Question 1

Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Tire Manufacturing must notify

Accepted Answer

Tire Manufacturing must notify both Uri and any third parties who are aware of the agency relationship to ensure that they are aware of the termination of Uri's authority. This will prevent any confusion or misunderstandings about Uri's authority to act on behalf of Tire Manufacturing. Notifying only third parties who are aware of the agency relationship (Option A) or the public generally (Option B) may not be sufficient to terminate Uri's authority. Notifying Uri only (Option D) may also not be sufficient as third parties who are aware of the agency relationship may still believe that Uri has the authority to act on behalf of Tire Manufacturing.

Question 2

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

Accepted Answer

Both Fab and GR8 can be held liable for the accident caused by GR8 during the repossession. Fab is responsible for ensuring that its agents act lawfully and in a reasonably safe manner while performing their duties. On the other hand, GR8 may be held directly responsible for causing the accident and Hadji's injuries. Therefore, Hadji may choose to pursue a claim against either or both Fab and GR8 for his injuries.

Question 3

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

BizOnline.com is bound by all of the actions of its e-agent, as the e-agent acts on behalf of the company in e-commerce transactions.

Question 4

Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she

Accepted Answer

The answer of Picabo drives a truck as an employee...

Question 5

Clu serves in a representative capacity for Digger. Elmo is injured through Clu's negligence. Digger may be liable to Elmo if Clu's conduct occurred

Accepted Answer

Digger may be liable for Clu's actions if they occurred in the course and scope of Clu's employment. This means that Clu was acting within the scope of their job duties when they caused the injury to Elmo. If Clu was acting outside of their employment relationship or had a propensity that Digger could not have known about, Digger would likely not be liable. Normal working hours alone do not determine liability.

Question 6

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 in?crease considerably. The agency agreement is likely

Accepted Answer

The discovery of oil beneath the land can be considered a fundamental change in the subject matter of the agency agreement, which terminates the agreement by operation of law. This is because the original purpose of the agreement, to sell the land for $150,000, is no longer feasible or appropriate given the increase in market value. Thus, Petra's authority as Omar's agent to sell the land no longer exists. Additional consideration or Petra's silence about the discovery of oil would not change this.

Question 7

Maia hires Nero, a real estate broker, to sell her warehouse. The ware?house burns down be?fore being sold. Nero is

Accepted Answer

Since the warehouse has burned down before being sold, Nero is no longer Maia's agent. The terms of their agreement would have been to sell the warehouse, which is no longer possible. Therefore, Nero's agency has ended.

Question 8

Fact Pattern 32-1B 
Eppie hires Franz to do some remodeling work in her office.
-Refer to Fact Pattern 32-1B. The relationship be?tween Eppie and Franz is

Accepted Answer

Eppie hired Franz to do some remodeling work in her office, indicating that Franz is an independent contractor rather than an employee. The terms master and servant and principal and agent do not accurately reflect the relationship between Eppie and Franz in this context.

Question 9

Security Armored Car Corporation employs Theo as an agent. Without Security's knowledge but otherwise acting within the scope of em?ployment, Theo commits a crime. The state can successfully prosecute

Accepted Answer

Individual employees are responsible for their own criminal actions, even if they commit the crime while on the job. Therefore, Theo can be prosecuted for the crime he committed without Security's knowledge, but Security cannot be held responsible for his actions since they did not have knowledge or play an active role in the crime.

Question 10

Flo, an agent for Great Seafood, Inc., has often done business with Hakim on Great Seafood's behalf. When Flo and Great Seafood terminate their agency, to avoid liability for later deals, Hakim must be no?tified by

Accepted Answer

Great Seafood, as the principal, is responsible for notifying third parties like Hakim of the termination of the agency to avoid liability for any future unauthorized actions by Flo.

Question 11

Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not con?sider whether

Accepted Answer

The fact that Brad indicated he was acting on behalf of Custodial is not necessarily relevant to determining whether he was acting within the scope of his employment. The court will primarily consider factors such as whether the act was authorized by Custodial, whether Custodial furnished the means by which the injury was inflicted, and whether the act is one commonly performed by employees for their employers.

Question 12

Fact Pattern 32-1B 
Eppie hires Franz to do some remodeling work in her office.
-Refer to Fact Pattern 32-1B. While working, Franz drops a tool on Gibby, Eppie's customer, causing an injury. Eppie is

Accepted Answer

Eppie is not liable because Franz is an independent contractor, and generally, employers are not liable for the torts of independent contractors.

Question 13

Fact Pattern 32-1A 
Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana.
-Refer to Fact Pattern 32-1A. Liability to Saldana for nonper?formance of the con?tract may be imposed on

Accepted Answer

When an agent acts on behalf of an unidentified principal, both the agent and the principal can be held liable for nonperformance of the contract.

Question 14

Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house burns down before being sold. The agency agreement is likely

Accepted Answer

The destruction of the subject matter of the agency, in this case the house, terminates the agency agreement by operation of law. Therefore, option D is the correct choice. All other options are incorrect because they imply that the agency agreement can still be in force after the destruction of the subject matter.

Question 15

Oberon is a salesperson for Precision Instruments, Inc. He tells Quad, a customer, that a device has a certain ca?pability when, as Oberon knows, it does not. In reliance, Quad buys the device. Liable for this misrepresen?ta?tion is

Accepted Answer

Oberon made the misrepresentation to Quad, and therefore, he is liable for the misrepresentation. Precision may not be liable because Oberon acted outside the scope of his employment in making the misrepresentation.

Question 16

Ezra is an agent for Fresh Food Corporation. Ezra makes an innocent mis?representation when entering into a contract on be?half of Fresh with Gala Grocery Stores, Inc. Gala

Accepted Answer

Gala Grocery Stores, Inc. may rescind the contract due to the innocent misrepresentation made by Ezra on behalf of Fresh Food Corporation. Innocent misrepresentation occurs when the misrepresentation was made without knowledge of its falsity and without any intention to deceive. Gala Grocery Stores, Inc. may choose to rescind the contract because they acted on the false information provided by Ezra. Gala Grocery Stores, Inc. cannot be estopped from performing the contract because they were not aware that the information was false. Fresh Food Corporation does not need to ratify the contract because it was entered into by Ezra on behalf of the company.

Question 17

On May 1, Craig retains Dora to act as his authorized agent. On June 1, a court declares Craig mentally incompetent. On June 2, before Dora knows of the court's declaration, she enters into a contract on Craig's be?half. The con?tract is

Accepted Answer

The contract is void because Craig was declared mentally incompetent before Dora entered into the contract on his behalf. As a result, Craig lacked the capacity to enter into a contract at the time, making the contract void from the outset. Therefore, neither Craig nor Dora can be bound by the contract.

Question 18

Clive is a purchasing agent for Double D Ranch with the authority to buy cat?tle at a certain auction. After the cattle are bought, the agency rela?tionship terminates

Accepted Answer

The agency relationship terminates automatically after the specific task of purchasing cattle at the auction is complete. No further notice is necessary.

Question 19

Rupert, an agent for Star Productions, Inc., enters into an unauthorized contract with Trucking Corporation purportedly on behalf of Star, which refuses to perform. Rupert is liable

Accepted Answer

Rupert is liable for misrepresentation to Trucking because he entered into a contract without authority, misleading Trucking into believing he had the power to bind Star Productions.

Question 20

Commercial Development Corporation (CDC) hires Delta Construction Company to work at a site as an independent contractor. Whether CDC will be liable for torts committed at the site by Delta depends on

Accepted Answer

CDC will only be liable for torts committed at the site by Delta if there are exceptionally hazardous activities involved. The other options do not pertain to the liability of CDC in this situation.

Quiz 32: Liability to Third Parties and Termination