Question 1

Which of the following is true regarding an agent who is acting for an undisclosed principal?

Accepted Answer

In the case of an undisclosed principal, the agent with actual authority will bind both himself and the principal on most contracts. The third party will be able to hold both the agent and principal liable for any breach of contract. Failure to disclose the name of the principal in this situation is not considered fraud as long as the agent has actual authority.

Question 2

Apparent authority arises out of words or conduct of a disclosed or unidentified principal manifested to third persons.

Accepted Answer

Apparent authority is based on the actions or words of the principal that lead third parties to reasonably believe that the agent has the authority to act on behalf of the principal.

Question 3

There can be apparent authority where a third party knows the agent has no actual authority.

Accepted Answer

Apparent authority arises when a third party reasonably believes an agent has the authority to act on behalf of the principal, typically due to the principal's representations. If the third party knows the agent lacks actual authority, there can be no apparent authority.

Question 4

The contract liability of the principal may depend upon whether the principal is disclosed,unidentified (partially disclosed),or undisclosed.

Accepted Answer

This statement is true because the liability of the principal differs depending on whether the agent discloses the identity of the principal to the third party, partially discloses it, or does not disclose it at all. In cases where the principal is undisclosed or partially disclosed, the agent may be held liable for any breach of contract or other misconduct. However, if the principal is fully disclosed, then the principal would generally be liable for any actions or obligations under the contract.

Question 5

Constructive notice of termination of an agency may not occur by mere publication in a newspaper.

Accepted Answer

The answer of Constructive notice of termination of an agency...

Question 6

An employer can be liable for an agent's negligence,but he will never be liable for his intentional torts.

Accepted Answer

An employer can be liable for an agent's intentional torts if they were committed within the scope of the agent's employment.

Question 7

Ratification and adoption of contracts have the same effect;they are both retroactive and both release the purported agent.

Accepted Answer

Ratification and adoption of contracts do not have the same effect; ratification is a principal's approval of an act of its agent where the agent acted without authority, and it retroactively binds the principal to the agent's actions. Adoption of a contract, however, typically refers to agreeing to be bound by the terms of a contract not initially part of, without the retroactive aspect of ratification.

Question 8

An employer may have criminal liability for the acts of his employee.

Accepted Answer

An employer can be held criminally liable for the actions of their employee if the employee committed the crime within the scope of their employment, and the employer was aware or should have been aware of the employee's actions. This is known as vicarious liability.

Question 9

The principal may ratify either the entire contract or certain parts of it.

Accepted Answer

Ratification by a principal must be of the entire contract; partial ratification is not permissible because it would alter the terms of the agreement.

Question 10

The doctrine of ____ is the basis for an employer's liability for an unauthorized tort committed by his employee in the course of his employment.

Accepted Answer

The doctrine of respondeat superior holds that an employer is responsible for the actions of their employees while they are performing job-related tasks or duties. This means that if an employee commits an unauthorized tort (such as causing an accident while driving a company vehicle) while carrying out their employment responsibilities, the employer may be liable for any resulting damages or injuries. Indemnification, apparent authority, and direct liability are related concepts, but they do not describe the specific basis for an employer's liability in the scenario described above.

Question 11

An agent who makes a contract with a third person on behalf of a disclosed principal usually is not a party to the contract.

Accepted Answer

When an agent makes a contract with a third person on behalf of a disclosed principal, the third person knows that the agent is acting as a representative of someone else. Therefore, the agent is not a party to the contract and cannot be held responsible for fulfilling its obligations.

Question 12

An agent acts for a(n)____ principal when she appears to be acting on her own behalf and the third person with whom she is dealing has no knowledge that she is an agent.

Accepted Answer

An undisclosed principal is when the third person with whom the agent is dealing has no knowledge that the agent is acting on behalf of a principal. This is also known as a "hidden principal". In this situation, the agent appears to be acting on her own behalf, and the principal's identity is not revealed until later.

Question 13

Ann,in the presence of Betty,tells Thomas that Ann is Betty's agent.In reality,Ann had no authority.Betty hears the statement,but she says nothing.In reliance,Thomas ships goods to Betty on Ann's order.Betty is liable even though no actual authority existed.

Accepted Answer

Betty's silence and failure to correct the misrepresentation made by Ann creates the appearance of authority, making Betty liable for the actions of Ann as her supposed agent. This is known as the doctrine of "apparent authority".

Question 14

The Second and Third Restatements are the same regarding when an agent's apparent authority ceases.

Accepted Answer

The Second and Third Restatements of Agency differ in their approach to when an agent's apparent authority ceases. The Third Restatement places more emphasis on the reasonable beliefs of the third party interacting with the agent, potentially extending the duration of apparent authority under certain circumstances, whereas the Second Restatement focuses more on the principal's manifestations and the agent's actual authority.

Question 15

If Sierra orally requests her agent Scott to sell her desk for at least $450,Scott's authority to sell the desk for this amount is actual and express.

Accepted Answer

The statement mentions that Sierra has made an "express" request to sell her desk for at least $450, which means Scott has actual authority to carry out the sale at that price.

Question 16

The Second Restatement provides that the death of a principal terminates all authority of an agent,including apparent authority,even though no notice is given to third parties.

Accepted Answer

According to the Second Restatement, the death of a principal terminates all authority of an agent, including apparent authority, even though no notice is given to third parties. Therefore, the statement is true.

Question 17

A person who purports to act as agent for a principal whom both the agent and the third party know to be wholly incompetent is personally liable on a contract entered into with a third person on behalf of such a principal.

Accepted Answer

If the agent knows that the principal is wholly incompetent, the agent cannot use the principal's incompetence as an excuse for not performing the contract, and is therefore personally liable for any obligations under the contract.

Question 18

Under the Uniform Durable Power of Attorney Act,if a principal who has executed a written durable power of attorney becomes incapacitated,the actual authority of an agent survives.

Accepted Answer

The Uniform Durable Power of Attorney Act states that a durable power of attorney survives the incapacity of the principal and the agent's authority remains in effect, hence the statement is true.

Question 19

A principal is contractually bound to a third party if the agent acts without any authority but the principal ratifies the contract.

Accepted Answer

If the agent acts without any authority, the principal is not initially bound to the third party. However, if the principal later ratifies the contract, they become bound to the third party.

Question 20

Samuel writes to Emma authorizing her to sell his automobile for $3,000.Emma,although she has no authority to delegate this task,asks Renaldo to try to sell the car.If Renaldo makes a contract with Michelle for the sale of the car,Samuel is not obligated to sell to Michelle,and Samuel acquires no rights against Michelle.

Accepted Answer

Since Emma had no authority to delegate the task of selling Samuel's car to Renaldo, any contract made by Renaldo with a third party (Michelle) is not binding on Samuel. Therefore, Samuel is not obligated to sell the car to Michelle and cannot acquire any rights against her.

Quiz 20: Relationship With Third Parties