Question 1

For "selling- off- price- list", Vera was terminated from her position as sales rep for the Crougar Co. Two months after the termination, Vera is still sending in orders from her former customers. This raises the issue of

Accepted Answer

The issue raised is whether Vera's continued sending of orders from former customers constitutes "holding out" by Vera, which could lead to potential liability for the company. The other options do not directly address this issue.

Question 2

When an agent approaches a third party and forms a contract but fails to disclose his status,

Accepted Answer

When an agent fails to disclose their status, the third party can choose to hold either the agent or the principal liable for the contract, as the agent is acting on behalf of the principal.

Question 3

Which of the following is not part of the duties of an agent to his principal?

Accepted Answer

It is not the duty of an agent to delegate his duties to someone else unless the principal has consented to it. The agent is responsible for performing his duties himself unless the principal consents otherwise.

Question 4

Zelda is a Hollywood movie star wanting to buy recreational property. She describes her specifications to Craig and asks him to make an offer to purchase if he finds a suitable property. She asks him not to divulge her identity. Craig finds an ideal property and makes a written offer in his own name to purchase the property for $500,000. The vendor signs an acceptance. Zelda suffers a financial setback and refuses to go through with the contract. Whom can the vendor sue?

Accepted Answer

Craig is the only party who has entered into a contract with the vendor. Zelda is not a party to the contract, so she cannot be sued.

Question 5

If my son takes a luxury cruise without my permission and has the company send me the bill and I pay, I create the impression that I will always pay for this type of conduct. If I fail to inform the company that I will not pay again, this refers to the idea of

Accepted Answer

Promissory estoppel refers to a situation where a party is prevented from going back on a promise, even if a legal contract does not exist, because the other party has relied on that promise to their detriment. By paying the bill, you create an impression of a promise to pay for such conduct in the future.

Question 6

The person appointing a representative in an agency relationship is known as the

Accepted Answer

The term "principal" is commonly used in agency relationships to refer to the person who appoints a representative or agent to act on their behalf. This is the most appropriate choice in this context. A power of attorney is a legal document that grants someone the authority to act on behalf of the person granting the power, so it is a related concept but not the best answer in this case. Administrator and supervising director are not commonly used terms for someone appointing a representative in an agency relationship.

Question 7

A entered into an agency agreement with agent B. B entered into a contract under seal with third party C. A was not named in the contract but B described herself as "agent". Which one of the following statements is best applied to these facts?

Accepted Answer

B entered into a contract under seal with third party C. A was not named in the contract but B described herself as "agent". So, B may sue C or be sued by C on the contract.

Question 8

Barney explains to Mrs. Adams that the contract is an option on her land, that he is an agent, and that the principal wants to remain undisclosed at the present time. If Mrs. Adams signs the option agreement, can it be enforced against her even though the principal is not named and the agent fails to sign?

Accepted Answer

The Statute of Frauds requires that only the party against whom enforcement is sought (the charged party) needs to sign the agreement for it to be enforceable.

Question 9

Clark is an employee of the Brown Seedling Company. He is authorised to buy various seeds from the farmers that produce such seeds. He works out of his house and is on the road most of the time. Clark is a

Accepted Answer

Clark is an employee of the Brown Seedling Company, so he is a dependent agent rather than an independent agent or manufacturer's representative. He is not selling directly to the customers but buying products from farmers as authorised by his company, so he is not a selling agent. Additionally, he is not acting as a broker between the farmers and the company, so he is not a seed broker.

Question 10

An agent will be liable for breach of warranty of authority if:

Accepted Answer

Breach of warranty of authority occurs when the agent misrepresents the scope of their authority and the principal is therefore not bound to the contract with the third party. The other options do not accurately describe breach of warranty of authority.

Question 11

An agency contract will most likely contain

Accepted Answer

An agency contract is a legal agreement between a principal and an agent that outlines the terms and conditions of their relationship. It will most likely contain both express and implied terms, which are the specific provisions that the parties agree to, as well as the customary practices and trade usage that apply to their industry. Additionally, the contract will typically include provisions for keeping the principal informed of the agent's actions and performance, as well as termination procedures in case either party wishes to end the agreement. Finally, the contract may also include private instructions that restrict the agent's authority in certain areas.

Question 12

Charlie owns a small parcel of land in Toronto. He wants his sister, who lives within a short distance of the land, to sell the parcel for him. In order for his brother to be able to sign all the real estate documents, Charlie needs to authorise

Accepted Answer

Charlie needs to give power of attorney to his sister since she is the one who will be selling the land on his behalf. This will allow his sister to act as his legal representative and sign all the necessary documents.

Question 13

Alwin signed up Twig as a talented bareback stunt rider. He was thinking his Uncle would hire her for his circus yet he had no direct authorisation to be an agent for his Uncle. Is this contract enforceable by Alwin's Uncle?

Accepted Answer

If Alwin's Uncle ratifies the contract within a reasonable time, it can become enforceable despite Alwin not having prior authorization.

Question 14

Travel Tours Inc. sells special holiday packages that are arranged by other small companies and individuals. Each time a holiday package is sold, Travel Tours adds a service charge to the quoted price. Travel Tours justifies these charges based on the fact that

Accepted Answer

The answer of Travel Tours Inc. sells special holiday packages...

Question 15

In Montreal, Mike represents six different Canadian business firms in the sale and servicing of their products. Mike is a

Accepted Answer

Mike is representing multiple Canadian business firms, indicating that he is not an employee of any one of those firms. Therefore, the best choice is independent agent.

Question 16

Ingrid was the purchasing agent for Fashion Boutique Inc. She was authorised to place orders up to $10,000 but would have to get the owner's approval for anything larger. On January 17th she placed an order for $13,672 without getting approval. Will the vendor be able to enforce this contract?

Accepted Answer

The vendor can enforce the contract because they had no reason to believe that Ingrid did not have the authority, as she was acting within the scope of apparent authority.

Question 17

Joe is appointed to sell a yacht on explicit instructions from the owner. Joe is acting with

Accepted Answer

Joe is acting with actual authority, as he has been explicitly appointed by the owner to sell the yacht. Actual authority exists when an agent has been given express or implied instructions from the principal to act on their behalf.

Question 18

An agency agreement can be established

Accepted Answer

An agency agreement can be established through various methods, including a written memorandum, being written under seal, an oral agreement, or through ratification. Therefore, all of the options (A, B, C, D) are correct and the correct answer is E.

Question 19

David, the owner of BayView Reality Inc., decided to buy one of his own firm's listings for investment purposes. The principal (owner of the property) refused to pay any commissions nor reduce the price on this transaction. Can this impasse be legally resolved?

Accepted Answer

The principal and David can negotiate a satisfactory deal without involving commissions or price reductions, as long as both parties agree to the terms.

Question 20

James was an ordinary salesman for Bulldog Electric Ltd., but his business card read "Territory Manager". He had no authority to sell his company's products for a reduced price, yet he told a potential customer, "I'll give you a 10% reduction if you place an order today". Legally speaking, will the customer be able to get the reduced price should he sign the contract?

Accepted Answer

James had apparent authority to offer the reduced price as his business card read "Territory Manager", which suggested to the customer that he had the authority to offer discounts. The customer would have reasonably relied on this representation and therefore, the company would be bound by James' actions.

Quiz 19: Agency and Franchising