Question 1

When is an agency relationship irrevocable?

Accepted Answer

An agency relationship is irrevocable when it is coupled with an interest of the agent in the subject matter. This means that the agent has a vested stake in the matter, such as owning property that the agency involves. In such cases, the principal cannot revoke the agency without the agent's consent.

Question 2

An agency:

Accepted Answer

An agency is a consensual relationship between a principal and an agent that can be created by contract or agreement, without necessarily requiring consideration or a formal writing such as a power of attorney. In some cases, an agency may be implied or created through the conduct of the parties. Additionally, if an agent lacks capacity, any resulting contracts with third parties may be void rather than voidable.

Question 3

In circumstances under which a person is held liable as a principal even though no actual agency has been created,there is a(n):

Accepted Answer

Each of the given options refer to a situation in which a person is held liable as a principal without there actually being a formal agency established. While there may be slight differences in the legal definitions and requirements for each of these concepts, they all generally refer to situations in which a third party reasonably believed that the person was acting as an agent on behalf of the principal, and the principal failed to correct or clarify this assumption.

Question 4

Carolyn,a cashier at Tops Supermarkets,may cash checks for up to $20 over a purchase amount.A friend needs money for a dress,so Carolyn cashes a check for $50 with no purchase.If the check bounces,Carolyn is:

Accepted Answer

Carolyn is liable because she violated her duty of obedience by cashing a check for $50 with no purchase, which goes beyond the policy of Tops Supermarkets allowing cashing checks only for up to $20 over a purchase amount.

Question 5

An agency will terminate on the occurrence of all but which one of the following?

Accepted Answer

The termination of an agency occurs when the subject matter of the agency is destroyed, the goal is accomplished, or the principal dies or becomes incapacitated. The agent quitting does not necessarily terminate the agency, as the principal may still need the services of another agent. However, if the principal leaves the country permanently or for an extended period, then the agency will terminate as the agent will no longer be able to perform their duties in the principal's absence.

Question 6

All of the following except which one is a duty of an agent?

Accepted Answer

Agents are expected to use information gained while acting on behalf of their principals to fulfill their duties effectively. However, they must not misuse this information for personal gain or in a way that harms the principal's interests. Choices A, B, and C are direct duties of an agent towards their principal.

Question 7

Milton owns a business delivering coffee and donuts within the downtown area of the city.Smith Co.calls him to deliver a large quantity of his products to their local office.While taking a coffee urn through the Smith Co.'s office,Milton drops it on Lester,scalding him.Who is liable?

Accepted Answer

Milton alone is liable for dropping the coffee urn and causing injury to Lester. As the owner of the business delivering the coffee and donuts, Milton has a duty to ensure the safe delivery of his products. By dropping the urn and causing injury, he breached that duty and is therefore liable for Lester's injuries. Smith Co. would not be liable unless they were somehow negligent in their handling of the situation. Lester cannot be held liable as he did not assume the risk of being scalded by hot coffee in the workplace.

Question 8

What is an independent contractor? Can an independent contractor also be an agent? Explain.

Accepted Answer

The answer of What is an independent contractor? Can an...

Question 9

Which of the following would NOT be considered an agent?

Accepted Answer

An independent contractor without authority to act on behalf of the person hiring her would not be considered an agent, as an essential aspect of an agency relationship is the authority to act on behalf of another.

Question 10

Carl loans Dan $1,500 for Dan's honeymoon.Dan gives Carl his ruby ring as security for the loan and after a year,tells Carl he may as well sell it to recoup the $1,500.When Dan's wife hears of this,she persuades Dan to call Carl and get back the ring.Can Carl sell it anyway?

Accepted Answer

Dan cannot terminate the agency because he has already given Carl permission to sell the ring to recoup the loan, making it an irrevocable agency.

Question 11

Robert advances money to John so that John can purchase inventory for his business.In return and for security on the loan,John makes Robert his agent.If John:

Accepted Answer

The answer of Robert advances money to John so that...

Question 12

Mark hires Joe's real estate agency to sell his estate,telling Joe he has lost too much money playing the stock market to afford to keep it up.Then Mark wins the three million-dollar lottery! Joe reads this in the newspaper and that afternoon makes a contract with Sharon to sell the estate.Is the contract valid?

Accepted Answer

The agency relationship was based on Mark's financial inability to maintain the estate. Winning the lottery significantly changes the conditions, potentially terminating the agency.

Question 13

Mark,who is 16 years old,appoints Joe,age 21,as his agent to purchase a videotape recorder from VideoWorld.The transaction between Joe and VideoWorld is:

Accepted Answer

The transaction is voidable at the discretion of Mark because he is a minor. Minors have the legal right to disaffirm contracts to protect them from exploitation, but the contract is not automatically void.

Question 14

Identify at least six factors a court will consider in determining whether a person acting for another is an employee or an independent contractor.

Accepted Answer

The answer of Identify at least six factors a court...

Quiz 19: Relationship of Principal and Agent