Question 1

Home Development Company employs llya to buy property for a future residential development.Ilya secretly buys some of the property and sells it to Home Development at a profit.Ilya has breached

Accepted Answer

Ilya has breached the duty of loyalty by secretly buying the property and selling it to Home Development at a profit without disclosing this conflict of interest. The duty of loyalty requires an agent to act solely in the best interests of their principal and avoid any conflicts of interest.

Question 2

Fact Pattern 
Maya and Noel work at OpenFlo Plumbing Supply.Maya is a plumbing engineer who works with OpenFlo clients on residential plumbing and field draining and irrigation projects.OpenFlo closely supervises all of its engineers,and dictates their work schedules.Noel works part-time in the evenings cleaning the offices and warehouse.
-Refer to Fact Pattern 20-1A.Noel is OpenFlo's

Accepted Answer

The fact pattern indicates that OpenFlo closely supervises its engineers and dictates their work schedules, which indicates a high level of control. However, no such level of control is specified for Noel, who works part-time in the evenings cleaning the offices and warehouse. Therefore, Noel's status as an employee or an independent contractor depends on whether OpenFlo controls the details of his physical performance.

Question 3

Homer is an officer of Integrity Corporation.With respect to binding Integrity to contracts,Homer's authority

Accepted Answer

Homer's authority to bind Integrity to contracts may be actual or apparent, meaning it can be given to him directly or may be inferred by his actions or position within the company.

Question 4

Fabulous Auto Sales,Inc. ,employs GR8 Collection Company as a collection agent.While repossessing a car from Hadji,one of Fabulous's customers,GR8 causes an accident in which Hadji is injured.Hadji can recover from

Accepted Answer

GR8 Collection Company was acting as an agent of Fabulous Auto Sales, Inc. while repossessing the car. Therefore, Fabulous can be held liable for any damages caused by GR8's actions. However, GR8 may also be held liable as they were directly involved in causing the accident. Hadji may choose to pursue a claim against either or both of them.

Question 5

Diego is a truck driver for Entertainment Supplies Company (ESC).Diego does exactly what ESC tells him.Diego is

Accepted Answer

Diego is an employee because he works for ESC and follows their instructions. An employer is the one who hires and gives instructions, so ESC is Diego's employer. An independent contractor is someone who works for themselves and is contracted out for specific jobs or tasks, which does not apply to Diego. A principal is someone who authorizes another person to act on their behalf, which also does not apply to Diego in this scenario.

Question 6

Louis,a certified public accountant and an investor,and Maria,an insurance salesperson and a realtor,may create an agency relationship for

Accepted Answer

The answer of Louis,a certified public accountant and an investor,and...

Question 7

Genetic Seed Company hires Howie to work on Genetic's shipping dock,accepting deliveries and dealing with other companies' drivers.With respect to Genetic,Howie is most likely

Accepted Answer

Howie is working for Genetic Seed Company and is responsible for accepting deliveries and dealing with other companies' drivers, which suggests that he is acting on behalf of Genetic Seed Company as its representative or agent.

Question 8

Emery is an agent for Downtown Market Corporation.Emery makes an innocent misrepresentation when entering into a contract on behalf of Downtown Market with Cool Fruits,Inc.Cool Fruits

Accepted Answer

In case of an innocent misrepresentation, the innocent party (Cool Fruits, Inc. in this case) may rescind the contract. This means that they have the option to terminate the contract and be put back in the position they were in prior to entering into the contract. However, this option is only available if the misrepresentation was a material factor in inducing the agreement.

Question 9

Rangler contracts with Siena to buy a certain horse for her.Rangler 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 Rangler 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 or losses that the indemnified party has to pay. In this case, Rangler can hold Siena liable for any damages he has to pay to Timberline Stables for breach of contract. Avoidance is the right to cancel a contract due to a breach, cooperation is the act of working together towards a common goal, and reimbursement refers to getting back money that has been spent or lost. None of these options accurately describe Rangler's right in this situation.

Question 10

Glen is an agent for Hi-Flite,Inc.On Hi-Flite's behalf and at its request,Glen pays Ian for certain plane maintenance and repair services.Glen's right to obtain the amount of those payments from Hi-Flite arises under the principal's duty of

Accepted Answer

Glen has paid Ian for maintenance and repair services on behalf of Hi-Flite. As such, Hi-Flite has a duty to reimburse Glen for the amount paid. This duty of the principal to reimburse the agent for payments made on its behalf is known as reimbursement.

Question 11

Omar hires Petra,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 terminated by operation of law because the discovery of oil has fundamentally changed the subject matter of the agreement, making it impossible for Petra to perform her duties as initially intended. This is known as the doctrine of impossibility or frustration of purpose. Additional consideration or Petra's failure to disclose the discovery of oil to customers would not change the fact that the agreement has been frustrated by the change in market value. Only mutual consent of the parties could potentially override the doctrine of impossibility, but that is not presented as a viable option in this scenario.

Question 12

Meals n' More,Inc. ,a catering company,requires its customers to pay by check.Lyra,a Meals n' More driver,tells customers that they can pay her with cash.When Meals n' More learns of Lyra's collections,it takes no action to stop it.Lyra steals some of the cash.Meals n' More may suffer the loss under the doctrine of

Accepted Answer

Apparent authority is when an agent (Lyra), who does not have actual authority to act on behalf of a principal (Meals n' More), behaves in a way that suggests to third parties (customers) that they have the authority to act on behalf of the principal. In this case, Lyra is acting outside the scope of her actual authority by accepting cash payments, but Meals n' More's failure to take action to stop her creates the appearance of authority to customers. Therefore, under the doctrine of apparent authority, Meals n' More may be held responsible for Lyra's actions and any losses incurred as a result.

Question 13

Jill introduces Kelly to her friends as "my associate." Kelly purports to act as Jill's agent in several business transactions with those friends.If Jill is liable for Kelly's actions,it will be under

Accepted Answer

The answer of Jill introduces Kelly to her friends as...

Question 14

Ozzy is an officer of Prudent Financial Corporation.Ozzy serves in a representative capacity for Prudent Financial's owners.With respect to binding Prudent Financial to contracts,Ozzy is

Accepted Answer

The answer of Ozzy is an officer of Prudent Financial...

Question 15

Fact Pattern 
Ulani indicates that she is acting as an agent on behalf of an unnamed client-Thoroughbred Stallions,LLC-when she enters into a contract with Shana.
-Refer to Fact Pattern 20-1A.Liability to Shana for nonperformance of the contract may be imposed on

Accepted Answer

Since Ulani indicated that she was acting on behalf of Thoroughbred Stallions, LLC, both Ulani and Thoroughbred Stallions may be held liable for nonperformance of the contract with Shana. As the principal, Thoroughbred Stallions may be held responsible for the actions of their agent, Ulani.

Question 16

Fact Pattern 
Maya and Noel work at OpenFlo Plumbing Supply.Maya is a plumbing engineer who works with OpenFlo clients on residential plumbing and field draining and irrigation projects.OpenFlo closely supervises all of its engineers,and dictates their work schedules.Noel works part-time in the evenings cleaning the offices and warehouse.
-Refer to Fact Pattern 20-1A.Maya is OpenFlo's

Accepted Answer

Maya is an employee of OpenFlo as she works closely supervised by the company and has her work schedule dictated by them. Additionally, she is also an agent of OpenFlo as she works with clients on behalf of the company. However, there is no indication that she is an independent contractor, as she does not have control over her work schedule or the projects she works on. Noel is not relevant to the question.

Question 17

Elin,an agent for First Credit Corporation (FC),enters into an unauthorized contract with Great Expectations,Inc.(GE),purportedly on FC's behalf.This contract will be enforceable if it is ratified by

Accepted Answer

The unauthorized contract can only be enforced if it is ratified by FC, the actual principal in this situation. GE cannot ratify on behalf of FC, and Elin's ratification alone would not make the contract valid. Only FC can ratify the contract to make it legally binding.

Question 18

Fact Pattern 
Ulani indicates that she is acting as an agent on behalf of an unnamed client-Thoroughbred Stallions,LLC-when she enters into a contract with Shana.
-Refer to Fact Pattern 20-1A.Thoroughbred Stallions is

Accepted Answer

An unidentified principal is one whose existence is known, but whose identity is not revealed. In this case, Ulani indicates she is acting on behalf of a client, but does not name Thoroughbred Stallions, LLC, making it an unidentified principal.

Question 19

BizOnline.com uses an electronic agent,or e-agent,to perform certain tasks in e-commerce.With respect to the e-agent's actions,BizOnline.com is bound by

Accepted Answer

The answer of BizOnline.com uses an electronic agent,or e-agent,to perform...

Question 20

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

Accepted Answer

The written agreement between Cory and Daily Delivery Agency describes their rights and duties, indicating that Cory has express authority over the actions of the agency.

Quiz 20: Agency