Bul Chap 19

Fred is Wilma's agent. Wilma is in the cake baking business. Without Wilma's knowledge, Fred began going to different civic events and publicly, yet falsely, criticizing the quality of cakes produced by Wilma's competitors. Several attendees at the events remarked that they would never shop in Wilma's business again due to Fred's behavior. Which duty has Fred violated? a. Duty of Good Conduct b. Duty to Compensate. c. Duty to Indemnify. d. None of these answers are correct.

a. Duty of Good Conduct

Wilma wishes to hire an agent. Though she believes that she can trust someone, based upon their reputation, she wants to know what the legal obligations are of an agent as a fiduciary. Which of the following is a legal obligation a fiduciary owes to the principal? a. Good faith and utmost loyalty to the principal. b. Duty to compensate c. Duty to self-deal. d. None of these answers are correct.

a. Good faith and utmost loyalty to the principal.

Baxter agrees with Morry to enter into the management of a new apartment building. Morry appoints Baxter as his manager for one year. During the course of the construction, Baxter decides to use funds specified for the construction of a garage that Baxter alone has been interested in completing. Morry is very angry on learning of Baxters' actions and terminates the agency. Baxter insists that the agency cannot be terminated in this manner. Is Baxter correct? a. Morry has the power to terminate the agency. b. Morry cannot terminate the agency under any circumstances. c. only Baxter can terminate the agency. d. Morry can terminate the agency, but only after the term has expired.

a. Morry has the power to terminate the agency.

Barney is Betty's gratuitous agent. One day, Barney tells Betty: "I'm through with you. I'm no longer your agent." After the statement, is Barney Betty's agent? a. No, Barney, as Betty's agent, renounced his agency and ended the relationship. b. Yes, because Betty must agree. c. Yes, because Barney is contractually obligated to be Betty's agent. d. None of these answers are correct.

a. No, Barney, as Betty's agent, renounced his agency and ended the relationship.

When the court ruled on Detroit Lions, Inc. v. Argovitz what issue did the court address? a. The court examined whether Argovitz, as an agent for Sims, violated his fiduciary duty to Sims in contract negotiations. b. The court reviewed the clauses of each football contract to see which was in Sims' best interests. c. The court analyzed the relative the cost of living in Houston vs. that of living in Detroit. d. The court assessed the wording of the Lions contract for an escape clause.

a. The court examined whether Argovitz, as an agent for Sims, violated his fiduciary duty to Sims in contract negotiations.

George holds a valid durable power of attorney for his father, who is incapacitated. Which of the following events will terminate the durable power of attorney. a. The death of his father. b. Insolvency of his father. c. A subsequent durable power of attorney granted by this father. d. None of these are correct.

a. The death of his father.

Which of the following will terminate a valid durable power of attorney after the principal is incapacitated? a. The death of the principal. b. Insolvency of the principal. c. A subsequent durable power of attorney granted by the principal. d. None of these are correct.

a. The death of the principal.

Belle was seriously ill and feared that she might lapse into a coma or somehow become unable to speak or act for herself in her medical emergency. She is aware that agents ordinarily lose their authority to act for principals who become mentally disabled. She nevertheless desires to have her husband Alan make medical decisions and speak on her behalf. She is particularly concerned about existing on life support in a persistent and incurable vegetative state. Is there any action that she might take to enable Alan to act for her? a. Belle can sign a power of attorney authorizing Alan to act for her. b. Belle can sign a durable power of attorney with specific power to make decisions on her behalf. c. Belle can handwrite her instructions and keep them in her Bible. d. Belle can change her Last Will and Testament to communicate her wishes.

b. Belle can sign a durable power of attorney with specific power to make decisions on her behalf.

Which of the following is a major duty, which the agent owes to the principal? a. Duty to compensate. b. Duty to act in good faith and with loyalty. c. Duty to indemnify. d. Duty to compete.

b. Duty to act in good faith and with loyalty.

Wilma employs Fred to purchase her a site suitable for her new cake business. Fred owns the perfect location and sells it to Wilma for a fair price, but does not tell Wilma that he had own the land. Which statement is correct? a. Fred has not violated his fiduciary duty to Wilma. b. Fred has violated his duty not to self-deal with Wilma. c. Fred has violated his duty to compete. d. None of these answers are correct.

b. Fred has violated his duty not to self-deal with Wilma.

The owner of a business with a buyer terminates an agency without giving notice of the termination to vendors who have dealt with the agent. Is it reasonable for the vendors to expect that the agent still has the authority to make contracts that will bind the business? a. The vendors are reasonable in doing business with the agent until a new agent is hired. b. The vendors are reasonable in doing business with the agent until they are notified of the termination of the agency. c. The vendors are unreasonable in doing business with the agent under any circumstance. d. None of these are correct.

b. The vendors are reasonable in doing business with the agent until they are notified of the termination of the agency.

agency is a consensual relationship that the principal and agent may form by: a. state common law. b. contract or agreement. c. federal or state statutes. d. administrative law.

b. contract or agreement.

If the agent is authorized to sell certain property of her principal for $1,000 and sells it for $1,500. Which of the following is the best description of her violation if she keeps the money? a. An agent may take a position that conflicts with the principal only if the principal, with full knowledge of all the facts, consents. b. An agent may not represent her principal in a transaction in which the agent has a personal interest. c. An agent has a duty not to acquire any financial or material benefits in connection with transactions conducted on behalf of the principal. d. All of these are correct.

c. An agent has a duty not to acquire any financial or material benefits in connection with transactions conducted on behalf of the principal.

Is the agent subject to liability to her principal for breach of the duty of obedience if she sells the principal's product on credit in violation of explicit instructions? a. No, that is a risk that the principal takes in this type of transaction. b. Yes, but the principal will end up without recourse for the loss. c. Yes, and she is liable to the principal for any amounts that the purchaser doesn't pay. d. All of these are correct.

c. Yes, and she is liable to the principal for any amounts that the purchaser doesn't pay.

A power of attorney is a formal manifestation that states an agent's authority. The agent is known as the: a. fiduciary. b. servant. c. attorney in fact. d. Independent contractor.

c. attorney in fact.

An agent's authority can terminate by: a. acts of the parties. b. operation of law. c. both acts of the parties and by operation of law. d. An agent's authority never terminates.

c. both acts of the parties and by operation of law.

The issue before the court in the Miller v. McDonald's Corporation case, was: a. whether 3K was solely liable for injuries caused at the McDonald's where Joni Miller was injured. b. whether Joni Miller was somewhat negligent for failing to find the gemstone in her Big Mac before she was hurt by it. c. whether McDonald's was vicariously liable for injuries caused at a franchised restaurant (operated by 3K). d. whether or not one should expect to find a stone in a sandwich at McDonald's.

c. whether McDonald's was vicariously liable for injuries caused at a franchised restaurant (operated by 3K).

Fred is Wilma's agent. Fred has violated his fiduciary duty to Wilma, and Wilma sues him. What type of action may Wilma bring against Fred, depending on the facts of the breach? a. Breach of Contract b. An action in tort for losses. c. An action to recover restitution. d. All of these answers are correct.

d. All of these answers are correct.

Mary is Eddie's principal. When does Mary owe Eddie a duty of compensation? a. If Eddie breaches his duty of obedience. b. If Eddie breaches his duty of loyalty. c. So long as Eddie's agency is a gratuitous one. d. When Eddie renders authorized services

d. When Eddie renders authorized services

A case in the chapter, Gaddy v. Douglass, brought what issue before the court? a. Whether the 1999 durable power of attorney was executed in the correct format. b. Whether Dr. Gaddy was the right person to have been appointed attorney-in-fact under the original durable power of attorney. c. Whether Ms. M's relatives coerced her into revoking the 1988 durable power of attorney. d. Whether a principal can revoke a valid durable power of attorney after she loses contractual capacity

d. Whether a principal can revoke a valid durable power of attorney after she loses contractual capacity

A(n) __________ is a written instrument that expresses the principal's intention that the agent's authority will not be affected by the principal's subsequent incapacity or that the agent's authority will become effective upon the principal's subsequent authority. a. fiduciary b. Agency by Estoppel c. Last Will and Testament d. durable power of attorney

d. durable power of attorney

All of the following are contractual duties owed by a principal to an agent, except: a. compensation. b. reimbursement. c. indemnification. d. self-dealing

d. self-dealing

A principal has a duty to compensate his or her agent if: a. the agent breached the duty of obedience. b. the agent breached the duty of loyalty. c. it is a gratuitous agency. d. the agent rendered authorized services

d. the agent rendered authorized services