Deck 38: Duties and Liabilities of Principals and Agents

Question 1

Agents with authority over other agents are referred to as superior agents.

Answer 1

True

Question 2

Agents who report to other agents are called worker agents.

Answer 2

False

Question 3

Agents under all circumstances create liability to the principal in contract and tort.

Answer 3

False

Question 4

Novation occurs when the principal affirms a previously unauthorized act.

Question 5

Actual authority requires the principal to create the impression authority exists.

Question 6

In a fully disclosed agency relationship, only the principal is contractually obligated to the third party for authorized acts of the agent.

Question 7

In a partially undisclosed agency relationship, the law imposes liability on the agent in the event that the principal does not perform her contractual obligations.

Question 8

A principal may face joint-and-several liability for an agent's tort, most commonly the tort of negligence, even though the principal has not engaged in any wrongful conduct.

Question 9

Liability for agents who are classified as independent contractors is derived from the doctrine of respondeat superior.

Question 10

One of the reasons agency is such a useful legal concept is because it allows businesses as __________ to grow and transfer authority to agents within the organization's chain of command.

A) primaries
B) principals
C) markets
D) commons

Question 11

A CEO could be referred to as a/an __________ agent.

A) private
B) superior
C) common
D) minimal

Question 12

Most C-level executives are referred to as __________ agents.

A) issuer
B) common
C) private
D) subordinate

Question 13

As agents, they may under certain circumstances create liability to the principal in __________ and tort.

A) financial performance
B) corporate governance
C) contract
D) None of the choices are correct.

Question 14

Brian hired Craig to negotiate a deal with Rudy. Brian instructs Craig that while he is in Rudy's office, he should be able to steal the important file. If Craig has the opportunity to steal the file but fails to do so, what is a true statement concerning this incident and Craig?

A) he is in violation of his duty of obedience
B) he failed to follow his principal's instructions
C) he is in violation of his fiduciary duty
D) None of the choices are correct.

Question 15

Principals often create agency relationships to give __________ the power to enter into contracts with third parties that are legally binding on the principal.

A) agents
B) conduits
C) workers
D) None of the choices are correct.

Question 16

An agent's power to bind a principal in contract is derived from the agent's authority, which may arise from __________ authority.

A) actual
B) apparent
C) ratification
D) All of the choices are correct.

Question 17

An __________ agent who enters into a contract with a third party binds the principal because the third party may legally enforce the contract against the principal.

A) offeree
B) offeror
C) agreed
D) authorized

Question 18

When the third party entering into the contract is aware of the principal's identity and knows that the agent is acting on behalf of the principal in the transaction, then the agency relationship is a/an __________ agency.

A) partially disclosed
B) fully disclosed
C) undisclosed
D) None of the choices are correct.

Question 19

In a fully disclosed agency relationship, only the __________ is contractually obligated to the third party for authorized acts.

A) private agent
B) public agent
C) principal
D) All of the choices are correct

Question 20

If the third party knows that the agent is representing a principal but does not know the actual identity of the principal, the agency relationship is a/an __________ agency.

A) partially disclosed
B) fully disclosed
C) undisclosed
D) None of the choices are correct.

Question 21

In a partially disclosed agency relationship, both the __________ and the agent may be liable for the obligations under the contract.

A) sub-agent
B) third party
C) principal
D) All of the choices are correct

Question 22

When a third party is completely unaware of an agency relationship and believes that the agent is acting on her own behalf when contracting, this is called a/an __________ agency.

A) partially disclosed
B) fully disclosed
C) undisclosed
D) None of the choices are correct

Question 23

In an undisclosed agency relationship, the __________ is fully liable to perform the contract.

A) agent
B) third party
C) principal
D) All of the choices are correct.

Question 24

Clyde has been hired to deliver a truckload of hogs to a cross-state slaughterhouse. On the way there he stops to visit his girlfriend Samantha, who lives five minutes off his prescribed route. He spends five minutes with her. During those five minutes he is considered to be on a/an __________.

A) escapade
B) detour
C) outing
D) None of the choices are correct.

Question 25

A principal may face __________ liability for an agent's tort, most commonly the tort of negligence, even though the principal has not engaged in any wrongful conduct.

A) bifurcated
B) limited
C) reduced
D) joint-and-several

Question 26

Liability for agents who are classified as employees is derived from the doctrine of __________.

A) res ipsa loquitor
B) nullification
C) respondeat superior
D) None of the choices are correct

Question 27

If the employee's negligent __________ results in harm only to emotional state, reputation, or a purely economic loss, respondeat superior does apply.

A) misappropriation
B) mistake
C) misapprehension
D) misconduct

Question 28

The doctrine of respondeat superior is limited by a requirement that in order for a principal (employer) to be liable for the employee's tort, the act must have occurred within the employee's employment.

A) persistence in
B) cessation of
C) timing of
D) scope of

Question 29

In Riley v. Standard Oil Co. of New York, 231 N.Y. 301 (N.Y. 1921), the high court:

A) remanded the case to the appellate court and ordered for a new trial
B) reversed the appellate court and ordered for a new trial
C) affirmed the appellate court
D) remanded the case to the appellate court

Question 30

Many courts have adopted the __________ rule whereby employers are generally not liable for tortious acts committed by employees while on their way to and from work.

A) here and there
B) traffic
C) frolic and detour
D) going-and-coming