Question 1

Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act.This describes a relationship between

Accepted Answer

The relationship described in the scenario is that of a principal and an agent. Jim is acting on behalf of Kit, subject to Kit's control and trust, which is the essence of an agency relationship. The other options do not fit the scenario as well.

Question 2

Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby.Jessie orally agrees to do so.This is

Accepted Answer

The answer of Gayla asks Jessie to contract with Jessie's...

Question 3

Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products.The firm cannot compete with Kathy in that territory under the principal's duty of

Accepted Answer

The principal's duty of cooperation requires them to work with the agent to help them be successful in their exclusive territory. This includes refraining from competing with the agent in their territory.

Question 4

Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act.They set out the terms in a written document, which they both sign.This is

Accepted Answer

This scenario describes the creation of an agency relationship by mutual agreement between Thom and Sela. They have set out the terms in a written document and both parties have signed, indicating their intention to create an agency relationship. The fact that Thom trusts Sela to act on his behalf, subject to his control, further confirms the existence of an agency by agreement.

Question 5

George and James create an agency relationship to facilitate the sale of illegal narcotics.This agency relationship

Accepted Answer

The sale of illegal narcotics is a violation of the law, and any agency relationships created to facilitate such activity are therefore illegal.

Question 6

Rita is appointed as an agent for Superior Sales, Inc.The agency agreement is silent as to the level of sales that Rita is expected to achieve.She must

Accepted Answer

The agency agreement is silent as to the level of sales expected, so Rita must use reasonable diligence and skill in her selling efforts. This is the standard expectation for agents in the absence of any specific targets laid out in the agreement.

Question 7

Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf.Edwina later contacts Frida to affirm the contract.This is

Accepted Answer

This is an example of agency by ratification since Edwina later affirms or ratifies the contract entered into by Dizzy on her behalf.

Question 8

Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax.The government prosecutes Lindsay for failing to pay the tax.She is

Accepted Answer

The answer of Mackenzie, an agent for Lindsay, signs an...

Question 9

Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances.In this capacity, Ester is

Accepted Answer

Ester is an independent contractor because she hires out her services on a per-project basis to different companies and venues. She is not an employee because she doesn't work directly for any of these companies, and she is not an agent or principal because she is not acting on behalf of anyone else or employing any other workers.

Question 10

Cory employs Daily Delivery Agency as an agent under a writ-ten agreement that describes the rights and duties of both parties.This is

Accepted Answer

The written agreement between Cory and Daily Delivery Agency explicitly defines their rights and duties, indicating that Cory granted express authority to Daily Delivery Agency as his agent.

Question 11

Sonia manages a Tasty Pastry store for United Food Company.To manage the business, Sonia's authority can be implied by

Accepted Answer

Sonia's authority can be implied by the position she occupies as the manager of the Tasty Pastry store. As the manager, she has inherent authority to make decisions and manage the business. This is an implied authority based on her position and job responsibilities. The other options (B, C, D) are not as appropriate as they suggest that Sonia's authority is based on external factors or personal choices, rather than her job title and position within the company.

Question 12

Julia is an agent who purchases wool for Kara's Knitting Company.In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool.Kara's Knitting Company must reimburse Julia because of the principal's

Accepted Answer

The duty of reimbursement is a fundamental duty of a principal-agent relationship. As Julia incurred expenses while performing her duties as an agent for Kara's Knitting Company, the company is obligated to reimburse her for these expenses.

Question 13

Carol is married to Andy.Carol buys food for their children's lunches and charges the cost to Andy's account.This is

Accepted Answer

The answer of Carol is married to Andy.Carol buys food...

Question 14

Geoff serves in a representative capacity for Huck.To accomplish the objectives of this relationship, Geoff's authority can be implied

Accepted Answer

Implied authority can be derived from custom, which means that a certain level of authority is assumed based on common practices or traditions in a particular industry or relationship. Therefore, it is appropriate for Geoff's authority to be implied based on custom in his representative capacity for Huck.

Question 15

Bernard is an expert on exotic flowers.Fine Floral Fixtures, Inc.(FFF) hires Bernard to order exotic flowers from various greenhouses.Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF.Bernard has breached

Accepted Answer

The answer of Bernard is an expert on exotic flowers.Fine...

Question 16

Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I'll install it for half of what the store would charge." Dita buys the carpet, which Bob installs for half the store's price.Bob keeps the money.Bob has breached

Accepted Answer

Bob's statement to Dita about offering to install the carpet for half of what the store would charge is a breach of the duty of loyalty. As an employee of Carpets Galore, Bob has a duty to act in the best interests of the store and not his personal gain. By offering a discount without the store's authorization and keeping the money for himself, he is acting against the store's interests and putting his own interests first.

Question 17

Will is an agent for MaryElise.MaryElise gives Will clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays.Will enters into a contract on MaryElise's behalf on Tuesday.Will has breached

Accepted Answer

Will has breached the duty of obedience, which requires an agent to follow the lawful and reasonable instructions of their principal. MaryElise's clear instructions limited the days on which Will could enter into contracts on her behalf, and by entering into a contract on Tuesday, Will failed to obey those instructions.

Question 18

Delite Candy Company hires Elton to sell Delite's products in a certain area.Delite agrees to pay Elton a salary, plus commission, for a trial period.They also agree that Elton can sell using any methods and during any hours that seem appropriate.The most important factor in whether Elton is Delite's employee is

Accepted Answer

The most important factor in determining whether Elton is Delite's employee is the level of control that Delite has over the details of his work. If Delite controls not only what work is done but how it is done, then Elton is likely an employee. In this case, Delite has control over when and how Elton sells their products, indicating that he may be considered an employee rather than an independent contractor. The other factors (salary, trial period, and job title) may be relevant, but they are not as significant as the level of control Delite has over Elton's work.

Question 19

Rangle contracts with Siena to buy a certain horse for her.Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment.Siena fails to pay the rest of the price.Timberline sues Rangle for breach of contract.His right to hold Siena liable for any damages that he has to pay is the right of

Accepted Answer

Indemnification is the right to hold someone else liable for any damages that a party has to pay. In this scenario, Rangle can hold Siena liable for any damages he has to pay to Timberline Stables for breach of contract. Therefore, option C is the correct answer. Option A, avoidance, refers to the right to cancel a contract due to a breach. Option B, cooperation, is not relevant in this scenario. Option D, reimbursement, refers to the act of being repaid for expenses already incurred and is not applicable here since Rangle has only made a down payment and has not incurred any expense yet.

Question 20

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so.In this circumstance, Poppy has

Accepted Answer

Poppy has apparent authority, which refers to the authority that a third party reasonably believes an agent has based on the agent's conduct, rather than actual authorization from the principal. In this case, Nan's conduct (perhaps giving Poppy a title or allowing her to handle certain matters) made it reasonable for Odel to believe that Poppy had the authority to act on Nan's behalf.

Quiz 16: Agency Relationships