Question 1

Bev indicates that she is acting as an agent on behalf of an unidentified client-Cuisine LLC-when she enters into a contract with Diners Bistro. Cuisine is

Accepted Answer

Cuisine LLC is a partially disclosed principal because Bev indicates she is acting on behalf of a client but does not reveal the client's identity.

Question 2

Hana indicates that she is acting as an agent on behalf of an unidentified client-In-Flight Service Inc.-when she enters into a contract with Jet Airlines. Liability to the airline for nonperformance of the contract may be imposed on

Accepted Answer

When an agent enters into a contract on behalf of a disclosed principal, both the agent and the principal can be held liable for nonperformance, especially if the agent did not act within the scope of their authority or if the contract specifies joint liability. Since Hana indicated she is acting on behalf of In-Flight Service Inc., both can be held liable.

Question 3

Qin, the owner of Reprocess Plant, instructs Shi, a plant supervisor, to fill a storage tank with a chemical made by Toxins Inc. that, as both Qin and Shi know, will combust if combined with the substance previously stored in the tank. And, as they also both know, the tank has not been cleaned. Liability for any resulting harm or damage extends to

Accepted Answer

Qin and Shi would both be liable for any resulting harm or damage because they knowingly directed and carried out the action of filling the storage tank with a chemical that would combust with the substance previously stored in the tank, without taking necessary precautions such as cleaning the tank. Their awareness and decision to proceed without mitigating the known risk directly implicates them in liability for any consequences. Toxins Inc. is not mentioned as having knowledge of or involvement in the decision to mix the chemicals in a dangerous manner, so liability does not extend to them based on the information provided.

Question 4

Deft Construction Company hires Egan, an independent contractor, to excavate and grade a certain parcel of land for a commercial development. Negligence in Egan's work causes the ground to subside, leading to the collapse of a building in which Deft workers are injured. Liability for the injuries extends to

Accepted Answer

Egan, as an independent contractor, is responsible for his own negligence. Deft Construction Company would generally not be liable for the negligent acts of an independent contractor.

Question 5

Gary drives a truck as an employee for Hauling Inc. Gary would most likely be considered acting outside the scope of her employment if he

Accepted Answer

Gary would be considered acting outside the scope of his employment if he was off duty, as in option A, because actions taken while not performing work duties or outside working hours are generally not considered within the scope of employment.

Question 6

Clark hires Dell, a real estate broker, to sell his beach house. The house is destroyed in a storm before it can be sold. Dell is Clark's agent

Accepted Answer

The agency relationship between Clark and Dell terminates when the subject matter of the agency (the beach house) is destroyed, making it impossible to fulfill the purpose of the agency (to sell the beach house).

Question 7

Without authority, Dot contracts purportedly on Eva's behalf with Field & Farm Equipment Inc. for the purchase of a tractor. Liability on the contract extends to

Accepted Answer

Dot only would be liable because she acted without authority from Eva. When someone enters into a contract on behalf of another without the authority to do so, the person acting (Dot in this case) is the one liable on the contract, not the person they purported to represent (Eva).

Question 8

Ruby, an agent for Shipping Company, leases a warehouse from Transit Facilities Inc. without stating that she is acting on Shipping Company's behalf. Liability for nonpayment of rent under the lease may be imposed on

Accepted Answer

Ruby, acting as an agent for Shipping Company without disclosing this fact, can be held personally liable along with the Shipping Company once the agency relationship is revealed. Both the agent and the principal can be held liable in such cases.

Question 9

Chu, an agent for Delivery Corporation, rents a truck from Equipment Inc. without revealing that he is acting on Delivery's behalf. When Delivery fails to pay for the use of the vehicle, the lessor collects the unpaid amount from Chu by judicial process. Entitled to be indemnified is

Accepted Answer

Chu is entitled to be indemnified because he acted on behalf of Delivery Corporation without disclosing his agency relationship. When acting as an agent, if the agent incurs expenses or liabilities while performing duties for the principal (in this case, Delivery Corporation), the agent is entitled to indemnification from the principal for those expenses or liabilities.

Question 10

To cover potential liability for the conduct of an agent or employee, most employers

Accepted Answer

Employers often purchase liability insurance to cover potential liabilities arising from the conduct of their agents or employees. This insurance helps protect the company from financial losses due to lawsuits or claims related to the actions of their personnel.

Question 11

Ira serves in a representative capacity for Jeff. Key is injured through Ira's negligence. Jeff may be liable to Key if Ira's conduct occurred

Accepted Answer

Jeff may be liable to Key if Ira's conduct occurred in the course and scope of Ira's employment. This is based on the principle of vicarious liability, where an employer can be held responsible for the negligent actions of an employee if those actions were performed within the scope of employment.

Question 12

Farah hires Gil, a real estate broker, to act as her agent to sell her land for $150,000. Before the land is sold at the stated price, oil is discovered beneath it, causing its market value to increase considerably. The agreement between Farah and Gil is likely

Accepted Answer

The discovery of oil significantly changes the value and nature of the property, which could lead to the termination of the agreement by operation of law, as the original terms were based on the property's value before the discovery. This is because the fundamental conditions under which the agreement was made have substantially changed.

Question 13

Luis hires Mieko to act as his agent to buy Noh's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Noh's seller who that third party is. Luis is

Accepted Answer

Luis is a partially disclosed principal because Mieko reveals that she is acting on behalf of a third party, but does not disclose Luis's identity.

Question 14

Part of the rationale for the doctrine of respondeat superior is that an injured person should be afforded effective relief, which is usually best provided by a business because

Accepted Answer

The doctrine of respondeat superior holds an employer or principal legally responsible for the wrongful acts of an employee or agent, if such acts occur within the scope of the employment or agency. The rationale behind this is that businesses are better equipped to bear the financial burden of liability, as they can distribute the costs associated with risks and liabilities across the entire enterprise, making it easier to provide effective relief to the injured party. This is in contrast to an individual employee, who may not have the financial capacity to compensate for damages caused.

Question 15

Milos employs Natalie to handle a list of financial transactions on Milos's behalf. This power will terminate on

Accepted Answer

The power granted to Natalie to handle financial transactions on Milos's behalf would terminate upon Milos's death or incapacity, as these events would legally end the authority given to Natalie to act in Milos's stead.

Question 16

Flight Craft Corporation sends its agent Gavin to a sales convention hosted by Holiday Travel to showcase Flight's new passenger jet. Gavin, who is authorized to make statements about the aircraft, makes false claims about its capability. Liability for injuries or damage to third parties who rely on the false claims extends to

Accepted Answer

Flight Craft Corporation is liable because Gavin is their agent and was acting within the scope of his authority when he made the false claims. Gavin is also liable because he personally made the false statements.

Question 17

Velma is a purchasing agent for Wild-Caught Fish Inc., with the authority to buy the catches of commercial fishers up to a certain quantity. When the limit is reached, the agency relationship terminates

Accepted Answer

The agency relationship terminates automatically when the limit set for the purchasing agent is reached, without the need for any further action or notice.

Question 18

In the course and scope of employment, Oscar, an agent for Processed Food Inc., violates state sanitation regulations by mishandling certain food products distributed by Quality Transport Corporation. In some jurisdictions, liability for the violations could extend to

Accepted Answer

In some jurisdictions, an employer (Processed Food Inc.) can be held liable for the actions of its employees (Oscar) if those actions occur within the course and scope of employment, even if the actions violate regulations.

Question 19

Cal directs Diego, Cal's agent, to harvest the hay on Edna's farm, although neither Cal nor Diego has the right to go onto the land and cut and remove the crop. Liability for the trespass and damage to the property extends to

Accepted Answer

Cal and Diego are both liable for the trespass and damage to the property because Cal directed the action and Diego carried it out, even though neither had the right to do so. Edna, the property owner, is not liable for actions she did not authorize or participate in.

Question 20

Corinne discloses that she is acting as an agent on behalf of Development LLC when she enters into a contract with Enterprise Funds Inc. Liability for nonperformance of the contract may be imposed on

Accepted Answer

Corinne is acting as an agent on behalf of Development LLC, which means that she is authorized to enter into contracts on behalf of the company. Therefore, both Corinne and Development LLC are liable for nonperformance of the contract.

Quiz 32: Agency Formation and Duties