Chapter 23: Agency Relationship

f no time or event of termination is specified, the agency _______ the result for which the agency was created has been accomplished.

automatically ends when

When an agent's breach of duty causes harm to the principal, and no compensation is due the agent, the principal can:______.

bring an action in court

Even after a deposit/agent dies, banks continue to have the authority to act as the depositor's agent for ______ for a limited period of time

check-cashing purposes

Employees are also called _______ throughout much of the world.

dependent agents

An agency is automatically terminated by law if the subject matter of the agency is lost or: ______

destroyed

To protect herself from a charge of ________, an agent's ________ to pursue a second source of income alerts the principal to potential problems

disloyalty, disclosure of her intention

If an agent acts outside her scope of authority and makes unauthorized advances of her own funds, which in turn causes the principal to suffer a loss, the principal: ______

does not have a duty to indemnify the agent

A person can have the capacity to act as an agent, even though she: _______

does not have the legal capacity to contract

If an agent incurs substantial ________ courts will ________ the agent has had a reasonable time to earn the expected commission.

expenses, not allow a principal to terminate the agency until

If an agent acting within her scope of authority makes advances of her own funds on a principal's behalf, the principal: ______

has a duty to reimburse the agent

Unlike the rest of the world, the United States ______ what terms may be included in an agency agreement

has few restrictions on

An agent has a(n) _______ to exercise her own judgment and act contrary to the principal's instructions without incurring liability in situations where the principal would have suffered financial loss or damages to her property.

implied authority

The _________ rule is designed to permit agents to collect commissions on sales completed after termination of the agency relationship if the sale primarily resulted from the agent's efforts

procuring cause

A principals duty to keep the agent's records is reinforced by ______ that require such recordkeeping

tax laws

If a third party is unaware that an agency has terminated: ______.

the agent may still be able to bind the principal

Anything of value that comes to the agent because of the agency relationship belongs to: ______

the principal

An agent owes her principal a duty of ______ of all the property and funds received or within the agent's care.

accounting

In addition to giving a principal a record of receipts and expenditures, a(n) ________ is an agreement, ________, between the agent and the principal that the records are accurate.

accounting, express or implied

Because an agency agreement is based on _______, each party has the right to terminate the agency event if there is no contractual right to do so.

mutual consent

Employees are under the control of their employer as to both the ______ of their work, and the ______ to achieve it

objective, means

In a well-drafted agency agreement, the relationship terminates at the time of completion or _______

on the happening of an event

An agent owes a principal all of the following duties: ______. (Check all that apply

Duty of Loyalty Duty of Care Duty to Communicate

Click all of the following that would generally apply to an independent contractor.

Employers control the results but not the means Contractors work according to their own methods. Contractors are paid by the job, not by the hour.

When a lawyer agrees to _______, she is paid a percentage of the financial settlement or the jury award if she wins.

a contingent fee

The doctrine of ______ stems from courts' reluctance to force people to continue business relationships against their will

agency at will

An agent has a duty to _________ for any secret profits, bribes, or kickbacks that she received from third persons during and within the scope of the agency

account for funds and property

An agent owes her principal a duty of ______ of all the property and funds received or within the agent's care

accounting

Generally, a person can do anything through a(n) ______ she could legally do personally.

agent

Agency law focuses on the relations between principals and a(n) ______ and ______ persons.

agent, third

True or false: Agency relationships may only be formed by a contractual agreement

false

True or false: Most of the world shares the United States' notions and traditions of agency at will

false

A(n) ______ is one who is trusted to act in the best interests of another, rather than pursuing his own interests

fiduciary

The main issue that distinguishes between an employee and an independent contractor is the: ______

level of control

An agent can ______ without violating a duty of loyalty if the principal agrees to the second source of income

moonlight

Ideally, the agency compensation agreement should specify: ________

when it is earned the amount of compensation due the agent

An agency may be either ______ and either ______.

written or oral, compensated or uncompensated

Unless stated explicitly in the agency agreement, an agent has a duty to exercise ______ care and the skills used in the kind of work she has agreed to do

Ordinary

In addition to a lien, an agent who has suffered legal injuries as a result of a principal's ______ can bring a(n) ______ for compensation owed the agent for her performance

breach;lawsuit

When an agent's breach of duty is serious enough, the principal may even ______ in spite of an unexpired contract.

discharge the agent without liability

An important aspect of the duty of loyalty requires the agent to avoid: ______. (Check all that apply

disclosing the principal's secrets using secrets for their own benefit disclosing customer lists

If a commissioned agent was the primary factor in a purchase or sale, the ______ states that the agent is entitled to the commission regardless of who eventually completes the sale

procuring cause rule

In most situations, an agent who is in lawful possession of a principal's ______ has a(n) _____ on it for compensation owed the agent for her performance.

property; lien

If an agency agreement is poorly drafted, courts will look to _______ for guidance

the common law of agency

If an agency agreement is poorly drafted, courts will look to _______ for guidance.

the common law of agency

To avoid being bound to a third party after an agency has terminated ______

the principal must give actual notice to the third party who has had business dealings with the principal

True or false: A distributor typically purchases her products directly from the manufacturer and bears the risk of no sale or nonpayment by the ultimate purchaser

true