Deck 19: Agency

Question 1

A minor who has appointed an agent may ________ the contract of agency in some states

A) estop
B) modify
C) reform
D) avoid

Answer 1

D

Question 2

Agency is a type of contract and, like other contracts, may be terminated by agreement, by performance, or by operation of law.

Answer 2

True

Question 3

If minors are capable of properly carrying out the duties of an agency relationship:

A) then they may be considered to represent other persons as agents.
B) they may still not be eligible to enter into a contract with an agent.
C) they may still not be considered to represent other persons as agents.
D) then they are exempted from representing other persons as agents.

Answer 3

A

Question 4

When the agent informs the third party that he or she is acting on behalf of another, and makes the third party aware of the identity of the principal, the principal is known as a furtive principal.

Question 5

A principal is not responsible to third parties for all agreements made by the agent on behalf of the principal even if the agent acted within the scope of his or her authority.

Question 6

The authority of an agent to perform the duties that are specifically stated in the contract of agency is known as apparent authority.

Question 7

Agents are usually classified according to the nature of their relationship with their principals.

Question 8

It is often necessary or desirable for a person or firm to be represented by another in business or personal dealings with third parties. This relationship is called a(n):

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

Question 9

A person who is delegated the authority to act only in a particular kind of transaction, under definite instructions, and with specific limits on the scope of his or her authority, is called a:

A) general agent.
B) hired agent.
C) special agent.
D) super-agent.

Question 10

The legal document formally creating an agency is called a:

A) general contract.
B) power of attorney.
C) deed.
D) guaranty.

Question 11

An agency by ratification results when a principal approves an unauthorized act performed by an agent.

Question 12

A person who represents another is known as a principal.

Question 13

Anyone who is legally competent to act for himself or herself cannot delegate that legal right to perform to another.

Question 14

A principal must pay the agent the compensation agreed to in the contract.

Question 15

An agency by invention is created when circumstances make such an agency necessary.

Question 16

A principal is liable for the torts and crimes of the agent if they are committed at the direction of the principal or while the agent is performing authorized duties during the ordinary course of the agency.

Question 17

It is not necessary for the agent to obey all of the principal's reasonable and lawful orders and instructions within the scope of the agency contract.

Question 18

The legal principles governing the relationship of principal and agent and of employer and employee are entirely different from each other.

Question 19

An agency by operation of law is created when a court finds the need for an agency to achieve a desired social policy.

Question 20

If a person acts as agent for more than one party with their knowledge, the agent is only entitled to receive compensation from the first principal the agent contracted with.

Question 21

If an employee is required to perform duties for the employer that necessitate the exercise of judgment and discretion and that result in the establishment of a contractual relationship between the employer and a third party, then the employee has the status of an agent even without a:

A) formal contract of agency.
B) deed of trust.
C) stock purchase agreement.
D) joinder agreement.

Question 22

An agent must keep accurate accounts of his or her transactions conducted as part of the:

A) termination clause.
B) appointment letter.
C) agreement
D) agency agreement.

Question 23

If a person acts as an agent for more than one party with their knowledge, the agent is entitled to receive compensation from:

A) each principal.
B) each agent.
C) his or her first employer.
D) his or her last employer.

Question 24

If the third party does not know the identity of the principal, the agent can be held personally responsible to the:

A) disclosed principal.
B) third party.
C) identified principal.
D) unidentified principal.

Question 25

A principal may not revoke an agency contract if the agent has an interest in the subject matter of the agency in addition to the remuneration that he or she receives for services. Such a contract is called an irrevocable agency, which is also known as:

A) agency coupled with an interest.
B) agency by revocation.
C) agency by ratification.
D) apparent authority.

Question 26

The main difference between principal-agent and employer-employee relationships is an employer's power to control the activities of a(n):

A) non-agent employee.
B) non-employee agent.
C) employee.
D) third party.

Question 27

If a third party knows of the agency and knows the identity of the principal, the agent cannot be held ______________ as long as the agent acts within the scope of his or her actual authority.

A) personally liable
B) in contempt of court
C) without bail
D) against his or her will.

Question 28

An agent is liable for losses to the principal resulting from the agent's:

A) capital accumulation.
B) personal business.
C) incompetence.
D) explicit agreement.

Question 29

The authority that has actually been given by the principal, either orally or in writing, is known as:

A) forbidden authority.
B) foreseen authority.
C) implied authority.
D) express authority.

Question 30

Whereas an agency agreement brings about a relationship between a principal and a third party that results in a contract, an employee who is not also an agent _______________.

A) also has such rights and powers
B) has no such rights or powers
C) has extensive rights
D) has limited rights

Question 31

If an agent commits any torts or crimes acting within the scope of his or her _______, then both principal and agent may be held liable.

A) mental capacity
B) authority
C) knowledge
D) financial capacity

Question 32

A principal must reimburse an agent for any loss or damage suffered by the agent in the legitimate:

A) ownership of property.
B) performance of duties.
C) enforcement of rules.
D) transfer of power.

Question 33

Which legal term is used for a person who is appointed as an agent?

A) Special Attorney
B) Attorney at Law
C) Attorney in Fact
D) Apparent Attorney

Question 34

When an agent does not inform the third party that he or she is acting on behalf of another person, the unidentified principal is known as a(n):

A) undisclosed principal.
B) unaware principal.
C) unauthorized principal.
D) distinct principal.

Question 35

An agency contract is terminated by an act of the parties when the principal and the agent have mutually agreed on:

A) renewal.
B) amendment.
C) continuation.
D) termination.

Question 36

In an agency by ratification, a principal cannot accept the benefits of a transaction and refuse to accept the:

A) obligations.
B) parallel benefits.
C) apparent benefits.
D) representation.

Question 37

An agent may perform only those acts that have been authorized by the principal or:

A) the spouse of the principal.
B) his or her employer.
C) the court.
D) the government.

Question 38

If an agent makes a fraudulent statement in a contract within the scope of his or her authority, then the:

A) principal is responsible.
B) agent is responsible.
C) principal is not responsible.
D) contracting party's agent is responsible.

Question 39

The authority that a third party may reasonably assume an agent possesses, despite the fact that the agent does not actually possess such authority, is known as:

A) unlawful authority.
B) ultra vires authority.
C) apparent authority.
D) delegated responsibility.

Question 40

What is a contract of agency and what is usually contained therein?

Question 41

When is an agency by operation of law created? Please give an example.

Question 42

Describe the consequences of a failure on the part of the principal to give notice of the termination of the agency to all third parties.