the power and right to change the principal's legal status

A principal's ratification is: (A) an agent's acceptance of responsibility from the principal (B) the principal's acceptance of responsibility for an agent's activities (C) the principal's rejection of responsibility for an agent's activities (D) the principal's acceptance of property from an agent (E) an agent's acceptance of property from the principal

(B) the principal's acceptance of responsibility for an agent's activities

Someone designated to do all acts that can be legally granted to an agent is called a(n): (A) special agent (B) universal agent (C) general agent (D) subagent (E) gratuitous agent

(B) universal agent

Which of the following can determine the scope of authority given to an agent: (A) statements of the agent (B) the principal's personal relationship with a third party (C) statements of the principal (D) all of the other specific choices are correct (E) none of the other specific choices are correct

Persons appointed by an agent delegated some authority are known as: (A) minor agents (B) pseudo-agents (C) subagents (D) delegated agents (E) none of the other choices

An agency ends without any action by the principal or the agent through: (A) termination through action (B) termination through inaction (C) termination by operation of law (D) termination by decision of law (E) termination by redefinition

The independent contractor is distinguished by: (A) the extent of the compensation (B) the extent of control the employee retains over work performance (C) the extent of control the employer retains over work performance (D) all of the other specific choices are correct (E) none of the other specific choices are correct

Which of the following is least likely to be an issue in determining if an employer has hired an employee or an independent contractor: (A) the specialization or skill of the occupation (B) the length of the employment (C) the level of compensation (D) the nature of the worker's tasks (E) where the work is performed

To establish an agency relationship: (A) the procedure in state statutes must be followed (B) there must be a written contract between the parties (C) the principal and agent must agree to form an agency (D) all of the other specific choices (E) none of the other choices

Which of the following can determine the scope of authority given to an agent: (A) statements of the agent (B) the principal's personal relationship with a third party (C) the principal's conduct (D) all of the other specific choices are correct (E) none of the other specific choices are correct

A(n) ____ is a principal's clear signal to be bound to the otherwise unauthorized agreement. (A) implied ratification (B) real ratification (C) delayed ratification (D) express ratification (E) explicit ratification

(D) express ratification

____ 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. (A) Agency by estoppel (B) Agency by permission (C) Agency by ratification (D) Agency by demand (E) Agency by practicality

(A) Agency by estoppel

To ratify an agreement a principal must know: (A) the important facts of the agreement (B) a general outline of the agreement (C) the name of the agent (D) the agent for at least two years (E) none of the other choices are correct

(A) the important facts of the agreement

The duty of loyalty: (A) requires a principal to place the agent's interests before the principal's personal interests or those of any third party (B) requires an agent to place the principal's interests before the agent's personal interests or those of any third party (C) requires the agent to work for only one principal at a time (D) requires the agent to work without compensation if necessary (E) refers to the medieval roots of agency law

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

An agent's ____ is the power to change the principal's legal obligations. (A) legal right (B) official power (C) authority (D) responsibility (E) authorization

Subagents work for the agent and owe duties to: (A) only the agent (B) only the principal (C) both the agent and the principal (D) no one (E) none of the other choices are correct

Which of the following is not a category of agents covered in the text: (A) gratuitous agent (B) special agent (C) foreign agent (D) general agent (E) universal agent

Implied ratification usually occurs when: (A) the principal refuses to accept the benefits of the agreement (B) the principal accepts the benefits of the agreement (C) the agent accepts the benefits of the agreement (D) a court processes the power of attorney (E) none of the other choices are correct

For an agency to be valid in most states: (A) there must be written evidence of its creation (B) the agency must be registered (C) the agent must be subject to the principal's control (D) there must be written evidence of its creation and the agent must be subject to the principal's control (E) the agent must be subject to the principal's control and the agency must be registered

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) a universal agent (B) a gratuitous agent (C) an agent who has an agency coupled with an interest (D) a special agent (E) none of the other choices

(D) a special agent

The duty of an agent to keep his principal informed of all facts relevant to the agency purpose is called the duty: (A) to account (B) of performance (C) of reasonable care (D) to inform (E) of loyalty

(D) to inform

The scope of an agent's authority is determined from the: (A) oral or written expressions of the principal (B) principal's conduct (C) customs in the business for which the agent is employed (D) oral or written expressions of the principal or the principal's conduct (E) oral or written expressions of the principal or the principal's conduct or the customs in the business for which the agent is employed

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

____ takes place when the principal behaves as if he has the intent of ratifying an unauthorized agreement. (A) implied ratification (B) real ratification (C) delayed ratification (D) express ratification (E) explicit ratification

(A) implied ratification

Through an agency relationship, the agent becomes a representative of the: (A) third party (B) principal (C) customer or supplier of the principal (D) shareholder (E) all of the other choices

(B) principal

The duty of an agent to perform responsibilities with the degree of care that a reasonable person would exercise under the circumstances is: (A) the duty to cooperate (B) the duty of reasonable care (C) the duty of realistic care (D) the duty of obedience (E) the duty of reasonable obligation

(B) the duty of reasonable care

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: (A) implied authority (B) express authority (C) actual authority (D) apparent authority (E) none of the other choices

(D) apparent authority

In which of the following situations can an agency relationship be created? (A) X hires Y to buy some property on X's behalf (B) X makes an oral agreement that Y will work for X's company as the company's general manager (C) X and Y enter into a written agreement that Y will work for X as the general manager of X's company (D) 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 (E) 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

(E) 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

Lois was the agent of Lester, who owned a store in Walton, Iowa. While Lester was away on vacation, the Mississippi River reached record flood. As an agent, Lois only had permission to engage in sales at the store and purchase certain items. Faced with the prospect of losing all goods, Lois shipped Lester's inventory to a storage facility 200 miles away, out of the path of the flood waters. This incurred costs, but saved the inventory. Lois acted in: (A) violation of her duty of loyalty (B) violation of her duty of obedience (C) violation of her duty of accounting (D) accordance with her duty of accounting (E) accordance with her duty of reasonable care

(E) accordance with her duty of reasonable care

A disclosed principal is a principal whose identity is: (A) known to the agent (B) unknown to the agent (C) unknown to third parties to contracts entered into with the agent (D) known to partners (E) known to third parties to contracts entered into with the agent

(E) known to third parties to contracts entered into with the agent

If an agency agreement did not specify how much an agent would be paid for his work, the principal has a ____ the "customary" amount. (A) duty to cooperate (B) duty to compensate (C) duty of obedience to (D) duty to indemnify (E) none of the other choices would apply

B) duty to compensate

Which of the following is an advantage to having the ability to use agents: (A) access to the expertise of agents (B) reduced tax burden (C) exemption from income tax (D) creation of many small companies within one larger company (E) easier organization of a company

(A) access to the expertise of agents

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 (B) authority in rem (C) authority at law (D) general authority (E) special authority

(A) actual authority

When an agent pays for the right to have authority for a business, a(n) ____ is created. (A) agency with coupled with an interest (B) agency with permission (C) agency with rights (D) general agency (E) shared agency

(A) agency with coupled with an interest

A key element of an agency relationship is: (A) an agent's ability to transact business for the principal (B) any relationship established for the sale of land be an oral contract (C) the principal acts for the benefit of the agent (D) a commitment for at least one year, to show intent to bind the parties to the agency relationship (E) none of the other choices

(A) an agent's ability to transact business for the principal

Which of the following is not a duty owed by the agent to the principal: (A) compensation (B) reasonable care (C) accounting (D) notification (E) all of the other choices are required

(A) compensation

The power of an agent to do whatever is reasonable and customary to carry out the agency purpose is given by: (A) express authority (B) implied authority (C) quasi authority (D) false authority (E) verbal authority

(B) implied authority

A manager who runs all aspects of a hotel is most likely what kind of agent: (A) universal agent (B) special agent (C) gratuitous agent (D) general agent (E) none of the other choices

(D) general agent

An agency through operation of law is established: (A) by a written contractual agreement of the parties (B) by ratification of the agent's activities by the principal (C) by the application of the doctrine of estoppel (D) when an emergency exists and the "agent's" actions are in the public interest (E) none of the other choices

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

Many states require agencies for ____ to be established in writing. (A) sale of boats (B) sale of businesses (C) sale of land (D) sale of livestock (E) sale of books

When an employer-employee relationship exists, employers: (A) may be liable for the torts committed by employees in the course of employment (B) are only liable for the torts committed by employees in the course of employment in some states (C) are never liable for the torts committed by employees in the course of employment (D) are liable for the torts committed by employees in the course of employment only if the employees are minors (E) none of the other choices are correct

(A) may be liable for the torts committed by employees in the course of employment

Many states require agencies that will exist for ____ to be established in writing. (A) more than one year (B) less than one year (C) less than five years (D) more than six months (E) none of the other choices are correct

(A) more than one year

If an agent claims to have authority but in fact has none, the principal is: (A) not responsible for the agent's dealings with third parties who have no reason to think the agent has authority (B) responsible for the agent's dealings with third parties who have no reason to think the agent has authority (C) responsible for up to 50% of the monetary value of any contracts entered into by third parties and the agent (D) responsible for up to 25% of the monetary value of any contracts entered into by third parties and the agent (E) none of the other choices are correct

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

A(n) ____ relationship is one in which an agent acts on behalf of or for the principal, with a degree of personal discretion. (A) principal-agent (B) master-servant (C) employer-employee (D) employer-independent contractor (E) none of the other choices are correct

(A) principal-agent

In an agency the principal: (A) provides the agent with authority (B) provides the agent with legal support (C) does not provide the agent with authority (D) is given authority by the agent (E) none of the other choices are correct

(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 court would be likely to hold that ITC: (A) ratified Clark's actions and so became liable for his actions (B) expressly accepted contracts negotiated by Clark, so was liable for the failure to perform (C) had no liability because Clark merely was allowed to use office space at ITC (D) had no liability because Clark had no authority to represent ITC in movie decisions (E) none of the other choices

(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 (B) reissues the agency (C) delimits the agency (D) cancels the agency (E) exposes the agency

(A) ratifies the agency

An alleged principal becomes a real principal by: (A) ratifying the agreement (B) refusing to ratify the agreement (C) suing the alleged agent (D) signing the power of attorney (E) signing a contract

(A) ratifying the agreement

Traditionally, the chief difference between an agent and a servant (employee) was that the: (A) servant was generally not employed to represent a principal in business dealings (B) servant was usually allowed more personal discretion in deciding how to accomplish a certain objective (C) agent was not controlled by the principal (D) servant acted on behalf of the master in contractual matters involving third parties (E) none of the other choices

(A) servant was generally not employed to represent a principal in business dealings

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) special authority (B) authority in rem (C) authority at law (D) general authority (E) none of the other choices

(A) special authority

Adam enters into an oral agreement with Tushar that Tushar will sell Adam's house for him. A week later, the house burns down. Adam and Tushar's agency is now: (A) terminated by operation of law (B) still in place (C) illegal in some states (D) fraudulent in all states (E) temporarily suspended

(A) terminated by operation of law

Apparent authority arises when: (A) 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 (B) the agent creates an appearance of authority in a principal that leads a third party to conclude reasonably that the agent has authority to act for the principal (C) the agent forges documents conferring authority on himself (D) the principal gives the agent implied authority (E) none of the other choices are correct

(A) 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

An agent must be able to show where money or property comes from and goes to because of his duty: (A) to account (B) to notify (C) of loyalty (D) of responsibility (E) to profit

(A) to account

A person designated by a principal to do all acts that can be legally delegated to an agent is a: (A) universal agent (B) special agent (C) gratuitous agent (D) general agent (E) none of the other choices

(A) universal agent

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 (B) ways that an agency may be sued (C) unacceptable ways to begin an agency (D) informal and thus non-binding ways of establishing an agency (E) none of the other choices are correct

(A) ways that an agency may be established

Under the common law doctrine of ____, employers are free to discharge employees for any reason at any time, and employees are free to quit their jobs for any reason at any time. (A) work at will (B) work at reasonable compensation (C) worker rights (D) fair work (E) freedom of employment

(A) work at will

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: (A) Chan because she did not have authority to enter into a final contract without permission (B) Cook because Chan has actual authority to make a contract on behalf of her principal (C) Cook if Chan signed the contract expressly on behalf of Cook; that is, the principal was revealed before the contract was made (D) Cook but only if Chan has apparent authority to enter into the contract (E) no one; there was no valid contract

(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: (A) Juan cannot abandon the agency relationship he established with Marie (B) Marie's authority to act as agent for Juan lapsed and the agency relationship is terminated (C) Juan should pay Marie damages for reducing her income (D) Marie may not be fired because she and Juan had a contract of employment (E) Juan cannot abandon the agency relationship he established with Marie and Juan should pay Marie damages for reducing her income

(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: (A) powers to act by estoppel (B) a general power of attorney (C) authority to cancel contracts anticipatorily (D) all of the other specific choices (E) none of the other choices

(B) 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) a universal agent (B) a gratuitous agent (C) an agent who has an agency coupled with an interest (D) a special agent (E) none of the other choices

(B) a gratuitous agent

Agency by estoppel means: (A) conduct on the part of the agent that implies an agency relationship must be stopped as soon as the principal implies disagreement (B) actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf (C) the agent creates an appearance of authority in the principal which leads a third party to reasonably conclude that the agent has the authority to perform certain acts (D) conduct by the agent through word or actions is not sufficient to bind the principal to contracts the agent creates (E) none of the other choices

(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: (A) cooperating with the agent (B) allowing the agent "significant discretion" (C) reimbursing the agent for any reasonable expense (D) indemnifying the agent for legal liability incurred in completing the purpose of the agency (E) all of the other choices are required

(B) allowing the agent "significant discretion"

Express ratification creating an agency by the principal occurs when the principal: (A) fails to object to an agent's unauthorized activities (B) by action shows a clear intent to be bound by unauthorized acts of the agent (C) accepts the benefits of an unauthorized agreement with a third party (D) all of the other specific choices (E) none of the other choices

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

An agency coupled with an interest is created: (A) when the principal provides the agent with a general power-of-attorney (B) by an agent who has paid for the right to exercise authority with regard to a business (C) when a person volunteers her services out of interest in the business (D) when the agent is authorized to delegate any authority to an interested party (E) none of the other choices

(B) by an agent who has paid for the right to exercise authority with regard to a business

A(n) ____is liable to a third party for a contract made by an agent who had actual authority to act on behalf of the principal. (A) undisclosed principal (B) disclosed principal (C) specific principal (D) legitimate principal (E) clear principal

(B) disclosed principal

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: (A) has a duty to reimburse Scott for the second plane ticket (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 (C) has a duty to reimburse Scott for half the plane ticket (D) has a duty to reimburse Scott for 1/3 of the plane ticket (E) does not have a duty to reimburse Scott for the ticket because he had no duty to reimburse Scott for a plane ticket to Chicago anyway

(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

The principal has a ____ with her agent by performing responsibilities defined in the agreement forming the agency. (A) duty to inform (B) duty to cooperate (C) duty to compensate (D) duty to reimburse (E) duty to indemnify

(B) duty to cooperate

A UPS package sorter is an example of a(n): (A) agent (B) employee (C) employee with agency powers (D) independent contractor (E) agent and independent contractor

(B) employee

An agent is a(n) ____ of the principal, which means that the agent occupies a position of trust, honesty, and confidence for the principal. (A) employee (B) fiduciary (C) legal aid (D) friend (E) business partner

(B) fiduciary

A person who volunteers with no expectation of being paid for her services is a(n): (A) exceptional agent (B) gratuitous agent (C) agent who has an agency coupled with an interest (D) one-time agent (E) none of the other choices

(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 an inefficient trust. Under recent Ohio law, he could have created a much more beneficial trust. In this case, Bill: (A) has violated a duty of loyalty (B) has violated a duty of reasonable care (C) has violated a duty of obedience (D) has violated a duty to account (E) may be out-of-date but has violated no duties

(B) has violated a duty of reasonable care

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: (A) was not obligated to the lease because real estate deals must be in writing with the principal of the company agreeing to the lease (B) was not obligated to the lease because Galgano did not have apparent authority to sign a lease that would bind AFLAC (C) was obligated on the lease as its employee had apparent authority (D) was not obligated on the lease, but its employee who told Galgano it was ok to enter into such a lease was obligated (E) all of the other choices are correct

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

In Bearden v. Wardley Corp., where Bearden sued Wardley because one of its agents, Gritton, bought a house from her and then cheated her on the transaction, the court held that: (A) Gritton was liable for breaching his duty to Bearden, but Wardley had no knowledge of Gritton's actions so was not liable (B) Gritton was liable for theft, but not for breach of his duty as an agent to Bearden, since that relationship expired before Gritton cheated Bearden (C) Gritton and Wardley violated their fiduciary obligations to Bearden, so both are liable (D) neither party was liable to Bearden because the contract was legitimate and her claim that she had been cheated by her agent, Gritton, was unfounded (E) none of the other choices

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 Ho 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: (A) Yim was not liable because he was an agent of Hosung Enterprise, Inc. (B) Yim was not liable, even though he was an agent of Hosung Enterprise, Inc. (C) Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal (D) Yim was not liable because he had apparent authority (E) Yim was liable because he disclosed Hosung Enterprise, Inc. as the principal

An agent is trying to sell a house for $100,000 for her principal. The principal will sell the house for as little as $80,000, but wants to get as much as possible. The agent tells her cousin to offer $81,000. The agent's actions are: (A) a legitimate effort to get the deal done that will benefit everyone involved (B) a violation of the duty of accounting (C) a violation of the duty of loyalty (D) a violation of the duty of notification to let the principal know he can counter-offer at a higher price (E) unethical, but it does not violate legal duties

An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n): (A) third party relationship (B) principal relationship (C) agency relationship (D) real relationship (E) representative relationship

Barbara, a purchasing agent for UTA, was fired for good reason. Being angry about her dismissal, she calls one of UTA's suppliers and orders 1,000 purple widgets UTA does not need. If UTA, the principal, is held liable for this transaction, it is because Barbara had: (A) express authority (B) implied authority (C) apparent authority (D) actual authority (E) none of the other choices apply

Because of the ____ an agent may not represent another party whose interests are in conflict with those of the principal. (A) duty of non-competition (B) duty of cooperation (C) duty of loyalty (D) duty to reimburse (E) duty of obedience and performance

An agent has a ____ the funds and property of his principal that have been entrusted to him or have come into his possession. (A) duty to compensate for (B) duty to reimburse (C) duty to account for (D) duty to document (E) duty to increase

Insuring an agent against losses suffered during the course of authorized transactions is part of the principal's: (A) duty of cooperation (B) duty of facilitation (C) duty to indemnify (D) duty to protect (E) duty to reimburse

A principal has a ____ the agent for reasonable expenses incurred in carrying out the duties of the agency. (A) duty to cooperate with (B) duty of loyalty to (C) duty to reimburse (D) duty of obedience to (E) none of the other choices would apply

A senior manager at Don Reid Ford is an example of a(n): (A) agent (B) employee (C) employee with agency powers (D) independent contractor (E) agent and independent contractor

A(n) ____ relationship is one in which one person is an employee whose conduct is controlled by the employer. (A) principal-agent (B) agent-principal (C) employer-employee (D) employer-independent contractor (E) none of the other choices are correct

Power of attorney: (A) is a document that applies only to attorneys in certain capacities (B) refers to a category of agents (C) is a document that creates an agency (D) exists whenever a person has the right to execute a transaction for another (E) exists whenever an attorney has the right to execute transactions for a client

The buyer for an electronics store is bribed by a supplier to order more of the brand sold by the supplier. This action violates which of the agent's duties? (A) notify (B) account (C) loyalty (D) indemnity (E) all of the other choices

For an agent to be a fiduciary means to: (A) indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees (B) have the right and obligation to sell goods belonging to a principal (C) occupy a position of trust, honesty, and confidence with respect to the principal (D) indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees and have the right and obligation to sell goods belonging to a principal (E) indemnify the principal for any losses incurred in a lawsuit, not including attorney's fees and have the right and obligation to sell goods belonging to a principal and occupy a position of trust, honesty, and confidence with respect to the principal

Which of the following would not be a factor in determining a ratification: (A) the principal can ratify only agreements about which he has knowledge of the material facts (B) the agent must have purported to act for of the principal and not on the agent's own behalf (C) the third party wishes for the principal to be a party to a contract (D) if the original agreement between the agent and third party was required by law to be in writing, ratification must also be in writing (E) all of the other choices

Which of the following can determine the scope of authority given to an agent: (A) statements of the agent (B) the principal's personal relationship with the agent (C) the trade customs in business (D) all of the other specific choices are correct (E) none of the other specific choices are correct

An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following: (A) shareholders (B) representatives (C) third parties (D) attorneys (E) ratifications

In most states, which agencies must be in writing: (A) all agencies must be in writing (B) only powers of attorney (C) those that are for the sale of land (D) those granting the agent power to enter into contracts (E) none of the other choices need be

An undisclosed principal is: (A) known to the agent (B) unknown to the agent (C) unknown to third parties to contracts entered into with the agent (D) known to partners (E) known to third parties to contracts entered into with the agent

Express authority consists of the agent's: (A) inability to conduct business for the principal (B) ability to mingle his funds with those of the principal (C) written or oral instructions from principal to agent (D) ability to hold power of attorney for the principal (E) ability to withhold services in the event of nonpayment by the principal

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. (A) you must accept the deal because your roommate had implied authority (B) you must accept the deal because people living together have power of attorney (C) you can accept the deal by express or implied ratification (D) you can accept the deal by express ratification only, not implied ratification (E) the deal cannot be valid because there was no consent

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: (A) Southern Equipment was liable because they engaged Royalty Builders to do the work (B) Southern Equipment was not liable because they engaged Royalty Builders to do the work and in doing so passed the liability to Royalty Builders (C) Southern Equipment was liable even though they did not engage Royalty Builders to do the work (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 (E) Southern Equipment was not liable because France was a minor and should not have been working in construction

(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

Lisa works for Sally. Lisa's jobs include selling the folk-art Santa Claus statutes that Sally handmakes, as well as purchasing the wood for the statutes. In this case Lisa is: (A) a servant only (B) an agent only (C) an independent operator (D) a servant and an agent (E) a master

(D) a servant and an agent

Fiduciary duties include: (A) accounting, notification, and performance (B) loyalty and reasonable care (C) ratification and indemnification (D) accounting, notification, performance, loyalty and reasonable care (E) accounting, notification, performance, loyalty, reasonable care, ratification and indemnification

(D) accounting, notification, performance, loyalty and reasonable care

The agent's ability to transact business on behalf of and for the principal depends on whether the agent possesses: (A) actual authority (B) apparent authority (C) quasi-authority (D) actual or apparent authority (E) actual or apparent authority or quasi-authority

(D) actual or apparent authority

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: (A) a trespass, which is illegal (B) breaking and entering, which is a crime (C) an agency by estoppel (D) an agency through operation of law (E) an agency by implied ratification

(D) an agency through operation of law

Operation of law provides agents with the authority to act beyond the authority granted by the principal when: (A) an agent has a good idea (B) an agent has an opportunity to make a profit for the principal through his actions (C) an agent understands all the risks (D) an emergency exists (E) the principal fails to make the right decision

(D) an emergency exists

In Bearden v. Wardley Corp., where Gritton's real estate agent cheated her in a deal, the court held that Wardley, Gritton's employer, violated its ____ to Bearden: (A) duty to inform (B) duty of performance (C) duty to account (D) duty of care (E) none of the other choices; Wardley was not responsible

(D) duty of care

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. (A) duty to cooperate (B) duty of loyalty (C) duty of obedience (D) duty to indemnify (E) none of the other choices would apply in such case

(D) duty to indemnify

An agency can be ended upon reasonable notice by: (A) only the agent (B) only the principal (C) only the party that initiated the agency (D) either the agent or the principal (E) none of the other choices are correct

(D) either the agent or the principal

Implied ratification of an agency occurs when the principal: (A) fails to object to the unauthorized activities of an agent (B) by action shows a clear intent to be bound by unauthorized acts of the agent (C) accepts the benefits of an unauthorized agreement with a third party (D) fails to object to the unauthorized activities of an agent and accepts the benefits of an unauthorized agreement with a third party (E) fails to object to the unauthorized activities of an agent and accepts the benefits of an unauthorized agreement with a third party and by action shows a clear intent to be bound by unauthorized acts of the agent

(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: (A) universal agent (B) special agent (C) gratuitous agent (D) general agent (E) none of the other choices

(D) general agent

236. 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? (A) Lyle must pay Tom out of his own pocket (B) Tom may sue Lyle but not Thelma to enforce the contract (C) Tom can be justified in presuming Lyle had authority to sign the contract only if Tom asked Thelma (D) if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible (E) neither Lyle nor Thelma will be responsible for paying because Lyle exceeded his duty of accounting to Thelma

(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: (A) is a gift from the neighbors, nothing more (B) is the responsibility of the homeowner; there is an agency by estoppel (C) is the responsibility of the homeowner; there is implied ratification of the agency (D) is the responsibility of the homeowner; there is agency by operation of law (E) none of the other choices

(D) is the responsibility of the homeowner; there is agency by operation of law

The scope of an agent's authority is determined from the: (A) oral or written expressions of the principal (B) principal's conduct (C) standards of the Uniform Agency Act (D) oral or written expressions of the principal or the principal's conduct (E) oral or written expressions of the principal or the principal's conduct or the standards of the Uniform Agency Act

(D) oral or written expressions of the principal or the principal's conduct

Which of the four general factors which bear upon whether a master-servant relationship exists is determinative: (A) selection and engagement of the servant (B) payment of compensation (C) power of dismissal (D) power of control (E) all of the other specific choices are 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): (A) universal agent (B) gratuitous agent (C) agent who has an agency coupled with an interest (D) special agent (E) none of the other choices

(D) special agent

____ is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking. (A) a special agent (B) an apparent agent (C) an employee (D) an independent contractor (E) a general agent

(E) a general agent

An auctioneer is an example of a(n): (A) agent (B) employee (C) employee with agency powers (D) independent contractor (E) agent and independent contractor

(E) agent and independent contractor

An agency may not be ended by: (A) unilateral notice by the agent (B) unilateral notice by the principal (C) mutual consent by agent and principal (D) lapse of agreed-upon time (E) decision of a third party opposed to the agency

(E) decision of a third party opposed to the agency

Anna hires Jack to paint her house. He supplies his equipment and buys the paint for which he will be paid by Anna. One day while Jack is painting Anna invites Tom for lunch. As Tom is walking into the house Jack accidentally drops a can of paint on his head. With respect to agency law, is Anna liable for the harms Jack causes Tom? (A) yes, because Jack is a servant (B) yes, because Jack is a master (C) yes, because Jack is an employee (D) no, because respondeat superior applies (E) no, because Jack is an independent contractor

(E) no, because Jack is an independent contractor

An agency may be established by: (A) operation of law (B) oral agreement of the parties (C) written agreement of the parties (D) operation of law or by oral agreement of the parties (E) operation of law or by oral agreement of the parties or by written agreement of the parties

(E) operation of law or by oral agreement of the parties or by written agreement of the parties

The principal may hold the third party to a contract, in an undisclosed principal situation, except when the: (A) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party (B) agent's performance is personal to the contract (C) contract, when a negotiable instrument, does not include the identity of the principal or existence of the agency relationship (D) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract (E) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract or the undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract

(E) undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract or the undisclosed principal is expressly excluded as a party to the contract between the agent and the third party or the agent's performance is personal to the contract

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 Ho 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 Yim was liable because: (A) the duty to disclose the principal is on the agent and Yim did not disclose Hosung Enterprise, Inc. as the principal (B) the duty to disclose the principal is on the third party and J's Fashion did not disclose Hosung Enterprise, Inc. as the principal (C) Hosung Enterprise, Inc. was a limited liability company and so could not be held liable (D) Yim made the contract without identifying Hosung Enterprise, Inc. as the agent (E) Yim unlawfully disclosed Hosung Enterprise, Inc. as the principal

A) the duty to disclose the principal is on the agent and Yim did not disclose Hosung Enterprise, Inc. as the principal

BLAW CHAPTER 14

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