Deck 15: Agency Law

Question 1

An independent contractor .

A) receives medical benefits from the employer
B) is paid a salary regularly
C) uses only the tools supplied by the employer
D) is free to work for more than one employer

Answer 1

D

Question 2

Which of the following is not a factor courts consider when deciding whether a worker is an employee or an independent contractor?

A) whether the hired person has a distinct occupation
B) whether the hired person has a distinct profession
C) whether the hired person supplies his or her own tools
D) whether the hired person is a resident of the state in which the employer is incorporated

Answer 2

D

Question 3

Under the doctrine of , the master is responsible for the servants' acts that are within the scope of their employment.

A) caveat emptor
B) respondeat superior
C) res ipsa loquitur
D) post hoc ergo propter hoc

Answer 3

B

Question 4

An agency agreement may be formed in all but which of the following ways?

A) expressed agency
B) implied authority
C) apparent agency
D) the principal's revocation of the agent's previous acts

Question 5

Which of the following is an incorrect statement regarding the employer-independent contractor relationship?

A) Independent contractors are hired by the principal-employer to do a specific job.
B) Independent contractors are controlled with respect to their physical conduct in performing a specific job.
C) Independent contractors are not controlled with respect to the details of their work performance.
D) For independent contractors, employers are normally not required to make payments into workers' compensation pools.

Question 6

Which of the following statements is true about an independent contractor?

A) An independent contractor is typically paid on a monthly basis.
B) An independent contractor typically works only for one employer.
C) An independent contractor's physical conduct or details of work performance are not controlled by the employer.
D) An independent contractor uses only the tools supplied by the contracting party.

Question 7

Which of the following is an incorrect statement regarding the employer-independent contractor relationship?

A) For independent contractors, employers are normally required to withhold Social Security amounts.
B) Employers are not usually liable for the torts committed by their independent contractors.
C) When called on to distinguish between an employee and an independent contractor, courts scrutinize the degree of control the employer has over the agent.
D) To escape paying unemployment insurance taxes as well as medical benefits, many employers in recent years have classified their workers as independent contractors or part-time workers.

Question 8

Charlie is a plumber who uses his own tools to work. He is generally hired for specific jobs for short durations. He receives lump sums after completing these jobs. Which of the following statements is true of this scenario?

A) Charlie's physical conduct is controlled by his employer.
B) Charlie is the principal in an agency relationship.
C) Charlie is an independent contractor.
D) Charlie can work for only one employer at a time.

Question 9

Ralph is a skilled carpenter who supplies his own tools. He works only until a job is completed, then gets paid, and moves on to the next job. In an agency relationship, Ralph is a(n) .

A) principal
B) independent contractor
C) employee
D) employer

Question 10

Which of the following is an incorrect statement regarding the creation of an agency relationship?

A) Agency relationships can be created by informal oral agreements.
B) Agency relationships can be created by formal written contracts.
C) Under the statute of frauds, some states require that all agency contracts be in writing.
D) An agency agreement must be filed with the secretary of state in the state where the agreement is executed.

Question 11

Which of the following is a difference between an employer-employee and an employer- independent contractor relationship?

A) An employer pays unemployment insurance taxes and medical benefits for employees but not for independent contractors.
B) An employer controls an independent contractor's physical conduct and details of work performance but not an employee's physical conduct and work performance.
C) An employer can be held liable for torts committed by an independent contractor but not for the torts committed by an employee.
D) An employer supplies the tools and equipment required by independent contractors, whereas employees are expected to bring their own tools and equipment.

Question 12

Actual authority includes both expressed authority and implied authority.

Question 13

Which of the following forms of agency relationships does a power of attorney document establish?

A) agency by agreement
B) agency by implied authority
C) agency through ratification
D) agency by estoppel

Question 14

Agency by is an agency relationship in which the customs and circumstances, rather than a detailed formal agreement, determine the agent's authority.

A) implied authority
B) expressed authority
C) estoppel
D) ratification

Question 15

Which of the following is not a factor courts consider when deciding whether a worker is an employee or an independent contractor?

A) whether the hired person supplies his or her own equipment
B) whether the hired person is employed only for a specific time period
C) whether the hired person is paid hourly or on completion of the job
D) whether the hired person is labeled by the employer as an employee or an independent contractor.

Question 16

Which of the following types of agency relationships serves as the foundation for the other types of agency relationships?

A) principal-agent relationship
B) employer-employee relationship
C) employer-independent contractor relationship
D) dual agency

Question 17

How did companies use the differences between employer-employee relationships and employer-independent contractor relationships to reduce costs in the competitive business environment of the 1990s?

Question 18

Expressed authority arises out of .

A) prior agreements between the principal and the agent
B) specific statements made by the principal to the agent
C) a principal's ratification of an unauthorized agreement
D) a principal's conduct toward a third party

Question 19

Discuss the various types of agency relationships.

Question 20

The employer-employee agency relationship is the only one that is subject to worker's compensation, Social Security, and unemployment compensation laws.

Question 21

Explain the authority granted to an agent in different types of powers of attorney.

Question 22

Amy writes a letter to Bill requesting him to deal with all employment matters at her business until she returns from a visit to a foreign country. Bill replies and accepts her request. Which of the following types of agency relationships have Amy and Bill established?

A) agency by implied authority
B) agency by agreement
C) agency through ratification
D) agency by estoppel

Question 23

Which of the following agency relationships is formed when a principal leads a third party to believe that a certain person is acting as an agent for the principal?

A) expressed agency
B) agency by implied authority
C) agency through ratification
D) agency by estoppel

Question 24

Which of the following is a condition for an agency by ratification to be effective?

A) A principal must give prior authorization to an agent.
B) A principal should lead a third party to believe that an individual is his or her agent.
C) The existence of a principal must be clear to a third party at the time of an agent's unauthorized act.
D) An agent must carry an authorization letter that establishes that he or she is the principal's agent.

Question 25

Richard wants to purchase Maria's farm. Maria leads Richard to believe that Simon is her agent, even though he is not. Which of the following statements is true of this scenario?

A) Simon cannot represent Maria as she has not authorized him to be her agent.
B) Agency through ratification grants Richard the authority to buy Maria's farm.
C) Maria is estopped from denying that Simon is her agent.
D) Simon can act on behalf of Maria only if she suffers from an illness that renders her mentally incompetent to take any decisions.

Question 26

Agency agreements that will last up to six months must be in writing according to the statute of frauds.

Question 27

Unless the agency contract says otherwise, courts have generally allowed agents to enter into contracts for incidentals.

Question 28

An agency relationship formed through oral agreement is also considered as an expressed agency.

Question 29

Agency by occurs when a person misrepresents himself or herself as an agent and the principal accepts the unauthorized act.

A) ratification
B) rescission
C) revocation
D) rejection

Question 30

Apparent authority for an agent to act is created by the words or actions of the agent.

Question 31

Brooke enters into a contract with Max to purchase several electronic goods. Brooke claims to be Jack's agent, even though she is not. Which of the following agency relationships is formed if Jack honors the contract?

A) agency by estoppel
B) agency by ratification
C) agency by implied authority
D) agency by agreement

Question 32

In an exclusive agency contract, the agent agrees not to work for another principal for the duration of the agreement.

Question 33

Edward leaves Sarah, the cashier, in charge of his gasoline service station while he goes home to have lunch. He tells her not to accept any auto repair jobs. During the lunch break, a customer leaves his car with Sarah to be serviced for a minor engine problem. When Edward returns, he accepts the repair job. Which of the following types of agency relationship is most likely to have been formed here?

A) agency by implied authority
B) expressed agency
C) agency by estoppel
D) agency by ratification

Question 34

Carol learns that Dave has hired a new employee to work at her company. Although Dave did not have permission to hire the new employee, Carol likes the new employee and decides to honor all the terms of the employment contract that Dave negotiated. Which of the following types of agency relationship have Carol and Dave formed?

A) agency by implied authority
B) agency by agreement
C) agency through ratification
D) agency by estoppel

Question 35

Which of the following statements is true of agency by estoppel?

A) It determines an agent's authority based on customs, circumstances, and the facts of a situation.
B) If a third person is led by a principal to believe that a certain individual is the principal's agent, it grants an agent the authority to act.
C) It is formed when a third party is unaware of the existence of a principal.
D) It occurs when an unauthorized agent commits a principal to an agreement and the principal accepts the unauthorized agreement.

Question 36

Which of the following statements is true of an exclusive agency contract?

A) It does not permit an agent to work for a different principal for the duration of the agreement.
B) It occurs when an unauthorized agent commits a principal to an agreement which the principal later accepts.
C) An agent can recover monetary damages, court costs, and attorney's fees if a principal fails to live up to this agreement.
D) An agent has the authority to make decisions concerning a principal's medical care in the event of a serious illness that renders the principal mentally incompetent.

Question 37

Which of the following statements is true about an agency by ratification?

A) A principal must have full knowledge of an agent's actions for the agency to be effective.
B) It occurs when a third person is led to believe by a principal that a certain individual is the principal's agent.
C) It occurs when a principal draws up a legal document to establish an agency relationship before an agent undertakes any action.
D) A third party must be unaware of the existence of a principal at the time of an agent's act for the agency to be effective.

Question 38

Which of the following statements is true about the power of attorney?

A) For business purposes, an agent's authority is determined by customs, circumstances, and the facts of a situation rather than a written or oral agreement.
B) It permits a principal to deny that someone is the principal's agent after leading a third party to believe that the person is an agent.
C) It is formed when an unauthorized act of an agent is accepted by a principal.
D) It gives an agent the authority to sign legal documents on behalf of a principal.

Question 39

Courts generally allow agents to do all but which of the following?

A) receive payments of money due the principal
B) enter into contracts for incidentals
C) employ or discharge employees
D) enter into a contract for an illegal purpose, so long as the subject matter of the contract is legal

Question 40

Which of the following is an agency that is formed when an unauthorized act of an agent is accepted by the principal?

A) expressed agency
B) agency by implied authority
C) agency through ratification
D) agency by estoppel

Question 41

Which of the following statements is true of the duty of compensation?

A) It does not permit an agent to be paid on a contingency fee basis.
B) If the parties in an agency cannot agree on the amount, courts will usually award the compensation claimed by one of the parties.
C) It requires a principal to compensate an agent for any losses incurred when the agent is acting on behalf of the principal.
D) It requires a principal to compensate an agent for services rendered even in the absence of a written agreement.

Question 42

An indemnity is an obligation on the part of a principal to reimburse the agent against any losses incurred when the latter is acting on behalf of the former.

Question 43

Tracy works as an agent for Medical Imaging X. Her principal has informed her that she cannot sell an X-ray machine for less than $20,000. If she directs customers to a competitor who is selling the same product, which of the following duties of an agent would she be violating?

A) performance
B) cooperation
C) loyalty
D) accounting

Question 44

If an agent negligently causes harm while working for a principal, the agent alone must pay the damages for the harm caused.

Question 45

In terms of the duty of reimbursement and indemnification, an agent is not entitled to expenses arising out of tortious conduct.

Question 46

Arthur enters into a written contract with James that requires James to sell Arthur's farm. Arthur then hires Katherine to sell his farm without terminating the contract with James. Which of the following statements is true of this scenario?

A) James can sue Arthur for monetary damages only if their contract was an exclusive agency contract.
B) James can sue Arthur for breach of contract on the grounds of duty of cooperation and ask for specific performance.
C) Arthur has the authority to enter into a contract with Katherine without terminating the contract with James.
D) If James has not completed the duties assigned to him in the contract, Arthur need not compensate James for his services.

Question 47

The duty of cooperation prevents a principal from .

A) engaging in behavior that interferes with the reasonable conduct of an agent as agreed upon in a contract
B) engaging in behavior that violates the standards set for creating a safe working environment for employees
C) ratifying an agent's unauthorized actions
D) indemnifying an agent for losses suffered on the principal's behalf

Question 48

Which of the following occurs if both a principal and an agent cannot agree on the compensation?

A) The principal is no longer bound by the duty of compensation.
B) Compensation will be calculated on the basis of what is reasonable or customary.
C) Compensation will be calculated according to government wage rates.
D) Compensation will be determined by the full faith and credit clause of the U. S. Constitution.

Question 49

Which of the following statements is true of the duty of obedience?

A) It bars an agent from acting in a manner that is adverse to the principal's interest.
B) It indicates that it is the duty of an agent to keep accurate books that can be viewed by the principal.
C) It requires an agent to follow all reasonable and lawful instructions of a principal.
D) It mandates that an agent must use reasonable care and skill in performing his or her work.

Question 50

The duty of performance requires agents to .

A) keep books accurately
B) exercise reasonable care and skill in performing their work
C) communicate all material information to a principal
D) follow all the instructions of a principal

Question 51

Which of the following statements is true of the duty of cooperation?

A) It requires that a principal do nothing to interfere with an agent's conduct while the agent is discharging the duties agreed upon in the contract.
B) It requires that a principal draw up a written agreement designating an individual as the agent and enumerate the duties that the agent is expected to perform.
C) It mandates that the agent's fee be agreed upon before the agent starts discharging his or her duties.
D) It mandates that a principal compensate an agent for all the expenses that arise when the agent is acting on behalf of the principal.

Question 52

One of the duties of a principal is to provide an agent with safe working conditions.

Question 53

In terms of the duty of reimbursement and indemnification, an agent is not entitled to expenses arising out of unlawful activities.

Question 54

Donald authorizes Alice to purchase 200 units of a certain electronic component. Alice identifies a suitable vendor and places the order. Alice bribes the vendor to have the goods delivered. Which of the following statements is true of this scenario?

A) If Donald accepts the goods purchased by Alice, agency by ratification occurs.
B) Alice has not fulfilled her duty of accounting to Donald.
C) Duty of reimbursement and indemnification does not require Donald to reimburse the bribe paid by Alice.
D) Duty of compensation requires Donald to reimburse the bribe paid by Alice.

Question 55

An agent's duty of loyalty requires the agent to .

A) use reasonable care and skill in performing work
B) live up to the standards of performance expected of an independent contractor
C) follow all reasonable and lawful instructions of a principal
D) avoid conflicts of interest while acting on behalf of a principal

Question 56

Which of the following statements is true of the duty of reimbursement and indemnification?

A) It bars agents from claiming expenses arising out of negligence or unlawful activities.
B) It requires a principal to compensate an agent for services rendered even in the absence of a written agreement.
C) It mandates that a principal should pay a contingency fee to an agent upon conclusion of the business transaction.
D) It forbids a principal from interfering with the reasonable conduct of an agent as agreed upon in a contract.

Question 57

A principal's duty to reimburse an agent for losses the agent suffers while acting on behalf of the principal is known as the duty of .

A) accounting
B) cooperation
C) indemnification
D) compensation

Question 58

Which of the following statements is true of the duty of loyalty?

A) It requires agents to live up to the standards of performance expected of people in their occupation.
B) It assigns an agent the duty to follow all reasonable and lawful instructions of a principal.
C) It requires agents to keep accurate books that can be viewed by principals.
D) It mandates that an agent act on behalf of one principal only to avoid conflicts of interest.

Question 59

How is an agent's authority determined in an agency by implied authority? What do courts generally permit agents to do?

Question 60

When does agency by ratification occur? What are the conditions necessary for it to be effective?

Question 61

Discuss the principal's duties to the agent.

Question 62

Under joint and several liability, all the parties responsible for a tort will be liable for damages as well.

Question 63

The tort of negligent supervision comes about when an employee is left in a position that may be harmful to others after notice is given to an employer.

Question 64

Which of the following is most important in determining whether a principal is liable to a third party for an agent's actions?

A) whether the principal provided safe working conditions
B) whether the principal had a record of indemnifying his or her agents
C) whether the principal was disclosed to the third party
D) whether the agent had abided by the duty of loyalty

Question 65

Matthew is a truck driver for Argosy, Inc. (Argosy). He transports the supplies from a vendor to the company and returns the company truck to Argosy. He is not authorized to make any stops while transporting goods. After collecting the goods from the vendor, Matthew stops at a pub where he makes defamatory statements about a third party. Which of the following statements is true of this scenario?

A) Both Matthew and Argosy are liable as Argosy is a disclosed principal.
B) Both Matthew and Argosy are liable as Matthew committed the tort within the scope of his employment.
C) Argosy is not liable as Matthew was in an unauthorized location according to company rules.
D) If both Argosy and Matthew are found to be jointly and severally liable, Matthew would have to pay most of the damages based on the "deep pocket" concept.

Question 66

The tort of negligent supervision arises when .

A) a third party is injured through an employee's negligent actions
B) a company suffers from losses due to lack of supervision of an employee
C) an employee is left in a position that may be harmful to others after notice is given to an employer
D) an employee's past offensive conduct is not uncovered by an employer when the employer fails to do a background check before hiring the employee

Question 67

Which of the following statements is true of a partially disclosed principal?

A) It refers to a person whose identity is not known to a third party, though the third party does know that an agent represents a principal.
B) When a principal is partially disclosed, an agent does not have the authority to act.
C) When a principal is partially disclosed, an agent has the authority to act, but the principal is not liable.
D) It refers to a person whose identity is known only to a third party and an agent at the time of the agreement.

Question 68

A manager is given notice of a male employee's inappropriate conduct toward a female employee. If the manager does not take timely action against the male employee, the manager is guilty of .

A) defamation
B) negligent supervision
C) negligent hiring
D) slander

Question 69

Discuss the agent's duties to the principal.

Question 70

Which of the following statements is true about the liability of principals for the acts of their agents?

A) Principals are responsible whenever the agents commit torts or criminal acts.
B) Principals are never responsible for any of the torts committed by their agents.
C) A principal is responsible only for the torts committed within the scope of the agent's employment.
D) A principal is liable for torts committed by the agent if the agent was in an unauthorized place at the time of commission of the tort.

Question 71

Regina works in the procurement department of Magic Kraft, Inc. (Magic Kraft). She is accused of price fixing, and a lawsuit is filed against her. Which of the following should the plaintiff establish for Magic Kraft to be liable for the crime?

A) Regina's superiors in Magic Kraft were aware that she was engaging in price fixing.
B) Regina was in an unauthorized place when she committed the crime.
C) Regina made use of company resources to commit the crime.
D) Regina committed the crime with her personal interests in mind.

Question 72

Courts have often indicated that the agent's most important obligation is fiduciary.

Question 73

Principals are generally not liable for criminal acts of their agents.

Question 74

Which of the following statements is true of e-agents?

A) E-agents can only be used for tasks related to information gathering.
B) Using an e-agent to accept a click-on agreement is considered unlawful.
C) An e-agent's actions must be approved by a principal for it to bind the principal.
D) The Uniform Electronic Transaction Act (UETA) allows e-agents to bind principals.

Question 75

If a school district fails to do background checks before employing teachers or school bus drivers when the potential employee's past offensive conduct toward a child could have been discovered, the school is guilty of .

A) trespass to personality
B) negligent supervision
C) negligent hiring
D) trespass to realty

Question 76

If the principal is undisclosed, an agent is likely to be liable to the third party.

Question 77

Jones, a famous tycoon, hires Smith to go to an auction to bid on a castle. Jones does not wish to be present at the auction as he fears the other bidders will "bid up" the price if they see that he is bidding. In this case, Jones is a(n) .

A) partially disclosed principal
B) independent contractor
C) undisclosed principal
D) employee

Question 78

The principal must do nothing to interfere with the reasonable conduct of an agent as agreed upon in an express or implied contract.

Question 79

A principal may be liable for the torts committed by an agent according to the doctrine of .

A) non-delegation
B) respondeat superior
C) res ipsa loquitur
D) negligence per se

Question 80

Betty authorizes William to act as her agent. William is required to purchase a vehicle on Betty's behalf. Which of the following statements is true of this scenario?

A) If a seller knows that William is acting as an agent, but does not know Betty's identity, William is ultimately liable to the seller.
B) If a seller knows that William is acting as an agent, but does not know Betty's identity, Betty is said to be an undisclosed principal.
C) If a seller does not know that William is acting as an agent, William is liable to the seller.
D) If a seller knows Betty's identity and is aware that William is an agent, Betty is said to be a partially disclosed principal.