Legal and Social Chapter 17

6. What are the two types of actual authority? Choose 2 answer choices. A. Implied authority B. Apparent authority C. Fiduciary relationship authority D. Express authority

A. Implied authority D. Express authority

CH3. When is an agent liable on a contract that the agent entered into in the business of the agent's principal? Choose 3 answers. A. if the agent entered into the contract in a personal capacity B. when the agent is acting without authority C. when the principal is not satisfied with the terms of the contract D. when the principal is undisclosed

A. if the agent entered into the contract in a personal capacity B. when the agent is acting without authority D. when the principal is undisclosed

Implied Authority

Authority that is created not by an explicit oral or written agreement but by implication

CH6. If harm is done by an agent, and it is discovered that this agent has been convicted of the same harm before at a previous job, what might a principal be liable for? A. negligent hiring B. negligent retention C. gratuitous hiring D. breach of fiduciary duty

A. negligent hiring

CH10. What is the term for the act of terminating an agency relationship? Choose 2 answers. A. renunciation, if done by the agent B. revocation, if done by the principal C. revocation, if done by the agent D. renunciation, if done by the principal

A. renunciation, if done by the agent B. revocation, if done by the principal

Jointly and severally liable

All members of a group are liable. They can be sued as a group, or any one of them can be sued individually for the full amount owed. But the plaintiff cannot recover more than the total she's owed

Q8. Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct? A. Since Jim is a gratuitous agent, he has no liability for the car B. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence C. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car D. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence

B. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence

2. How do agency relationships affect businesses and the business world? Choose 2 answer choices. A. Agency relationships eliminate legal concerns. B. Workers can specialize and become experts. C. Principals are benefited, but agents are not benefited. D. Businesses can grow by hiring employees.

B. Workers can specialize and become experts. D. Businesses can grow by hiring employees.

Q4. As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal. (T/F)

False

Respondeat superior

A principal is liable for certain torts committed by an agent

Apparent Authority

An agent's apparent authority arises when the principal causes a third party to believe that the agent has authority, even though she or he does not

CH1. What are the fiduciary duties of an agent to her principal? Choose 3 answers. A. indemnification B. accounting C. loyalty D. obedience

B. accounting C. loyalty D. obedience

CH11: What must a principal do to terminate an agency at will? A. Pay a severance payment to the agent. B. Give express written notification to the agent. C. Get a court order to terminate the agency. D. Simply notify the agent of the termination.

D. Simply notify the agent of the termination.

Principal

In an agency relationship, the person from whom an agent is acting

Agent

In an agency relationship, the person who is acting on behalf of a principal

Intermediary agent

Some who hires subagents for the principal

Subagent

Someone appointed by an agent to perform the agent's duties

Q6. Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. What should Tom do in this situation?

Tom should not hire Elton; he has a duty to obey Esday's instructions only if they are legal and ethical

Q1. If apparent authority is present, the principal is liable for even the unauthorized acts of the agent. (T/F)

True

Q3. Generally, either party to an agency relationship has the power to terminate it at any time. (T/F)

True

5. What is the key factor in apparent authority? A. Apparent authority is dictated by operation of law in case of emergencies. B. The actions of both the principal and the agent C. The agent's actions D. The principal's actions

D. The principal's actions

Equal dignities rule

If an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written

Nonphysical tort

One that harms only reputation or feelings, or wallet

Gratuitous agent

Someone not paid for performing duties

Fiduciary relationship

The trustee must act in the best interests of the beneficiary

Q7. Which of the following persons is NOT an agent? A. Craig, a telephone marketing employee B. Tim, a real estate broker for a large real estate company C. Harold, a trustee to the beneficiaries of an estate D. Diane, a shoe salesperson for retail store

C. Harold, a trustee to the beneficiaries of an estate

1. Which of the following scenarios illustrates a business world without agency relationships? A. Hiring an expert as an employee. B. A corporation with only one employee. C. Hiring an expert as an independent contractor. D. The owner prepares the tax returns.

D. The owner prepares the tax returns.

Express Authority

Both parties agree, orally or in writing, that an agency relationship exists in which the agent has the power to act in the place of, and on behalf of, the principal

CH8. Who can terminate an agency relationship? A. Neither may terminate the agency until the terms of the agreement have transpired. B. Only the principal may terminate. C. Only the agent may terminate. D. Either the agent or the principal may terminate.

D. Either the agent or the principal may terminate.

Q2. Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate, acting as a prudent person." On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29. A. The contract is valid since the agency's purpose was achieved before Jenna was notified of the death B. The contract is voidable at the option of Brandon C. The contract is voidable at the option of Mrs. O'Leary's estate. D. The contract is void since the agency terminated May 29

D. The contract is void since the agency terminated May 29

Case Study Activity: Abkco Music, Inc. v. Harrisongs Music, Ltd.

Facts: - Bright Tunes Music Corp. owned copyright to the song "He's So Fine", a hit for the Chiffons - The company sued Beatle George Harrison alleging that his composition "My Sweet Lord" copied "He's So Fine" - At the time of the suit, Allen B. Klein handled the business affairs of the Beatles - Klein (representing Harrison) suggested that Harrison might be interested in purchasing the copyright to "He's So Fine." - Shortly after, Klein's management contract with the Beatles expired - To advance these negotiations, Klein gave Bright Tunes information about royalty income for "My Sweet Lord"—information that he had gained as Harrison's agent. Issue: Did Klein violate his fiduciary duty to Harrison by using confidential information after the agency relationship terminated? Conclusion: - Taking all of these circumstances together, we agree that [Klein's] conduct did not meet the standard required of him as a former fiduciary.

Knowledge Check: In a contract which makes no mention of a principal or of an agency relationship, but is signed by one of the parties, "Kevin Jones, agent" is considered to have: A. A disclosed principal B. A partially disclosed principal C. An undisclosed principal D. No principal

B. A partially disclosed principal

8. For what terminations does a principal NOT have a duty to notify third parties? A. Agencies in which a third party has dealt with the agent B. Agencies with apparent authority C. Agencies terminated by operation of law

C. Agencies terminated by operation of law

4. What does agency by ratification require? Choose 2 answer choices. A. The principal must have the legal capacity to contract. B. The principal must have hired the agent before the contract was signed. C. The principal affirms the agent's entire act, not just a portion. D. The agent must have followed all of the principal's rules in negotiating and signing the contract.

A. The principal must have the legal capacity to contract. C. The principal affirms the agent's entire act, not just a portion.

Q5. John hired Tim to sell his house. Which statement is correct? A. John, but not Time, can terminate the agency relationship B. John is Tim's principal C. Time, but not John, can terminate the agency relationship D. Time is John's principal

B. John is Tim's principal

7. What authority is ended with the termination of an agency relationship? A. All agency authorities B. Apparent authority C. Actual authority D. Notice authority

C. Actual authority

CH7. Is a principal under a duty to compensate an agent who works on the principal's behalf? A. Yes, if the contract requires compensation. B. No, an agent is never paid. C. Yes, if the agent does a really good job above and beyond what is expected. D. No, if a salary has not been agreed on.

A. Yes, if the contract requires compensation.

3. What does the ratification of an agency relationship include? A. The law creates an agency relationship in the case of an emergency. B. The principal led a third party to believe someone was an agent. C. There is an agreement between the principal and the agent. D. A party affirms the contract another person made with a third party.

D. A party affirms the contract another person made with a third party.

CH9. What will terminate an agency relationship? Choose 3 answers. A. mutual agreement between agent and principal B. of the purpose of the agency C. passage of one year, as agency agreements must be updated annually D. lapse of a pre-specified time

A. mutual agreement between agent and principal B. of the purpose of the agency D. lapse of a pre-specified time

CH5. Who is liable to third parties for damage caused by an agent's tortious conduct if the principal had directed the agent to take that action? A. only the agent B. both the agent and the principal C. neither the agent nor the principal if the principal has insurance coverage D. only the principal

B. both the agent and the principal

CH2. How does a principal become liable to third parties on contracts? A.The agent ratifies the contract. B. A principal is not liable to third parties on contracts. C. The principal's agent has the authority to bind the principal in a contract with a third party. D. The principal directly signs a contract with a third party.

C. The principal's agent has the authority to bind the principal in a contract with a third party.

CH4. Is a principal liable for the tortious actions of the principal's agent? A. No, unless the principal authorized the tortious conduct. B. Yes, but only if the principal authorized the tortious conduct. C. Yes, but the agent must reimburse the principal. D. No, only the agent is liable for the agent's torts.

C. Yes, but the agent must reimburse the principal.

Case Study Activity: Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC

Facts: - Brenner filed suit against Belliard and Fell - They allegedly violated their duty of loyalty to her company - Brunner claimed that they left their login information and they found that they were plotting to open a competing gym Issue: Did Belliard and Fell violate their duty of loyalty to Pure Power? Conclusion: - An agent is obligated under New York law to be loyal to his employer - When an employee uses an employer's proprietary or confidential information when establishing a competing business, the employee breaches his or her fiduciary duty to the employer. - This ongoing and deliberate conduct, transpiring over the course of several months, constitutes a clear breach of the duty of loyalty owed by employees - Belliard and Fell had to pay $245,000 to the gym