Deck 1: Introduction to Agency and Business Organization

Question 1

The principal's duties to the agent do not include

A) the duty to compensate the agent as agreed on.
B) the duty to cooperate with the agent.
C) the duty to exercise reasonable care to avoid placing the agent in harm's way.
D) the duty to always put the agent's interests first.

Answer 1

D

Question 2

A principal is not liable for the torts of his or her agent if the

A) tort is committed by the agent acting in the scope of his or her employment by the principal.
B) agent's action is unrelated to the agency relationship.
C) principal is negligent or reckless in super- vising the agent.
D) agent is acting under the principal's direc- tion when committing the tort.

Answer 2

B

Question 3

Under the doctrine of respondeat superior, an agent is not responsible for torts committed while working for an employer.

Answer 3

False

Question 4

When the principal intentionally or negligently causes a third party to reasonably believe that an individual is acting as the principal's agent, and the third party relies on that belief, then

A) no agency relationship exists.
B) an express agency agreement is created.
C) the purported agent assumes personal liabil- ity for his or her actions.
D) an apparent agency may exist.

Question 5

Agency is a legal relationship in which

A) the principal acts on behalf of the agent.
B) the principal becomes personally liable for all actions of the agent.
C) a written contract must specify all authority of the agent.
D) the agent acts for or represents the principal by the principal's authority.

Question 6

Partners act as agents for the partnership and the other partners.

Question 7

A power of attorney need not be put in writing.

Question 8

A special type of power of attorney designed to continue for certain purposes even after the incapacity of the principal is referred to as a

A) special power of attorney.
B) will power of attorney.
C) durable power of attorney.
D) general power of attorney.

Question 9

An agent's duties to the principal include

A) the duty of loyalty.
B) the duty to act without compensation.
C) the duty to perform any tasks requested by the principal.
D) the duty to compensate the principal.

Question 10

An apparent agency can be created by the actions of an apparent agent alone, without any action by the principal.

Question 11

An agency relationship may not be created

A) by express contract.
B) by conduct of the principal and agent.
C) without the principal's knowledge or con- sent.
D) by ratification.

Question 12

An agency may be created by ratification when the principal accepts the benefits derived from the agent acting on his or her behalf.

Question 13

Disputes concerning agency law are typically resolved under the contract or common law of the state where the agency was created.

Question 14

The doctrine of respondeat superior applies to the relationship between an employer and employee and not to the relationship between an employer and an independent contractor.

Question 15

Unlike most contracts, consideration need not be exchanged to form an agency relationship.

Question 16

When used in relation to the agency relation- ship, the master

A) retains some control over his or her servant (employee).
B) gives his or her servant (employee) full discretion to act on the master's behalf.
C) hires the employee for a specific task for which the master is not responsible.
D) is not liable for any actions taken on his or her behalf by the servant (employee).