Question 1

An agent may not engage in inappropriate behavior that reflects badly on the principal,but this rule applies only to conduct while the agent is on duty.

Accepted Answer

The statement is incorrect. The rule applies to all behavior of the agent that may reflect badly on the principal, regardless of whether the agent is on duty or off duty.

Question 2

Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.

Accepted Answer

This is known as dual agency and is legal in many states as long as both parties consent and the agent follows ethical guidelines.

Question 3

Ron is the business agent for Kansas Sunshine,a rock band.He is also the agent for another popular Midwestern rock group,City Sand.Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game.The promoter was willing to pay $250,000 for both groups to play after the game;however,Ron talked her into booking just City Sand for $175,000.Given his contract with City Sand,Ron made more money under this arrangement.Has Ron violated his fiduciary duty to Kansas Sunshine?

Accepted Answer

Ron negotiated a deal that favored City Sand, the other band he represents, over Kansas Sunshine. This indicates that Ron may have put his own interests ahead of his principal's interests, which violates his fiduciary duty to Kansas Sunshine. While it is common for agents to represent multiple clients, Ron's actions in this specific situation suggest a breach of his fiduciary duty.

Question 4

An agent must obey any and all instructions of the principal.

Accepted Answer

An agent must obey lawful and reasonable instructions of the principal, but not instructions that are illegal or unethical.

Question 5

As a good neighbor,Lou gratuitously agreed to try to sell Haley's aquarium while she was on vacation.Since there is no consideration for this agreement,there can be no agency relationship between Lou and Haley.

Accepted Answer

While it is true that there is no consideration for the agreement, gratuitous agency is still a valid type of agency relationship. Lou has agreed to act as an agent for Haley in selling her aquarium, even without compensation or consideration. Therefore, there is an agency relationship between Lou and Haley.

Question 6

Victoria is the director of marketing for B & G Corporation.Victoria needed to negotiate an out-of-town contract on behalf of B & G.B & G has a legal duty to reimburse Victoria for the hotel expenses she incurs on the trip to negotiate the contract.

Accepted Answer

As a director of marketing negotiating an out-of-town contract on behalf of the company, Victoria is expected to incur hotel expenses, and the company has a duty to reimburse her for those expenses as they are necessary for the performance of her job duties.

Question 7

If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.

Accepted Answer

Implied authority refers to the authority that is not explicitly stated but is understood to exist based on the responsibilities of the employee's job. As a cashier, Denise has implied authority to perform acts that are necessary to carry out her job and serve customers.

Question 8

Mohammad was an employee in the new product development department of Estay Inc.Mohammad was directly involved in the development of a new product that Estay intended to launch in six months.Estay took great care to keep information concerning the new product a secret.Ceries,Inc.,a competitor of Estay,persuaded Mohammad to leave Estay to direct Ceries' marketing department.Which statement is correct?

Accepted Answer

As an employee of Estay, Mohammad had a duty not to disclose any confidential information he acquired during his employment, even after his agency relationship with Estay is terminated. This duty of confidentiality is an implied obligation that an agent owes to the principal. Therefore, Mohammad cannot share the confidential information he knows about Estay's new product with Ceries. The equal dignities rule only applies to the execution of contracts and is not relevant in this scenario.

Question 9

Janet was employed as a sales representative for Esday,Inc.An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract.Can Janet keep the bracelet?

Accepted Answer

As an agent, Janet has a duty to act in the best interest of Esday, and accepting gifts from customers could be considered a conflict of interest. Therefore, she should disclose the gift to Esday and ask for permission to keep the bracelet. Esday may have policies in place regarding accepting gifts and may require Janet to return it.

Question 10

Maylin has the authority to delegate her tasks as agent for Brian unless he has expressly restricted her from doing so.

Accepted Answer

The answer of Maylin has the authority to delegate her...

Question 11

Morgan is so grateful to Patrick for his work preparing insurance quotes for him that Morgan gives Patrick two tickets to an upcoming NFL game.Patrick may not keep the tickets unless he lets his agency know,and the agency may take the tickets or let Patrick keep them.

Accepted Answer

The statement clearly mentions that Patrick may not keep the tickets unless he lets his agency know, and the agency may take the tickets or let Patrick keep them. Thus, the given statement is true.

Question 12

An agency relationship can be created:

Accepted Answer

An agency relationship is created by mutual consent of the parties involved, which implies that both the agent and principal must agree to enter into a relationship in which the agent will act on behalf of the principal. This agreement can be oral, written, or implied through the parties' conduct, but it must include the agent's authority to act on behalf of the principal. Contract law applies to agency relationships, but meeting all the standards of contract law is not the only requirement for creating an agency relationship.

Question 13

Larry decided to relocate to Germany.Larry hired Happy Homes,Inc.to find a buyer and contract for the sale of his house in the United States.The agency relationship between Larry and Happy Homes may be created by an oral agreement.

Accepted Answer

The answer of Larry decided to relocate to Germany.Larry hired...

Question 14

Dwayne agrees to serve as Walker's agent in booking spots for Walker's portable basketball game.Dwayne asks Walker for pictures and size specifications of the game so he can provide potential customers information they need.If Walker does not provide the pictures and size information,he is breaching a duty to Dwayne.

Accepted Answer

If Walker does not provide the pictures and size specifications, he is not fulfilling his obligation to provide Dwayne with the necessary information to book spots for the game, which is a breach of his duty as a principal to his agent.

Question 15

An agent is not entitled to use confidential information gained from the agency relationship even after the agency relationship terminates.

Accepted Answer

This is a fundamental principle of agency law. The duty of loyalty requires that the agent keep confidential any information gained during the agency relationship, and this duty continues even after the termination of the relationship. Violation of this duty can result in legal action against the agent.

Question 16

Nikki was a tax accountant with HBR Accounting.Nikki decided to do some tax consulting in the evenings and on weekends.HBR is unaware of Nikki's consulting work.Which statement is correct?

Accepted Answer

Nikki has breached a fiduciary duty to HBR because she is engaging in a competing business without the firm's knowledge, which could potentially conflict with her obligations to her employer.

Question 17

The bankruptcy of an agent automatically terminates an agency relationship.

Accepted Answer

The bankruptcy of an agent does not automatically terminate an agency relationship. The agent's fiduciary duties and obligations to the principal still continue, and the principal may choose to continue the agency relationship by appointing a new agent.

Question 18

One potential remedy for an agent's breach of duty is that a principal can recover from the agent any damages the breach has caused.

Accepted Answer

This is correct as one of the remedies available to a principal for an agent's breach of duty is the right to recover damages caused by the breach. This provides the principal with compensation for any harm or losses suffered as a result of the agent's actions or failure to act.

Question 19

An employer is generally liable for the intentional wrongful acts of his or her employees.

Accepted Answer

An employer is typically liable for the wrongful acts of employees only if they occur within the scope of employment, not for intentional acts outside that scope.

Question 20

Rob agrees to act as an agent for Diane in selling her car.Diane has a duty of loyalty to Rob.

Accepted Answer

Rob has a duty of loyalty to Diane as her agent, not the other way around.

Quiz 15: Agency