Deck 29: Agency Formation and Termination

Question 1

Which of the following constitutes an agency?

A) principal-agent relationship
B) agent-agent relationship
C) principal-principal relationship
D) agent-independent contractor relationship

Answer 1

A

Question 2

Martin, who wants to sell a house he owns, authorizes his concierge, Wilhelm, to find a potential buyer and finalize a deal above a stipulated price. Wilhelm contracts Chris, a real estate broker, and instructs him to only find a potential buyer and send them over to Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company to renovate the house. ReNowait completes its work and Martin pays them. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. What role does Chris perform?

A) independent contractor
B) agent
C) principal
D) trustee

Answer 2

A

Question 3

A(n) ________ is a fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act.

A) assignment
B) garnishment
C) accommodation
D) agency

Answer 3

D

Question 4

Agency relationships created against public policy are void and unenforceable.

Question 5

Martin, who wants to sell a house he owns, authorizes his concierge, Wilhelm, to find a potential buyer and finalize a deal above a stipulated price. Wilhelm contracts Chris, a real estate broker, and instructs him to only find a potential buyer and send them over to Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company to renovate the house. ReNowait completes its work and Martin pays them. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. What sort of commercial relationship exists between Martin and Wilhelm?

A) employer-employee relationship
B) agent-agent relationship
C) agent-independent contractor relationship
D) principal-agent relationship

Question 6

A(n) ________ is a relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.

A) agent-independent contractor relationship
B) principal-agent relationship
C) agent-agent relationship
D) employer-employee relationship

Question 7

A party who employs another person to act on his or her behalf is known as a(n) ________.

A) agent
B) principal
C) independent contractor
D) employee

Question 8

Which of the following is true of a principal-independent contractor relationship?

A) Principals are bound by the authorized contracts of their independent contractors.
B) Independent contractors cannot be authorized by principals.
C) Independent contractors are employees of the principals.
D) Principals cannot directly employ independent contractors.

Question 9

An agent is a party who ________.

A) agrees to act on behalf of another
B) employs another person to act on his or her behalf
C) directs a worker under an express or implied contract of employment
D) receives the services of another for remuneration

Question 10

A principal works on behalf of an agent.

Question 11

An employer-employee relationship exists when an employer gives an employee authority to act and enter into contracts on his or her behalf.

Question 12

Greg, who wants to sell a car he owns, authorizes his concierge, Walter, to find a potential buyer and finalize a deal above a stipulated price. Walter contracts Jacob, an independent car sales broker, and instructs him to only find a potential buyer and send them over to Walter for the sale. Greg then contracts CarWreckers, an automobile modification company to renovate his car. CarWreckers completes its work and Greg pays them. Jacob then searches for a suitable buyer and finds one in Carl. Carl buys the car and Jacob is paid for his services. Who is the principal during the car sale transaction?

A) CarWreckers
B) Carl
C) Greg
D) Walter

Question 13

A principal who signs a contract with a third party is obligated to perform that contract.

Question 14

Martin, who wants to sell a house he owns, authorizes his concierge, Wilhelm, to find a potential buyer and finalize a deal above a stipulated price. Wilhelm contracts Chris, a real estate broker, and instructs him to only find a potential buyer and send them over to Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company to renovate the house. ReNowait completes its work and Martin pays them. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. Who performs the role of the agent in this land sale transaction?

A) Wilhelm
B) Martin
C) Chris
D) George

Question 15

A principal-agent relationship exists when an employer hires an employee to perform some form of physical service.

Question 16

Agency law is a mixture of tort law and contract law.

Question 17

Martin, who wants to sell a house he owns, authorizes his concierge, Wilhelm, to find a potential buyer and finalize a deal above a stipulated price. Wilhelm contracts Chris, a real estate broker, and instructs him to only find a potential buyer and send them over to Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company to renovate the house. ReNowait completes its work and Martin pays them. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. What role does ReNowait Goodhouses perform?

A) agent
B) independent contractor
C) principal
D) trustee

Question 18

Minors can appoint an agent without court approval.

Question 19

Which of the following is true of an employer-employee relationship?

A) An employee has implied power of attorney towards the principal.
B) An employee has authority to act on behalf of the principal.
C) An employee can enter into contracts on behalf of the employer.
D) An employee is hired to perform a physical task or service.

Question 20

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter into contracts on his or her behalf?

A) employer-employee relationship
B) employer-agent relationship
C) principal-third party relationship
D) principal-agent relationship

Question 21

If a person employs an architect to design the layout of his or her own home, it would constitute a(n) ________ relationship.

A) employer-employee
B) principal-independent contractor
C) principal-agent
D) agent-independent contractor

Question 22

Which of the following is true of a general power of attorney?

A) A power of attorney can be oral.
B) Only lawyers can be agents of a power of attorney.
C) A power of attorney cannot be claimed once the principal is incapacitated.
D) It may allow the agent to sign legal documents on the principal's behalf.

Question 23

Which of the following is true of an express agency?

A) The agency involved is allowed to have multiple agents if desired.
B) The agency is implied from the conduct of the parties.
C) The agency comes to effect when the principal ratifies an unauthorized act.
D) The agency arises when a principal creates the appearance of an agency that does not exist.

Question 24

Marlon intends to sell a piece of real estate he owns and contracts Nita, a real estate broker, to make the sale. In the contract, Marlon authorizes Nita to make the sale at or above a minimum price he wants and the date by which he wants the sale to be completed. The contract also stipulates that Marlon will not hire another broker to sell that piece of land until the contract period expires. Nita finds a suitable buyer, makes the sale in time, and is paid by Marlon for her services. What kind of contract existed between Marlon and Nita?

A) an apparent agency contract
B) a ratified contract
C) an exclusive agency contract
D) an exclusive principal contract

Question 25

An agency that occurs when a principal and an agent do not expressly create an agency but is inferred from the conduct of the parties is known as a(n) ________.

A) apparent agency
B) agency by ratification
C) implied agency
D) agency coupled with an interest

Question 26

Marcus employs a real estate broker, Dean, to sell his house. Dean's express powers are to advertise and market the house for sale, show the house to prospective buyers, and accept offers from them. He is not allowed to seal a deal without Marcus' consent. Marcus goes away on a month-long trip where he cannot be contacted. During this time, a short circuit in the house causes a power outage. Dean uses his authority to hire an electrician to repair the circuits and restore electricity in the house. Marcus then comes back and pays Dean for the repairs. What is the nature of the agency that Dean used to fix the problem in the house?

A) implied agency
B) agency by ratification
C) power of attorney
D) express agency

Question 27

An express agency agreement that is often used to give an agent the control to sign legal documents on behalf of the principal is known as a(n) ________.

A) assignment
B) accommodation
C) power of attorney
D) letter of credit

Question 28

What is an independent contractor? Provide several examples.

Question 29

An agency that occurs when a principal and an agent categorically agree to enter into an agency agreement with each other is known as a(n) ________.

A) agency by ratification
B) implied agency
C) apparent agency
D) express agency

Question 30

Canton has listed his house for sale but cannot be present for the sale because he needs to go out of town. He intends to give his brother Stratham the power of attorney to make decisions regarding the selling of his house while he is gone. What kind of power of attorney should Canton execute?

A) a general power of attorney
B) a special power of attorney
C) a limited power of attorney
D) an implied power of attorney

Question 31

Marlon intends to sell a piece of real estate he owns and contracts Nita, a real estate broker, to make the sale. In the contract, Marlon authorizes Nita to make the sale at or above a minimum price he wants and the date by which he wants the sale to be completed. The contract also stipulates that Marlon will not hire another broker to sell that piece of land until the contract period expires. Nita finds a suitable buyer, makes the sale in time, and is paid by Marlon for her services. Which of the following types of agency existed between Marlon and Nita?

A) apparent agency
B) agency by ratification
C) implied agency
D) express agency

Question 32

Which of the following is true about a special power of attorney?

A) It is an implied form of the power of attorney.
B) It limits the agent's powers to those enumerated in the agreement.
C) It allows the agent to act in any matters on the principal's behalf.
D) It only allows certified lawyers to be agents.

Question 33

A power of attorney is an example of a(n) ________ agreement.

A) agency by ratification
B) apparent agency
C) express agency
D) implied agency

Question 34

A(n) ________ is a contract a principal and agent enter into that says the principal cannot employ another agent other than the one stated.

A) exclusive principal contract
B) exclusive agency contract
C) ratified contract
D) apparent agency contract

Question 35

An agency by ratification occurs when the principal ________.

A) accepts an unauthorized act created by an unauthorized agent
B) accepts an authorized act created by an authorized agent
C) creates the appearance of an agency that in actuality does not exist
D) accepts an act carried out under the implied authority of an agent

Question 36

A principal can authorize an independent contractor to enter into contracts.

Question 37

Taylor gives a power of attorney to his twin brother Corey, permitting Corey to make all decisions on his behalf while he is abroad. Per the terms of the power of attorney, Corey is allowed make decisions to buy or sell stocks on Taylor's behalf, sell Taylor's real estate if he deems it to be in Taylor's best interest, pursue or defend lawsuits on Taylor's behalf, and make all other relevant decisions for Taylor. What kind of power of attorney would confer such powers to Corey?

A) a special power of attorney
B) a limited power of attorney
C) an implied power of attorney
D) a general power of attorney

Question 38

Which of the following is true about a durable power of attorney?

A) It is only effective as long as the principal is able.
B) It remains effective even though the principal is incapacitated.
C) It is effective even when the agency is an oral agreement.
D) It is only effective if the agent is a certified lawyer.

Question 39

A power of attorney where a principal confers powers on an agent to act in specified matters on the principal's behalf is referred to as a(n) ________.

A) implied power of attorney
B) general power of attorney
C) limited power of attorney
D) special power of attorney

Question 40

Frank Hannigan sees a grand piano that his musician friend Scott Kristoff had been looking for in an antique store. Frank enters into a contract to purchase the grand piano from the antique seller and signs the contract, "Frank Hannigan, agent for Scott Kristoff." But because Frank is not Scott's agent, Scott is not bound by the contract. If Scott decides to accept the contract, what kind of agency would be created?

A) express agency
B) implied agency
C) agency by ratification
D) power of attorney

Question 41

A duty that a principal owes to pay an agreed-upon amount to the agent, either upon the completion of the agency or at some other mutually agreeable time, is known as a principal's ________.

A) duty to reimburse
B) duty to cooperate
C) duty to indemnify
D) duty to compensate

Question 42

Which of the following describes an agency by estoppel?

A) an agency that arises when a principal ratifies a contract created by an unauthorized agent
B) an agency created when a principal and an agent expressly agree to enter into an agency agreement
C) an agency that is not expressly stated but is implied and inferred in the conduct of the parties
D) an agency that arises when a principal creates the appearance of an agency that in actuality does not exist

Question 43

Ashley owns a piece of vacant real estate through which a small river runs. Ashley hires Warren, a licensed real estate broker, to list the property for sale and help sell the property. While inquiring in the neighborhood, Ashley's neighbor Lenny tells Warren that a chemical plant upstream has polluted his property and that Warren should have environmental engineers test Ashley's property as well. Warren does not tell Ashley about Lenny's suggestion. Warren manages to find a buyer for Ashley's property in Martha. It is later discovered that the property Martha bought from Ashley is polluted. What important agent's duty has Warren failed to perform?

A) duty to indemnify
B) duty to account
C) duty to reimburse
D) duty to notify

Question 44

Powers of attorney can be oral.

Question 45

The ________ is principal's duty to cover the agent for any losses the agent suffers because of the principal's conduct.

A) duty to cooperate
B) duty to indemnify
C) duty to compensate
D) duty to reimburse

Question 46

A general power of attorney limits the agent to those acts enumerated by the agreement.

Question 47

Which of the following is true of an apparent agency?

A) The authority of an apparent agent is implied from the conduct of the parties.
B) The third-party is not bound to a contract created by an apparent agent.
C) The principal is bound to the contracts entered into by an apparent agent.
D) The actions of an apparent agent create an apparent agency.

Question 48

A power of attorney gives an agent the power to sign legal documents on behalf of the principal.

Question 49

An agent given a power of attorney is known as an attorney-in-fact.

Question 50

Ronald, the purchasing manager of Tellys Supermarket in Georgia, was asked to purchase an order of the latest videogame console, FunCase, to keep in the supermarket. However, due to a truckers' strike, he had to make a trip to the FunCase warehouse, which was in Florida. Ronald paid for the trip himself, went to the warehouse, procured the shipment, and returned. After he got back, Tellys Supermarket paid Ronald for the trip he made to Florida. What duty of the principal did Tellys Supermarket perform when they paid Ronald for the trip to Florida?

A) duty to cooperate
B) duty to reimburse
C) duty to compensate
D) duty to indemnify

Question 51

If a principal and an agent enter into an express agency contract, the principal cannot employ any agent other than the exclusive agent.

Question 52

What is imputed knowledge?

A) information collected by a principal prior to engaging in an agency
B) information collected by a principal on an agency
C) information learned by an agent that is attributed to the principal
D) information learned by a principal that is attributed to an agent

Question 53

A special power of attorney empowers the agent to act in any matters on the principal's behalf without limitation.

Question 54

A durable power of attorney remains effective even if the principal is incapacitated.

Question 55

What is an implied agency?

Question 56

An express agency contract cannot be orally agreed upon.

Question 57

Only a lawyer can become an attorney-in-fact.

Question 58

An agency by ratification occurs when a principal ratifies an authorized act.

Question 59

In an agency by ratification, the agent is relieved of any liability for misrepresentation.

Question 60

Agency can be implied from the conduct of the involved parties.

Question 61

Which of the following qualifies as the termination of an agency by impossibility of performance?

A) the loss of a required qualification
B) the bankruptcy of the principal
C) the insanity of either the principal or the agent
D) the conviction of either the principal or the agent

Question 62

Matthew employs a real estate agent to sell his house for $10 million. The agent later learns that the house is rumored to be haunted and that brings down the value of the house to about $5 million. The agency terminates because of ________.

A) an unusual change in circumstances
B) impossibility of performance
C) operation of law
D) act of the parties

Question 63

The termination of an agency contract in violation of the terms of the agency contract is referred to as ________.

A) termination by an unusual change in circumstances
B) termination by impossibility of performance
C) terminated by operation of law
D) wrongful termination

Question 64

Constructive notice is not valid against strangers who assert claims of apparent agency.

Question 65

An agency contract is similar to other contracts in that it can be terminated by an act of the parties.

Question 66

agency change in law can terminate an agency due to the impossibility of performance.

Question 67

An agent who has negligently or intentionally failed to perform his express duties is liable under tort law.

Question 68

Parties with whom an agent has direct dealings must be given direct notice of the termination of an agency.

Question 69

Which of the following would lead to the termination of an agency by operation of law?

A) the loss or destruction of the subject matter of the agency
B) the death of either the principal or agent
C) the loss of a required qualification
D) a change in the law

Question 70

The insanity of either a principal or an agent cannot terminate an agency.

Question 71

A principal is not bound to contracts made by an apparent agency.

Question 72

What is an agent's duty to account?

Question 73

The ________ includes keeping records of all property and money received and expended during the course of an agency.

A) duty of accountability
B) duty of termination
C) duty to reimburse
D) duty to notify

Question 74

A direct notice of termination goes to any third party who has knowledge of an agency but with whom the agent has not dealt.

Question 75

The termination of an agency does not necessarily extinguish the power of the agent to act on behalf of the principal.

Question 76

Which of the following is true of a direct notice of termination?

A) It is only applicable in employer-employee relationships.
B) It is given to all persons with whom an agent dealt.
C) It can only be given orally.
D) It is only executed after the death of either the agent or the principal.

Question 77

An agency contract is terminated with the death of either the principal or the agent.

Question 78

The mutual assent of parties can terminate an agency.

Question 79

Wrongful termination refers to the termination of an agency contract in violation of the terms of the agency contract.

Question 80

A principal owes a duty to indemnify an agent for any losses the agent suffers because of the principal's conduct.