Law Exam 4
power of attorney
A legal document that establishes some agency relationships is known as:
unknown to third parties to contracts entered into with the agent
An undisclosed principal is:
no, because Jack is an independent contractor
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?
accounting, notification, performance, loyalty and reasonable care
Fiduciary duties include:
the agent must be subject to the principal's control
For an agency to be valid in most states:
a servant and an agent
Lisa works for Sally. Lisa's jobs include selling the folk-art Santa Claus statutes that Sally hand-makes, as well as purchasing the wood for the statutes. In this case Lisa is:
more than a year
Many states require agencies that will exist for ______ to be established in writing
subagents
Persons appointed by an agent delegated some authority are known as:
universal agent
Someone designated to do all acts that can be legally granted to an agent is called a(n):
actual or apparent authority
The agent's ability to transact business on behalf of and for the principal depends on whether the agent possesses:
he is violating his duty of loyalty
If an agent competes with his principal without the principal's consent:
accordance with her duty of reasonable care
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:
sale of land
Many states require agencies for ______ to be established in writing.
both the agent and the principal
Subagents work for the agent and owe duties to:
servant was generally not employed to represent a principal in business dealings
Traditionally, the chief difference between an agent and a servant (employee) was that the:
known to third parties to contracts entered into with the agent
A disclosed principal is a principal whose identity is:
general agent
A manager who runs all aspects of a hotel is most likely what kind of agent:
the principal's acceptance of responsibility for an agent's activities
A principal's ratification is:
employee with agency powers
A senior manager at Don Reid Ford is an example of a(n):
decision of a third party opposed to the agency
An agency may not be ended by:
the duty of obedience and performance
An agent must perform instructions provided by the principal. If the agent fails to do so, he violates:
written or oral instructions from principal to agent
Express authority consists of the agent's:
the power to do whatever is reasonable and customary to carry out the agency purpose
Implied authority consists of:
provides the agent with authority
In an agency the principal:
-actual authority -special authority
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. the principal dies b. the agent dies c. the subject matter of the agency is destroyed
Which of the following would lead to termination by operation of law for an agency:
duty to reimburse
A principal has a _________ the agent for reasonable expenses incurred in carrying out the duties of the agency.
either the agent or the principal
An agency can be ended upon reasonable notice by:
agency relationship
An employment of an agent for the purpose of representation in establishing relations between a principal and third parties is known as a(n):
has violated a duty of reasonable care
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:
by action shows a clear intent to be bound by unauthorized acts of the agent
Express ratification creating an agency by the principal occurs when the principal:
occupy a position of trust, honesty, and confidence with respect to the principal
For an agent to be a fiduciary means to:
duty to compensate
If an agency agreement did not specify how much an agent would be paid for his work, the principal has a _________ the "customary" amount.
the agent owes to the principal
The law of agency places its primary emphasis on the duties:
oral or written expressions of the principal or the principal's conduct or the customs in the business for which the agent is employed
The scope of an agent's authority is determined from the:
apparent authority
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:
an agent's ability to transact business for the principal
A key element of an agency relationship is
general agent
A person authorized to execute all regular transactions connected with a business is called a:
gratuitous agent
A person who volunteers with no expectation of being paid for her services is a(n):
disclosed principal
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.
terminated by operation of law
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:
actions by the principal lead a person to believe that the presumed agent has authority to act on the principal's behalf
Agency by estoppel means:
by an agent who has paid for the right to exercise authority with regard to a business
An agency coupled with an interest is created:
termination by operation of law
An agency ends without any action by the principal or the agent through:
principal
An agency is created when an agent agrees to act for, or in place of, the:
operation of law or by oral/written agreement of the parties or by means of the doctrine of estoppel or ratification
An agency may be established by:
third parties
An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the following:
when an emergency exists and the "agent's" actions are in the public interest
An agency through operation of law is established:
duty to account for
An agent has a ________ the funds and property of his principal that have been entrusted to him or have come into his possession.
a violation of the duty of loyalty
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:
special agent
An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):
authority
An agent's _____ is the power to change the principal's legal obligations.
ratifying the agreement
An alleged principal becomes a real principal by:
agent and independent contractor
An auctioneer is an example of a(n):
apparent authority
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:
gratuitous agent
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:
ratified Clark's actions and so became liable for his actions
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:
Cook because Chan has actual authority to make a contract on behalf of her principal
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:
for the reasonable value of the services provided
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:
not responsible for the agent's dealings with third parties who have no reason to think the agent has authority
If an agent claims to have authority but in fact has none, the principal is:
fails to object to the unauthorized activities of an agent and accepts the benefits of an unauthorized agreement with a third party
Implied ratification of an agency occurs when the principal:
-Gritton and Wardley violated their fiduciary obligations to Bearden, so both are liable -both Wardley and Gritton owed Bearden fiduciary duties and so both were liable
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:
duty of care
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:
-was not obligated to the lease because Galgano did not have apparent authority to sign a lease that would bind AFLAC -the district court was correct in its ruling that AFLAC was bound by the contract because Galgano had apparent authority
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:
-Southern Equipment was not liable because they did not engage Royalty Builders to do the work and they had no control over Royalty Builders -factors: selection and engagement of the servant, payment of compensation, power of dismissal, power of control
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:
-Yim was liable because he never disclosed Hosung Enterprise, Inc. as the principal -the duty to disclose the principal is on the agent and Yim did not disclose Hosung Enterprise, Inc. as the principal
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:
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
In which of the following situations can an agency relationship be created?
Marie's authority to act as agent for Juan lapsed and the agency relationship is terminated
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:
if Tom was justified in presuming Lyle had authority to sign the contract, Thelma will be responsible
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?
does not have a duty to reimburse Scott for the second plane ticket because it was Scott's fault he had to buy it
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:
is the responsibility of the homeowner; there is agency by operation of law
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:
allowing the agent "significant discretion"
The duties of a principal to an agent do not include:
loyalty
The duty of ________ requires an agent to place the principal's interests before the agent's personal interests or those of any third party
the extent of control the employer retains over work performance
The independent contractor is distinguished by:
duty to cooperate
The principal has a _______ with her agent by performing responsibilities defined in the agreement forming the agency
duty to indemnify
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.
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
The principal may hold the third party to a contract, in an undisclosed principal situation, except when the:
insure the agent against losses suffered during the course of authorized transactions
The principal's duty to indemnify the agent means the principal must:
incurred due to the agent's misconduct or negligence
The principal's duty to reimburse does not cover expenses:
principal
Through an agency relationship, the agent becomes a representative of the:
a general power of attorney
To carry out their duties, universal agents are typically granted:
the principal and agent must agree to form an agency
To establish an agency relationship:
the important facts of the agreement
To ratify an agreement a principal must know:
ratifies the agency
When a principal accepts the consequences of the activities of a person who had previously not been the principal's agent, the principal:
the agent's authority to act for the principal ends
When an agency is terminated:
may be liable for the torts committed by employees in the course of employment
When an employer-employee relationship exists, employers:
liable to the third party for the principal's nonperformance of the contract
When there is an undisclosed principal, the agent is:
an agency through operation of law
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:
-access to the expertise of agents -expanded business opportunities
Which of the following is an advantage to having the ability to use agents:
the level of compensation
Which of the following is least likely to be an issue in determining if an employer has hired an employee or an independent contractor:
foreign agent
Which of the following is not a category of agents covered in the text:
compensation
Which of the following is not a duty owed by the agent to the principal:
a. providing a safe working environment b. warning the agent of any unreasonable risk associated with the agency c. not furnishing goods of inferior quality to the agent
Which of the following is part of the principal's duty to cooperate:
the third party wishes for the principal to be a party to a contract
Which of the following would not be a factor in determining a ratification:
power of control
Which of the four general factors which bear upon whether a master-servant relationship exists is determinative:
special agent
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:
you can accept the deal by express or implied ratification
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.
actual authority
______ is the authority given to the principal by the agent
implied ratification
_______ takes place when the principal behaves as if he has the intent of ratifying an unauthorized agreement.
independent contractor
________ 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.
