Question 1

Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand

Accepted Answer

Vern may demand an accounting to determine the exact amount of commissions he is due for the sales he made. This will help resolve the disagreement between him and Watercraft regarding the amount of commissions. A constructive trust, specific performance, or demanding nothing would not be applicable in this situation.

Question 2

Lucy is married to Marco. Lucy buys food for their children's lunches and charges the cost to Marco's account. This is an agency by

Accepted Answer

The answer of Lucy is married to Marco. Lucy buys...

Question 3

Suva is an agent for Tax Accountants, Inc. On the firm's behalf and at its request, Suva pays Uzo for specially coded software. Suva's right to obtain the amount of the payment from Tax Accountants arises under the duty of

Accepted Answer

Suva is making the payment on behalf of Tax Accountants and has the right to obtain reimbursement for the payment under the duty of reimbursement, which is the obligation to compensate someone for expenses or losses incurred on their behalf.

Question 4

Bern, a salesperson at a Carpet & Tile store, tells Dan, a customer, "Buy your flooring here, and I'll install it for less than the store would charge." Dan buys carpeting, which Bern installs for half the store's price. Bern keeps the money. With respect to the store, Bern has breached

Accepted Answer

Bern has breached the duty of loyalty by taking business away from the store and keeping the profits for himself. As an employee, Bern owes a duty of loyalty to act in the best interest of the store and not compete with it. By undercutting the store's installation prices, Bern is harming the store's business and acting against its interests.

Question 5

Darla serves in a representative capacity for Ellen's Botanicals. To accomplish the objectives of this relationship, Darla's authority can be implied by

Accepted Answer

When an agent serves in a representative capacity for a principal, the agent's authority can be implied by custom. This means that the authority is implied based on what is usual or expected in similar situations, rather than being expressly stated in a contract or agreement. For example, if Darla has been acting as a representative for Ellen's Botanicals for many years and has always been authorized to negotiate and sign contracts on behalf of the company, her authority to do so can be implied by custom.

Question 6

Ingmar asks Jess to contract with Kay's Lawn Service to maintain Ingmar's lawn. Jess orally agrees to do so. This is an agency by

Accepted Answer

This is an agency by agreement because Jess and Ingmar have a mutual understanding that Jess will act as Ingmar's agent to enter into a contract with Kay's Lawn Service. The agreement does not need to be in writing to create an agency relationship.

Question 7

Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is

Accepted Answer

Rosa introduced Sal as "my associate," which could reasonably lead Trey to believe that Sal had some sort of authority to act on Rosa's behalf. This creates an agency by estoppel, where Rosa is liable for Sal's actions even if she did not explicitly create an agency relationship with him.

Question 8

Emmett, an agent for Fridley, signs an agreement with Glover on Fridley's behalf but neglects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is

Accepted Answer

The answer of Emmett, an agent for Fridley, signs an...

Question 9

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

Accepted Answer

Poppy has apparent authority, which is the authority that a principal (in this case, Nan) unintentionally gives to another person (in this case, Poppy) who has been held out as having authority to act on the principal's behalf. In this situation, Odel reasonably believes that Poppy has the authority to act on Nan's behalf based on her conduct, even though she does not actually have express or implied authority.

Question 10

Jon contracts with Kino to buy a certain number of sheep for Kino's Animal Farm. Jon makes a deal with Lila for the sheep, but neither Jon nor Kino pays the price. Lila sues Jon for breach. Jon's right to hold Kino liable for any damages is the right to

Accepted Answer

Indemnification is the right to hold someone else liable for any damages that arise from a contract or other legal obligation. In this scenario, Jon could hold Kino liable for any damages resulting from the breach of the contract to buy sheep. However, the question does not provide enough information to determine if Jon actually has a right to indemnification from Kino in this specific case.

Question 11

Bread Company hires Craig to sell the company's products in a certain area. Bread agrees to pay Craig a salary, plus commission, for a trial period. They also agree that he can sell using any methods and during any hours that seem appropriate. The key factor in whether Craig is Bread's employee is

Accepted Answer

The key factor in determining whether someone is an employee or an independent contractor is the degree of control that the employer has over the details of the work. In this case, Bread Company allows Craig to use any methods and work any hours that he chooses, suggesting that he has a high degree of control over his work. This would lean towards him being an independent contractor rather than an employee. The amount of the salary, the length of the trial period, and the size of the sales area are not as important factors in this determination.

Question 12

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

Accepted Answer

The fact that Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties indicates that there is express authority.

Question 13

Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of

Accepted Answer

The duty of cooperation includes not competing with the agent in their exclusive territory. Therefore, the correct answer is B.

Question 14

Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for

Accepted Answer

Denny and Ethel may create an agency relationship for any legal purpose, as long as it does not violate any laws or public policies.

Question 15

Ben manages a warehouse and its inventory for Coffee Roaster Inc. To operate this part of the business, Ben's authority can be inferred

Accepted Answer

The answer of Ben manages a warehouse and its inventory...

Question 16

Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached

Accepted Answer

Fred has breached the duty of loyalty by putting his personal interests ahead of the company he was hired to represent. As an agent, he had a fiduciary duty to act in the best interests of his principal, Energy Company, and he violated that duty by secretly buying and selling some of the property for his own personal gain.

Question 17

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

Accepted Answer

Rosario is hired on a per-project basis, which indicates that she is not an employee, as employees generally work for an employer on a regular basis. As she is also not a principal who hires someone else to perform the job, the most appropriate classification for Rosario is an independent contractor.

Question 18

Kit hires Lanie to manage Kit's Cattle Ranch. Lanie agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Lanie to so act. Their relationship is

Accepted Answer

The relationship between Kit and Lanie is that of a principal (Kit) and an agent (Lanie). Lanie has agreed to act on Kit's behalf and under Kit's control, which are the characteristics of an agent in a principal-agent relationship.

Question 19

Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached

Accepted Answer

Larry has breached the duty of obedience by not following Mary's clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays. This duty requires the agent to obey the lawful instructions of the principal and act solely in the principal's best interest. Therefore, Larry has violated this duty by going against Mary's instructions.

Question 20

Lev, an agent for Mill Grains LLC, executes an unauthorized contract with National Grocers Inc. The deal is highly advantageous to Mill Grains, and the company ratifies the contract. The contract is

Accepted Answer

The contract is valid because Mill Grains LLC ratified the contract, even though it was initially unauthorized. Ratification by the company makes the contract legally binding and enforceable.

Quiz 27: Agency Relationships in Business