Question 1

Agency relationships do not permeate the business world.

Accepted Answer

Agency relationships are a common feature in the business world where one party (the principal) employs another party (the agent) to act on their behalf. These relationships exist in various forms such as employer-employee, buyer-seller, and even between shareholders and directors of a company.

Question 2

An agency by estoppel arises when the principal's actins have created the appearance of an agency that does not in fact exist.

Accepted Answer

An agency by estoppel arises when a third party reasonably believes that an agent has the authority to act on behalf of a principal because of the actions of the principal, even if no actual agency agreement exists. This is also known as apparent authority.

Question 3

Generally, the law assumes that the principal is aware of any information acquired by the agent that is relevant to the agency.

Accepted Answer

This principle is called imputed knowledge, which means that any information acquired by the agent, in the scope of their agency, is considered to be known by the principal.

Question 4

An agency relationship created for a purpose that is contrary to public policy may still be enforceable.

Accepted Answer

An agency relationship that is created for a purpose that is contrary to public policy is considered void and unenforceable.

Question 5

Ratification involves a question of intent, and intent can be expressed only by words.

Accepted Answer

Ratification can also be expressed through actions or conduct, not just words.

Question 6

The agent has the right to be compensated, to be reimbursed and indemnified, and to have a safe working environment.

Accepted Answer

This statement is true. According to common law, an agent is entitled to compensation for their services, reimbursement for expenses incurred on behalf of their principal, and indemnification for any losses suffered while acting within the scope of their agency. Additionally, a principal has a duty to provide a safe working environment for their agents.

Question 7

Whether a worker is an employee or an independent contractor has no effect on the employer's liability for the worker's actions.

Accepted Answer

An employer's liability can depend on whether the worker is classified as an employee or an independent contractor. Employers have more control over employees, so they may be held liable for their actions in a broader range of circumstances. On the other hand, independent contractors are generally considered to be in business for themselves, so employers may have less liability for their actions. It is important for employers to correctly classify their workers to ensure they understand and meet their legal obligations.

Question 8

An agent can represent two principals in the same transaction as long as neither of them knows about it.

Accepted Answer

It is a violation of the agent's fiduciary duty to represent two principals in the same transaction without their knowledge and consent. This would create a conflict of interest and could result in the agent's license being revoked or other legal action being taken against them.

Question 9

The term fiduciary is at the heart of agency law.

Accepted Answer

The term fiduciary refers to a legal relationship in which one party (the fiduciary) has a duty to act in the best interests of another party (the beneficiary). This concept is central to agency law, where agents have a fiduciary duty to act in the best interests of their principals.

Question 10

Through agents, a principal can conduct only one business operation at a time.

Accepted Answer

Through agents, a principal can conduct multiple business operations simultaneously.

Question 11

Any copyrighted work created by an employee within the scope of his or her employment at the request of the employer is a "work for hire."

Accepted Answer

According to the U.S. Copyright Act, a work for hire is a work created within the scope of employment, or a work specially ordered or commissioned for use in various types of works such as a contribution to a collective work, a part of a motion picture or other audiovisual work, a translation, or a supplementary work. In both cases, the employer or commissioning party is considered the legal author and copyright owner of the work.

Question 12

If a great degree of skill is required, this may indicate that a person is an employee hired for a specialized job and not an independent contractor.

Accepted Answer

The answer of If a great degree of skill is...

Question 13

A principal has a duty to cooperate with the agent and to assist the agent in performing his or he duties.

Accepted Answer

According to the law of agency, the principal has a duty to cooperate with the agent and to provide necessary assistance to the agent in the performance of his or her duties. This duty arises from the principal-agent relationship where the principal hires the agent to act on his or her behalf.

Question 14

An agency agreement can be implied by conduct.

Accepted Answer

An agency agreement can be implied by the conduct of the parties involved. This means that although there may not be a formal written agreement, the actions and behaviors of the parties can suggest that an agency relationship exists.

Question 15

Employers can avoid certain tax liabilities by hiring independent contractors instead of employees.

Accepted Answer

Independent contractors are not considered employees, so employers do not need to pay certain taxes such as Social Security and Medicare taxes for them. However, it is important for employers to properly classify workers and not misclassify employees as independent contractors to avoid legal and financial consequences.

Question 16

Anything that an agent obtains by virtue of the employment or agency relationship is his or hers to keep.

Accepted Answer

Anything obtained by an agent in the course of their employment or agency relationship belongs to the principal, not the agent. This is because the principal is the one who provided the opportunity and resources for the agent to obtain such benefits. However, the agent may be entitled to a commission or other agreed-upon compensation for their services.

Question 17

A person must have contractual capacity to be an agent.

Accepted Answer

The answer of A person must have contractual capacity to...

Question 18

Even during emergency situations, when the principal cannot be consulted, the agent may not deviate from the principal's instructions without violating the duty of obedience.

Accepted Answer

The answer of Even during emergency situations, when the principal...

Question 19

If work is usually done under the employer's direction, this indicates independent-contractor status.

Accepted Answer

If work is done under the employer's direction, then it indicates an employee-employer relationship rather than an independent-contractor relationship. Independent contractors typically have more control over their work and operate as their own business entity.

Question 20

A familiar example of an agent is the owner of a corporation.

Accepted Answer

The answer of A familiar example of an agent is...

Quiz 32: Agency Formation and Duties