Unit 7: Agency Module 12: Agency Relationships Quiz

Erin indicates that she is acting as an agent on behalf of an identified client—Flight Services Inc.—when she enters into a contract with Go Airlines. Liability to Go for nonperformance of the contract may be imposed on

Flight Services only. Cuisine is a partially disclosed principal. A disclosed principal is liable to a third party for a contract made by the agent. If the principal is disclosed, the agent has no contractual liability for the nonperformance of the principal or the third party.

Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on

Miklo's' death or incapacity. This power will terminate on Miklos' death or incapacity. The general rule is that the death or insanity of either the principal or the agent automatically and immediately terminates an ordinary agency relationship. Knowledge of the death or insanity is not required. Some states, however, have enacted statutes that change the common law rule to require an agent's knowledge of the principal's death before termination.

Bey indicates that he is acting as an agent on behalf of an unidentified client—Cuisine LLC—when he enters into a contract with Diners Bistro. Cuisine is

a partially disclosed principal. Cuisine is a partially disclosed principal. A disclosed or partially disclosed principal is liable to a third party for a contract made by the agent.

Aiden hires Buck to manage Aiden's Cattle Ranch. Buck agrees to act on Aiden's behalf, subject to Aiden's control, and Aiden trusts Buck to so act. Their relationship is

a principal and an agent. Their relationship is a principal and an agent. Section 1(1) of the Restatement (Third) of Agency1 defines agency as "the fiduciary relation [that] results from the manifestation of consent by one person to another that the other shall act in his [or her] behalf and subject to his [or her] control, and consent by the other so to act." In other words, in a principal-agent relationship, the parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties.

Diamonds & Gold Inc. hires Esmé to buy gems and precious metals from various sources on its behalf. In this relationship, Diamonds is

a principal. Diamonds is the owner of the business. That, by definition, makes them the principal.

Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is

an agency by estoppel. If Rosa is liable for Sal's actions, it will be because their relationship is an agency by estoppel.

Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely

an agent. Nolly is most likely an agent. Normally, all employees who deal with third parties are deemed to be agents. In this case, Nolly is dealing with third parties - customers and drivers.

Nora works at Oil & Gas Inc. She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps, and dictates their schedules. With respect to third parties, Nora is

an employee and agent. Nora is an employee and agent. As a sales rep Nora is dealing with third parties - customers, which makes her an agent. Because the company closely supervises its sales reps and dictates their schedules, she is also an employee.

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

an independent contractor. An independent contractor is a person who contracts with another to do something for them but who is not controlled or supervised directly by the hiring party.

Luis hires Mieko to act as his agent to buy Ngoc's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. When Mieko negotiates with Ngoc, she does not say anything about Luis or any third party. Luis is

an undisclosed principal. Although Luis told Mieko that she was negotiating on behalf of a third party, she failed to mention it in her negotiation with Ngoc. This leaves Luis totally undisclosed. An undisclosed principal is a principal whose identity is totally unknown by the third party.

Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for

any legal purpose. Denny and Ethel can form an agency relationship for any legal purpose. Agency relationships normally are consensual. They come about by voluntary consent and agreement between the parties. Normally, the agreement need not be in writing, and consideration is not required. A person must have contractual capacity to be a principal.

Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred

in the course and scope of Ira's employment. Jett may be liable to Key if Ira's conduct occurred in the course of Ira's employment.