Question 1

An agent may lose the right to compensation:
A)by breaching the agency contract willfully and deliberately.
B)if the specified result of the contract is not obtained.
C)if the duty of loyalty is breached.
D)All of the above
E)None of the above.

Accepted Answer

An agent may lose the right to compensation if they willfully and deliberately breach the agency contract, if the specified result of the contract is not obtained, or if they breach the duty of loyalty. Therefore, all options given in choices A, B, and C are correct, making D the correct answer.

Question 2

All of the following except which one is a duty of an agent?
A)Account for money received on behalf of his principal.
B)Inform his principal of any information relevant to his agency.
C)Refrain from competing with his principal.
D)After the agency is terminated, refrain from using any information gained while an agent.

Accepted Answer

Duty D, refraining from using any information gained while an agent after the agency is terminated, is not a general duty of an agent. The primary duties of an agent include accounting for money received on behalf of the principal, informing the principal of relevant information, and refraining from competing with the principal. However, the obligation regarding the use of information after termination of the agency can vary based on the terms of the agreement and specific laws, but it is not considered a general duty like the others listed.

Question 3

Matt hires Joe's real estate agency to sell his property, telling Joe he has lost too much money playing the stock market to afford to keep it up.Then Matt wins the three million-dollar lottery! Joe reads this in the newspaper and that afternoon makes a contract with Sharon to sell the property.Is the contract valid?
A)No, the agency terminated because of the change in conditions.
B)No, the agent has no right to sell without consent.
C)Yes, Matt would have to notify Joe if he wanted to stop the sale.
D)Yes, Joe had apparent authority to sell.

Accepted Answer

Matt's change in financial situation means that the original reason for hiring Joe's agency - to sell the property because he could no longer afford it - is no longer valid. Therefore, the agency contract would have been terminated, and Joe would not have the authority to sell the property to Sharon without Matt's consent.

Question 4

Which of the following would NOT be considered an agent?
a.A salesman who sells his employer's goods.
b.A manager who hires employees for the store owner.
c.A bus driver in relation to the riders.
d.A buyer who regularly buys merchandise for a store.

Accepted Answer

The answer of Which of the following would NOT be...

Question 5

A principal has no duty to compensate his or her agent if:
A)the agent breached the duty of obedience.
B)the agent breached the duty of loyalty.
C)it is a gratuitous agency.
D)All the above are correct.

Accepted Answer

All of the above choices are situations in which the principal has no duty to compensate the agent. The duty of obedience requires the agent to follow the principal's instructions, and if the agent fails to do so, compensation may not be due. Similarly, the duty of loyalty requires the agent to act in the best interests of the principal, and if the agent violates this duty, compensation may not be due. Finally, if the agency is gratuitous, meaning the agent is not being paid for their services, there is no obligation for compensation.

Question 6

Carl loans Dan $1,500 for Dan's honeymoon.Dan gives Carl his ruby ring as security for the loan and after a year, tells Carl he may as well sell it to recoup the $1,500.When Dan's wife hears of this, she persuades Dan to call Carl and get back the ring.Can Carl sell it anyway?
A)Yes, because Carl has apparent authority.
B)Yes, because Carl has an express agency.
C)No, Carl's authority has been revoked.
D)Yes, because Dan cannot terminate this agency except by discharging the obligation.

Accepted Answer

The answer of Carl loans Dan $1,500 for Dan's honeymoon.Dan...

Question 7

In the case of Del Pilar v.DHL Global Customer Solutions (USA), Inc., the court determined that:
A)Silver Ink was DHL's employee and, thus, DHL was liable under the doctrine of respondeat superior.
B)determining the nature of Silver Ink's relationship with DHL was a factual issue inappropriate for summary judgment.
C)Silver Ink was an independent contractor for whose conduct DHL was not liable.
D)the descriptive labels employed by the parties are controlling as to whether a person is an employee or an independent contractor.

Accepted Answer

The court determined that the nature of Silver Ink's relationship with DHL was a factual issue that could not be resolved through summary judgment. This suggests that the court did not consider Silver Ink to be clearly either an employee or an independent contractor, and therefore further factual inquiry was necessary to determine the appropriate legal classification. The other options are not supported by the case description.

Question 8

Steven is a manufacturer's representative for Incell Corporation.One day he receives a big-screen television as a gift from one of the clients he contacts on behalf of Incell.
A)Steven must account to Incell for the gift he has received.
B)The big-screen television belongs to Incell rather than to Steven.
C)If he keeps the TV without telling Incell, he will have breached his fiduciary duty.
D)All of the above are correct.

Accepted Answer

A) Steven must account to Incell for the gift he has received because it may create a conflict of interest or appear as a bribe, compromising his impartiality and loyalty as a representative of Incell.

B) The big-screen television belongs to Incell rather than to Steven because he received it in the course of his duties as a representative of Incell.

C) If he keeps the TV without telling Incell, he will have breached his fiduciary duty because he has a legal and ethical obligation to act in the best interests of Incell, avoid conflicts of interest, and disclose any potential conflicts to his employer.  Therefore, he should report the gift to his employer and follow the company's policy on accepting gifts.

Question 9

An agent is not required to keep which of the following information confidential?
A)Unique business methods.
B)Customer lists.
C)Information that his or her principal is engaged in criminal activity.
D)Business plans.

Accepted Answer

An agent is required to keep all of the options confidential except for information indicating criminal activity by his or her principal. This type of information must be reported to the proper authorities.

Question 10

Arthur advances money to John so that John can purchase inventory for his business.In return and for security on the loan, John makes Arthur his agent.If John:
A)becomes incapacitated, Arthur's agency is terminated by operation of law.
B)dies, Arthur's agency is terminated by operation of law.
C)Both of the above.
D)Arthur's agency is irrevocable.

Accepted Answer

The answer of Arthur advances money to John so that...

Question 11

If Carson, who is an agent for Peter, breaches his fiduciary duty to Peter, Carson:
A)is liable to Peter for breach of contract.
B)is liable to Peter in tort for any losses caused by the breach.
C)must make restitution for any profits or property received in breach of this duty.
D)All of the above are correct.

Accepted Answer

Carson, as an agent of Peter, owes a fiduciary duty to act in Peter's best interests. If Carson breaches this duty, he may be liable under contract law, tort law, or the equitable principle of restitution. Therefore, all of the above choices are correct. Choice A states that Carson is liable for breach of contract with Peter. Choice B states that Carson is liable for any losses caused by the breach under the tort law. Choice C states that Carson must make restitution for any profits or property received in breach of this duty.

Question 12

Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a purchase amount.A friend needs money for a dress so Carolyn cashes a check for $50 with no purchase.The check bounces.Carolyn is:
A)liable because she violated her duty of obedience.
B)liable because she breached her duty to inform.
C)not liable since she has apparent authority to take the check.
D)not liable unless she knew her friend did not have the money in the bank.

Accepted Answer

Carolyn is liable because she violated her duty of obedience by cashing a check for $50 with no purchase, which goes beyond the policy of cashing checks for up to $20 over a purchase amount.

Question 13

The Electronic Signatures in Global and National Commerce Act validates:
A)contracts relating to transactions affecting interstate commerce formed by electronic agents as long as the action of the electronic agent is legally attributable to the person to be bound.
B)electronic signatures on codicils and testamentary trusts.
C)electronic signatures on divorces and other matters of family law.
D)electronic signatures on contracts governed by the UCC, other than sales and leases of goods.
E)All of the above.

Accepted Answer

The Electronic Signatures in Global and National Commerce Act validates contracts relating to transactions affecting interstate commerce formed by electronic agents as long as the action of the electronic agent is legally attributable to the person to be bound. Option B, C, and D are incorrect as they are not explicitly mentioned as valid under the act.

Question 14

Bob owns a business delivering coffee and donuts within the downtown area of the city.Smith Co.calls him to deliver a large quantity of his products to their local office.While taking a coffee urn through the Smith Co.'s office, Bob drops it on Lester, scalding him.Who is liable?
A)Smith Co.and Bob are liable.
B)Bob alone is liable.
C)Lester has to absorb the cost himself since he assumed the risk by working at Smith Co.
D)Only Smith Co.is liable.

Accepted Answer

Bob is directly responsible for the injury caused to Lester because the injury resulted from Bob's actions (dropping the coffee urn). There's no indication that Smith Co. had any control over Bob's actions or contributed to the accident, making Bob alone liable.

Question 15

Which of the following is not a breach of an agent's duty of obedience?
A)Entering into an unauthorized contract for which his or her principal is then liable.
B)Committing a tort for which the principal is now liable.
C)Improperly delegating her authority.
D)Not following a principal's instruction to misrepresent the quality of a competitor's goods to a potential customer.

Accepted Answer

Not following a principal's instruction to misrepresent the quality of a competitor's goods to a potential customer would not be a breach of an agent's duty of obedience as it is unethical and illegal to engage in such misrepresentation. The other options involve actions that could result in liability for the principal and are therefore breaches of the agent's duty of obedience.

Question 16

When is an agency relationship irrevocable?
A)It is never irrevocable.
B)When the agency is coupled with an interest of the agent in the subject matter.
C)When the principal violates his duties to the agent.
D)When the agent is a fiduciary.

Accepted Answer

An agency relationship can become irrevocable when it is coupled with an interest of the agent in the subject matter, such as when the agent has invested money in the subject matter of the agency. This makes it impossible for the principal to revoke the agency.

Question 17

Mark, who is 16 years old, appoints Joe, age 21, as his agent to purchase a videotape recorder from VideoWorld.The transaction is:
A)void because Mark is a minor.
B)voidable by VideoWorld because Mark is a minor.
C)voidable by Mark because he is a minor.
D)not voidable because Joe is not a minor.

Accepted Answer

The transaction is voidable by Mark because he is a minor, and minors have the right to disaffirm contracts.

Question 18

The contractual duties owed by a principal to an agent are the duties of:
A)compensation.
B)reimbursement.
C)indemnification.
D)All of the above.
E)None of the above.

Accepted Answer

The contractual duties owed by a principal to an agent include compensation for services rendered, reimbursement for expenses incurred on behalf of the principal, and indemnification for any liability the agent may incur while carrying out duties for the principal. Therefore, all of the above options are correct.

Question 19

The concept of conflict of interest as it relates to the law of agency includes which of the following?
A)An agent may take a position that conflicts with the principal only if the principal, with full knowledge of all the facts, consents.
B)An agent may not represent her principal in a transaction in which the agent has a personal interest.
C)An agent may not act on behalf of adverse parties to a transaction without both principals' approval of the dual agency.
D)All of the above.

Accepted Answer

All of the above statements are concept of conflicts of interest as it relates to the law of agency.

A) An agent may take a position that conflicts with the principal only if the principal, with full knowledge of all the facts, consents - means that if an agent is taking a position that conflicts with the interests of the principal, the principal must be informed of all the facts and give his consent before the agent can act in that position.

B) An agent may not represent her principal in a transaction in which the agent has a personal interest - means that an agent cannot represent himself or engage in any deal in which he has a personal interest that conflicts with the interests of the principal.

C) An agent may not act on behalf of adverse parties to a transaction without both principals' approval of the dual agency - means that an agent cannot handle a transaction where he represents both the buyer and seller, for example, without both parties' approval.

Question 20

A gratuitous agent:
A)is a paid agent.
B)is subject to the same duty of loyalty as other agents.
C)has no duty of diligence.
D)need not be reimbursed for her expenses.

Accepted Answer

A gratuitous agent, despite not being paid, is still subject to the same duty of loyalty as other agents, meaning they must act in the best interest of the principal.

Quiz 29: Relationship of Principal and Agent

An agent may lose the right to compensation:

All of the following except which one is a duty of an agent?

Which of the following would NOT be considered an agent? a.A salesman who sells his employer's goods. b.A manager who hires employees for the store owner. c.A bus driver in relation to the riders. d.A buyer who regularly buys merchandise for a store.

A principal has no duty to compensate his or her agent if:

Carl loans Dan $1,500 for Dan's honeymoon.Dan gives Carl his ruby ring as security for the loan and after a year, tells Carl he may as well sell it to recoup the $1,500.When Dan's wife hears of this, she persuades Dan to call Carl and get back the ring.Can Carl sell it anyway?

In the case of Del Pilar v.DHL Global Customer Solutions (USA) , Inc., the court determined that:

Steven is a manufacturer's representative for Incell Corporation.One day he receives a big-screen television as a gift from one of the clients he contacts on behalf of Incell.

An agent is not required to keep which of the following information confidential?

Arthur advances money to John so that John can purchase inventory for his business.In return and for security on the loan, John makes Arthur his agent.If John:

If Carson, who is an agent for Peter, breaches his fiduciary duty to Peter, Carson:

Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a purchase amount.A friend needs money for a dress so Carolyn cashes a check for $50 with no purchase.The check bounces.Carolyn is:

The Electronic Signatures in Global and National Commerce Act validates:

Bob owns a business delivering coffee and donuts within the downtown area of the city.Smith Co.calls him to deliver a large quantity of his products to their local office.While taking a coffee urn through the Smith Co.'s office, Bob drops it on Lester, scalding him.Who is liable?

Which of the following is not a breach of an agent's duty of obedience?

When is an agency relationship irrevocable?

Mark, who is 16 years old, appoints Joe, age 21, as his agent to purchase a videotape recorder from VideoWorld.The transaction is:

The contractual duties owed by a principal to an agent are the duties of:

The concept of conflict of interest as it relates to the law of agency includes which of the following?

A gratuitous agent: