Question 1

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent​

Accepted Answer

The destruction of the house terminates the agency relationship between Orin and Pat as the subject matter of the agency (the oceanfront house) no longer exists.

Question 2

​Chuck hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to increase considerably. The agency agreement is likely

Accepted Answer

The agency agreement is likely terminated by operation of law due to a significant change in circumstances, such as the discovery of oil, which affects the value and nature of the property.

Question 3

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify​

Accepted Answer

Reliable Insurance must notify both Stuart and any third parties who are aware of the agency relationship in order to terminate Stuart's authority. This ensures that all parties are properly informed of the change in the agency relationship and can take appropriate action. Simply notifying third parties who are aware of the relationship would not be sufficient, as Stuart himself would also need to be informed. Notifying the public generally would not be necessary or practical. Notifying Stuart alone would not be sufficient to inform third parties who are relying on his authority.

Question 4

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity. After the grain is bought, the agency relationship terminates​

Accepted Answer

The agency relationship terminates automatically after the grain is bought because the purpose of the relationship has been fulfilled. No further notice or action is required.

Question 5

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate​

Accepted Answer

The agency agreement will terminate once the condos have been sold, which is the purpose of the agreement. None of the other options are valid reasons for termination of the agency agreement.

Question 6

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute​

Accepted Answer

Private Security cannot be held responsible for Olsen's criminal actions since they had no knowledge of it and it was outside of their scope of control. Olsen is the one responsible for committing the crime and can be prosecuted by the state.

Question 7

Becca is a purchasing agent for Cable & Wire Corporation. Doyle, a Cable & Wire corporate officer, gives Becca written authority to buy for the firm as much copper as necessary. The next day, Doyle calls Becca and tells her to buy only a certain quantity of copper and no more. Becca shows the written authority to Earthbound Resources, Inc., and enters into a contract to buy more than the quantity specified by Doyle. Earthbound Resources ships the order to Cable & Wire. Is Cable & Wire liable to Earthbound Resources under the contract? Is Becca liable? In each case, if so, why? If not, why not?

Accepted Answer

The answer of Becca is a purchasing agent for Cable...

Question 8

Chemical Refining Corporation hires Disposal & Recovery Company to work as an independent contractor. Whether Chemical Refining will be liable for torts committed at the site by Disposal & Recovery depends on​

Accepted Answer

Whether Chemical Refining will be liable for torts committed at the site by Disposal & Recovery depends on whether unusually hazardous activities are involved. If the activities are unusually hazardous, then Chemical Refining may be held strictly liable for any harm caused by Disposal & Recovery, regardless of fault.

Question 9

On March 1, Eugene retains Farley to act as his authorized agent. On April 1, Eugene dies. On April 2, before Farley knows of Eugene's death, he enters into a contract on Eugene's behalf. The contract is​

Accepted Answer

The contract is void because the principal, Eugene, died before the agent, Farley, entered into the contract on his behalf. As a result, Farley no longer had the authority to act as Eugene's agent, and the contract is not enforceable against Eugene or his estate.

Question 10

Cropland Farms, LLC, hires Desiree to act as its agent to buy a certain tract of land from Ethan for $1,000 per acre. Cropland Farms does not want Ethan to know that it is the principal or that Desiree is its agent. Cropland Farms wants the land to test genetically modified seed products, and believes that Ethan may not sell the land for that purpose, or may demand a premium price if he knows that Cropland Farms is the buyer. Desiree makes the purchase, signing only her name to the contract as the buyer and not disclosing to Ethan the agency relationship. The transfer of the deed is to occur on June 1. Ethan learns of Cropland Farms's identity on May 15. Can Ethan legally refuse to deed the property on June 1? Explain.

Accepted Answer

The answer of Cropland Farms, LLC, hires Desiree to act...

Question 11

Metro Hospital, Inc., employs New Collection Company as an agent for the collection of Metro's unpaid accounts. While garnishing O'Shea's wages, New Collection misstates the amount and collects too much. O'Shea can recover from​

Accepted Answer

O'Shea can recover from either Metro or New Collection because New Collection is acting as an agent for Metro Hospital. As a principal, Metro is liable for the actions of its agents performed within the scope of their agency.

Question 12

Rachel is an agent for Sports Logo Merchandise, Inc. Rachel makes an innocent misrepresentation when entering into a contract on behalf of Sports Logo with Team Marketing & Sales Corporation. Sports Logo​

Accepted Answer

An agent's innocent misrepresentation can bind the principal, making Sports Logo Merchandise, Inc. directly responsible for Rachel's actions.

Quiz 33: Agency Liability and Termination

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent​

​Chuck hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to increase considerably. The agency agreement is likely

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify​

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity. After the grain is bought, the agency relationship terminates​

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate​

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute​

Chemical Refining Corporation hires Disposal & Recovery Company to work as an independent contractor. Whether Chemical Refining will be liable for torts committed at the site by Disposal & Recovery depends on​

On March 1, Eugene retains Farley to act as his authorized agent. On April 1, Eugene dies. On April 2, before Farley knows of Eugene's death, he enters into a contract on Eugene's behalf. The contract is​

Metro Hospital, Inc., employs New Collection Company as an agent for the collection of Metro's unpaid accounts. While garnishing O'Shea's wages, New Collection misstates the amount and collects too much. O'Shea can recover from​

Rachel is an agent for Sports Logo Merchandise, Inc. Rachel makes an innocent misrepresentation when entering into a contract on behalf of Sports Logo with Team Marketing & Sales Corporation. Sports Logo​

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent

Chuck hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to increase considerably. The agency agreement is likely

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity. After the grain is bought, the agency relationship terminates

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute

Chemical Refining Corporation hires Disposal & Recovery Company to work as an independent contractor. Whether Chemical Refining will be liable for torts committed at the site by Disposal & Recovery depends on

On March 1, Eugene retains Farley to act as his authorized agent. On April 1, Eugene dies. On April 2, before Farley knows of Eugene's death, he enters into a contract on Eugene's behalf. The contract is

Metro Hospital, Inc., employs New Collection Company as an agent for the collection of Metro's unpaid accounts. While garnishing O'Shea's wages, New Collection misstates the amount and collects too much. O'Shea can recover from

Rachel is an agent for Sports Logo Merchandise, Inc. Rachel makes an innocent misrepresentation when entering into a contract on behalf of Sports Logo with Team Marketing & Sales Corporation. Sports Logo