Deck 17: Agency

Question 1

The relationship between a principal and an independent contractor always involves an agency relationship.

Answer 1

False

Question 2

It is basic tenet of agency law that notice to the agent is notice to the principal.

Answer 2

True

Question 3

Real estate brokers are independent contractors.

Answer 3

True

Question 4

An agency relationship can only be formed with a written agreement.

Question 5

An agency relationship created for an illegal purpose is enforceable.

Question 6

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

Question 7

Employees who deal with third parties are agents of their employers.

Question 8

An independent contractor is an employee.

Question 9

Remedies of the agent for breach of duty by the principal arise out of contract and tort law.

Question 10

A principal has the right to control an agent's conduct in matters entrusted to the agent.

Question 11

A person must have contractual capacity to be an agent.

Question 12

Generally, the agent owes the principal no duties.

Question 13

In a principal-agent relationship, the parties agree that the principal will act on behalf and instead of the agent in negotiating and transacting business with third persons.

Question 14

An agency relationship cannot exist in the absence of a formal agreement.

Question 15

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

Question 16

An agency relationship must be based on an express or implied agreement that the agent will act for principal and that the principal agrees to have the agent so act.

Question 17

An employer has no control over an employee's work.

Question 18

An agency relationship may occur by operation of law in a family.

Question 19

An independent contractor is an employer who controls his or her agent's performance.

Question 20

Through agents, a principal can conduct multiple business operations simultaneously.

Question 21

Giving an agent a power of attorney confers implied authority.

Question 22

If a principal does not ratify an authorized contract, the prin?cipal is not bound.

Question 23

Authority declared in clear, direct, definite terms is express authority.

Question 24

Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber. In this relationship, Jackson Lumber is the

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

Question 25

Clara is a salesperson in The Corner Store. When Carla makes a sale to Jenny, the sale is

A) binding on The Corner Store.
B) binding on Carla.
C) binding on The Corner Store only if the owner of The Corner Store is present when the sale is made.
D) not binding on anyone.

Question 26

A disclosed principal is a principal whose identity is not known by the third party at the time the contract is made by the agent.

Question 27

A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.

Question 28

If a principal does not ratify an unauthorized contract, the principal is not bound.

Question 29

For an agent's implied authority to be effective, a principal must ratify it.

Question 30

The equal dignity rule requires that a principal and agent treat each other with "equal dignity."

Question 31

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely

A) an agent.
B) an independent contractor.
C) a principal.
D) a work for hire.

Question 32

If a principal cannot be contacted in an emergency situation, an agent cannot deviate from previously given instructions.

Question 33

A principal is responsible for all intentional torts committed by an agent.

Question 34

A principal owes an agent a duty of compensation.

Question 35

Under the doctrine of respondeat superior, an agent is liable for the principal's negligence.

Question 36

KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands. KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the standards that should be observed, the goals that should be attained, and the methods that should be used. Lola is most likely KupaJava's

A) employee.
B) independent contractor.
C) principal.
D) power of attorney.

Question 37

An agency can terminate once its purpose is achieved.

Question 38

Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is

A) an agent and has the authority.
B) an agent but does not have the authority.
C) not an agent and does not have the authority.
D) not an agent but does have the authority.

Question 39

When an agency relationship is terminated, the principal has a duty to personally notify third parties who knew of its existence.

Question 40

If a principal ratifies a contract without knowing all of the facts, the principal can rescind the contract.

Question 41

George and James create an agency relationship to facilitate the sale of illegal narcotics. This agency relationship

A) is illegal.
B) is legal.
C) will be recognized by some states, but not others.
D) can exist, but will be subject to sanctions for illegal activity.

Question 42

Rita is appointed as an agent for Superior Sales, Inc. The agency agree?ment is silent as to the level of sales that Rita is expected to achieve. She must

A) achieve nothing because the agreement says nothing on the issue.
B) attain the level that Rita achieved with her previous employer.
C) maintain the level Superior attained before Rita became an agent.
D) use reasonable diligence and skill in selling.

Question 43

Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but ne?glects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is

A) liable, because notice to Mackenzie is notice to Lindsay.
B) liable, because notice to Kirk is notice to Lindsay.
C) not liable, because Mackenzie did not tell Lindsay about the tax.
D) not liable, because Kirk did not tell Lindsay about the tax.

Question 44

Lather Up Soap Products Company grants its agent Kathy an exclusive terri?tory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of

A) avoidance.
B) cooperation.
C) indemnification.
D) reimbursement.

Question 45

Cory employs Daily Delivery Agency as an agent under a writ?ten agreement that describes the rights and duties of both parties. This is

A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Question 46

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

A) apparent authority.
B) express authority.
C) implied authority.
D) no authority.

Question 47

Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite's employee is

A) the amount of Elton's salary.
B) the control Delite has over the details of the work.
C) the length of the trial period.
D) the title that designates Elton's position.

Question 48

Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I'll install it for half of what the store would charge." Dita buys the carpet, which Bob in?stalls for half the store's price. Bob keeps the money. Bob has breached

A) no duty.
B) the duty of loyalty.
C) the duty of notification.
D) the duty of obedience.

Question 49

Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby. Jessie orally agrees to do so. This is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 50

Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays. Will enters into a contract on MaryElise's behalf on Tuesday. Will has breached

A) the duty of performance.
B) the duty of loyalty.
C) no duty.
D) the duty of obedience.

Question 51

Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's

A) duty of performance.
B) duty of loyalty.
C) duty of compensation.
D) duty of reimbursement.

Question 52

Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is

A) an agent.
B) an employee.
C) an independent contractor.
D) a principal.

Question 53

Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to affirm the contract. This is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 54

Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached

A) the duty of performance.
B) the duty of loyalty.
C) no duty.
D) the duty of notification.

Question 55

Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied

A) by contradiction.
B) by custom.
C) by lack of reason.
D) under no circumstances.

Question 56

Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act. They set out the terms in a written document, which they both sign. This is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 57

Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to pay the rest of the price. Timberline sues Rangle for breach of contract. His right to hold Siena liable for any damages that he has to pay is the right of

A) avoidance.
B) cooperation.
C) indemnification.
D) reimbursement.

Question 58

Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by

A) an inference from the position Sonia occupies.
B) any inference a reasonable customer or supplier would make.
C) any inference Sonia chooses to make.
D) no inference.

Question 59

Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is

A) an agency by operation of law.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 60

Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between

A) a business and its competitors.
B) a government and its governed.
C) a parent and a child.
D) a principal and an agent.

Question 61

Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Company. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is

A) a disclosed principal.
B) an implied principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Question 62

Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building. Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials. Meanwhile, Principal hires Skye, a certified public accountant, to work in its cost-accounting division as an employee, with no authority to hire or supervise others. Skye asks Theo, an outside experienced accountant, to advise her on certain accounting procedures but fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to solicit orders for its products in a designated territory. Uma obtains an order from Verity Industries, Inc., which is assured the order will be filled soon. But Uma does not follow through with the paperwork and fails to submit the order to Principal. Verity suffers a loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law. Discuss fully whether an agency relationship was created by Principal with Quality Construction, Skye, or Uma.

Question 63

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

A) any transaction causing a loss to Miklos.
B) Miklos's death or incapacity.
C) Miklos's sixty-fifth birthday.
D) Nathalie's handling of one of each stipulated transaction.

Question 64

Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a Commodities corporate officer, gives Brenda written authority to buy for the firm as many computers and peripheral devices as necessary. The next day, Dennis calls Brenda and tells her to buy only fifty note?book computers and nothing else. Brenda shows the written authority to E-Products, Inc., and enters into a contract with E-Products to buy sixty note?book computers and a selection of printers, scanners, and extra storage media. E-Products ships the order to Commodities. Is Commodities li?able to E-Products under the contract? Is Brenda liable? In each case, if so, why? If not, why not?

Question 65

Bud approves on behalf of Cody-but without authorization-a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be

A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Question 66

Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell the condominiums in a building at BDC's coastal resort. The agency will terminate

A) after the condos have been sold.
B) if the prices of the condos must be reduced to sell them.
C) once BDC obtains insurance to cover the property.
D) when BDC pays Gulfview its first commission.

Question 67

Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not con?sider whether

A) Brad was acting within the scope of the agency.
B) Brad was acting within the scope of his employment.
C) Custodial authorized the act.
D) Custodial was personally at fault.

Question 68

Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Treadwell must notify

A) only third parties who are aware of the agency relationship.
B) the public generally.
C) Uri and any third parties who are aware of the agency relationship.
D) Uri only.

Question 69

Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the contract, and Joli is not, if Cake Bake is

A) a disclosed principal.
B) a partially disclosed principal.
C) an undisclosed principal.
D) an apparent agent.

Question 70

Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract re?lat?ing to the exterior. This attempt will be

A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Question 71

Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she

A) crashed into a car at the airport while off duty.
B) hit a pedestrian in a parking lot during a "working" lunch.
C) ran over an attendant at Quik's gas station while refueling the truck.
D) smashed into a store-front while intoxicated on-duty.

Question 72

Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house burns down before being sold. The agency agreement is likely

A) still in force if Frida gives Gert additional consideration.
B) still in force if Gert does not tell prospective customers.
C) terminated by mutual consent of the parties.
D) terminated by operation of law.