Business Law II Midterm #1

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Which of the following is an instance of misuse of confidential information?

An agent divulges private details of his past employer to his principal.

Which of the following is true of tort liability for principals and agents?

An agent is liable for the principal's tortious conduct if he or she participates in it.

Which of the following is true of an employer-employee relationship?

An employee is hired to perform a physical task or service.

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter into contracts on his or her behalf?

employer-employee relationship

A power of attorney is an example of a(n) ________ agreement.

express agency

What is imputed knowledge?

information learned by an agent that is attributed to the principal

What is vicarious liability?

liability without fault

A ________ occurs when an agent makes an untrue statement that he or she knows is not true.

misrepresentation

According to the coming and going rule, what is the liability of the principal for injuries caused by its agents and employees while they are on their way to or from work?

no liability

If a person employs an architect to design the layout of his or her own home, it would constitute a(n) ________ relationship.

principal-independent contractor

Which of the following would lead to the termination of an agency by operation of law?

the death or either the principal or agent

Under the ________ test, the principal is liable for any intentional torts committed by an agent during working hours on the principal's premises.

work-related

A principal can authorize an independent contractor to enter into contracts.

True

A third-party offer to an agent must be conveyed to the principal.

True

Agency law is a mixture of tort law and contract law.

True

Dual agency occurs when an agent acts for two or more different principals in the same transaction.

True

The ________ is principal's duty to cover the agent for any losses the agent suffers because of the principal's conduct.

Duty to indemnify

An express agency contract cannot be orally agreed upon.

False

In a partially disclosed agency, the contracting third party transacts directly with the principal and does not know the identity of the agent.

False

Minors can appoint an agent without court approval.

False

Principals are liable for negligence caused by an agent during a substantial frolic and detour.

False

Undisclosed self-dealing by an agent is not regarded as violation of the duty of loyalty.

False

Vicarious liability is liability with fault.

False

Greg, who wants to sell a car he owns, authorizes his concierge, Walter, to find a potential buyer and finalize a deal above a stipulated price. Walter contracts Jacob, an independent car sales broker, and instructs him to only find a potential buyer and send them over to Walter for the sale. Greg then contracts CarWreckers, an automobile modification company to renovate his car. CarWreckers completes its work and Greg pays them. Jacob then searches for a suitable buyer and finds one in Carl. Carl buys the car and Jacob is paid for his services. Who is the principal during the car sale transaction?

Greg

Which of the following is true about a durable power of attorney?

It remains effective even though the principal is incapacitated.

Which of the following is a true statement about independent contractors?

The principal asserts little control over the independent contractor.

Which of the following is true of a fully disclosed agency?

The principal is liable on the contract with a third party.

Which of the following is true of an undisclosed agency?

The third party has no knowledge of the agency.

A dual-purpose mission is a situation that occurs when ________.

a principal requests an agent to run an errand when the agent is on his or her own personal business

An agency by ratification occurs when the principal ________.

accepts an unauthorized act created by an unauthorized agent


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