Deck 25: Agency law

Question 1

A(n)________ is a relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.

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

Answer 1

B

Question 2

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter into contracts on behalf his or her behalf?

A) employer-employee relationship
B) employer-agent relationship
C) principal-third party relationship
D) principal-agent relationship

Answer 2

A

Question 3

The agency of power of attorney is an example of an ________ agreement.

A) agency by ratification
B) apparent agency
C) express agency
D) implied agency

Answer 3

C

Question 4

A(n)________ is a contract a principal and agent enter into that says the principal cannot employ another agent other than the one stated.

A) exclusive principal contract
B) exclusive agency contract
C) ratified contract
D) apparent agency contract

Question 5

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and intends him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes their work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.Who among the following perform the role of the agent in this land sale transaction?

A) Wilhelm
B) Martin
C) Chris
D) George

Question 6

A party who employs another person to act on his or her behalf is known as a(n)________.

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

Question 7

Which of the following constitutes an agency?

A) principal-agent relationship
B) agent-agent relationship
C) principal-principal relationship
D) agent-independent contractor relationship

Question 8

Marlon intends to sell a piece of real estate he owns and contracts Nita,a real estate broker,to make the sale.In the contract,Marlon authorizes Nita to make the sale at or above a minimum price he wants and the date by which he wants the sale to be completed.The contract also stipulates that Marlon should not hire another broker to sell that piece of land until the expiry of the contract period.Nita finds a suitable buyer,makes the sale in time,and is paid by Marlon for her services.Which of the following types of agency had Marlon and Nita entered into?

A) apparent agency
B) agency by ratification
C) implied agency
D) express agency

Question 9

A(n)________ is a fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control,and consent by the other so to act.

A) assignment
B) garnishment
C) accommodation
D) agency

Question 10

Taylor gives a power of attorney to his twin brother Corey,permitting Corey to make all decisions on his behalf while he is abroad.As per the terms of the power of attorney,Corey is allowed make decisions to purchase or sell stocks on Taylor's behalf,sell Taylor's real estate if he deems it to be in Taylor's best interest,pursue or defend lawsuits on Taylor's behalf,and make all other relevant decisions for Taylor.Which of the following is a kind of power of attorney that would confer such powers to Corey?

A) a special power of attorney
B) a limited power of attorney
C) an implied power of attorney
D) a general power of attorney

Question 11

Marlon intends to sell a piece of real estate he owns and contracts Nita,a real estate broker,to make the sale.In the contract,Marlon authorizes Nita to make the sale at or above a minimum price he wants and the date by which he wants the sale to be completed.The contract also stipulates that Marlon should not hire another broker to sell that piece of land until the expiry of the contract period.Nita finds a suitable buyer,makes the sale in time,and is paid by Marlon for her services.What kind of contract existed between Marlon and Nita?

A) an apparent agency contract
B) a ratified contract
C) an exclusive agency contract
D) an exclusive principal contract

Question 12

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and intends him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes their work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.Which of the following roles does ReNowait Goodhouses perform?

A) agent
B) independent contractor
C) principal
D) trustee

Question 13

An agency that occurs when a principal and an agent categorically agree to enter into an agency agreement with each other is known as an ________.

A) agency by ratification
B) implied agency
C) apparent agency
D) express agency

Question 14

Which of the following statements is true of an employer-employee relationship?

A) An employee has implied power of attorney towards the principal.
B) An employee has authority to act on behalf of the principal.
C) An employee can enter into contracts on behalf of the employer.
D) An employee is hired to perform a task or service.

Question 15

Which of the following statements is true about an agent?

A) It refers to a party who agrees to act on behalf of another.
B) It refers to a party who employs another person to act on his or her behalf.
C) It refers to a party that directs a worker under an express or implied contract of employment.
D) It refers to a party who receives the services of another for remuneration.

Question 16

Which of the following statements is true of an express agency?

A) The agency involved is allowed to have multiple agents if necessary.
B) The agency is implied from the conduct of the parties.
C) The agency comes to effect when the principal ratifies an unauthorized act.
D) The agency arises when a principal creates the appearance of an agency that does not exist.

Question 17

Which of the following statements is true of a general power of attorney?

A) A power of attorney can be oral.
B) Only lawyers can be agents of a power of attorney.
C) A power of attorney cannot be claimed once the principal is incapacitated.
D) It allows the agent to sign legal documents on the principal's behalf.

Question 18

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and intends him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes their work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.Who among the following perform the role of the principal during the land sale transaction?

A) ReNowait Goodhouses
B) George
C) Martin
D) William

Question 19

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and intends him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes their work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.Which of the following commercial relationship exists between Martin and William?

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

Question 20

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

A) It is an implied form of power of attorney.
B) It limits the agents powers to those enumerated in the agreement.
C) It allows the agent to act in any matters on the principal's behalf.
D) It only allows certified lawyers to be agents.

Question 21

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

A) It is only effective as long as the principal is able.
B) It remains effective even though the principal is incapacitated.
C) It is effective even when the agency is an oral agreement.
D) It is only effective if the agent is a certified lawyer.

Question 22

Which of the following statements best describe an agency by estoppel?

A) It refers to an agency that arises when a principal ratifies a contract created by an unauthorized agent.
B) It refers to an agency created when a principal and an agent expressly agree to enter into an agency agreement.
C) It refers to an agency that is not expressly stated but is implied and inferred in the conduct of the parties.
D) It refers to an agency that arises when a principal creates the appearance of an agency that in actuality does not exist.

Question 23

Which of the following statements best describes an agent's duty of loyalty?

A) It refers to a fiduciary duty an agent owes not to act adversely to the interests of the principal.
B) It refers to a duty that an agent has to maintain an accurate accounting of all transactions undertaken on the principal's behalf.
C) It refers to a duty that an agent owes to notify the principal of important information concerning the agency.
D) It refers to a duty that an agent owes to meet the standards of reasonable care, skill, and diligence implicit in all contracts.

Question 24

If a person employs an architect to design the layout of his or her own home,it would constitute a(n)________ relationship.

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

Question 25

________ refers to an agent's duty to meet the standards of reasonable care,skill,and diligence implicit in all contracts.

A) Duty to notify
B) Duty to perform
C) Duty to account
D) Duty of loyalty

Question 26

A power of attorney where a principal confers powers on an agent to act in specified matters on the principal's behalf is referred to as ________.

A) implied power of attorney
B) general power of attorney
C) limited power of attorney
D) special power of attorney

Question 27

An express agency agreement that is often used to give an agent the control to sign legal documents on behalf of the principal is known as a(n)________.

A) assignment
B) accommodation
C) power of attorney
D) letter of credit

Question 28

Which of the following statements is true of an apparent agency?

A) The authority of an apparent agent is implied from the conduct of the parties.
B) The principal is bound to the contracts entered into by an apparent agent.
C) The third-party is not bound to a contract created by an apparent agent.
D) The actions of an apparent agent create an apparent agency.

Question 29

Ashley owns a piece of vacant real estate through which a small river runs.Ashley hires Warren,a licensed real estate broker,to list the property for sale and help sell the property.While inquiring in the neighborhood,Ashley's neighbor Lenny tells Warren that a chemical plant upstream has polluted his property and that Warren should have environmental engineers test the soil on Ashley's property as well.Warren does not tell Ashley about Lenny's suggestion.Warren manages to find a buyer for Ashley's property in Martha.It is later discovered that the property Martha bought from Ashley is also polluted.Which of the following agent duties has Warren failed to perform?

A) duty to indemnify
B) duty to account
C) duty to reimburse
D) duty to notify

Question 30

An agency that occurs when a principal and an agent do not expressly create an agency,but is inferred from the conduct of the parties is known as ________.

A) apparent agency
B) agency by ratification
C) implied agency
D) agency coupled with an interest

Question 31

A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time is known as a principal's ________.

A) duty to reimburse
B) duty to cooperate
C) duty to indemnify
D) duty to compensate

Question 32

Which of the following statements is true of a principal-independent contractor relationship?

A) Principals are bound by the authorized contracts of their independent contractors.
B) Independent contractors cannot be authorized by principals.
C) Independent contractors are employees of the principals.
D) Principals cannot directly employ independent contractors.

Question 33

The ________ is the principal's duty to cover the agent for any losses the agent suffers because of the principal's conduct.

A) duty to cooperate
B) duty to indemnify
C) duty to compensate
D) duty to reimburse

Question 34

Ronald,the purchasing manager of Tellys Supermarket in Georgia,was asked to buy an order of the latest videogame console,FunCase,to keep in the supermarket.However,due to a truckers' strike,he had to make a trip to the FunCase warehouse,which was in Florida.Ronald paid for the trip himself,went to the warehouse,procured the shipment,and returned.After he got back,Tellys Supermarket paid Ronald for the trip he made to Florida.Which of the following duties of the principal did Tellys Supermarket perform here when they paid Ronald for the trip to Florida?

A) duty to cooperate
B) duty to reimburse
C) duty to compensate
D) duty to indemnify

Question 35

Frank Hannigan sees a grand piano that his musician friend,Scott Kristoff,had been looking for,in an antique store.Frank enters into a contract to purchase the grand piano from the antique seller and signs the contract,"Frank Hannigan,agent for Scott Kristoff." But because Frank is not Scott's agent,Scott is not bound by the contract.If Scott decides to accept the contract,what kind of agency would be created?

A) express agency
B) implied agency
C) agency by ratification
D) power of attorney

Question 36

Marcus employs a real estate broker,Dean,to sell his house.Dean's express powers are to advertise and market the house for sale,show the house to prospective buyers,and accept offers from persons who want to purchase the house.He is not allowed to seal a deal without Marcus' consent.Marcus goes away on a month-long trip where he cannot be contacted.During this time,a short circuit in the house causes a power outage.Dean uses his authority to hire an electrician to repair the circuits and restore electricity in the house.Marcus then comes back and pays Dean for the electricity repair.What is the nature of the agency that Dean used to fix the electricity problem in the house?

A) implied agency
B) agency by ratification
C) power of attorney
D) express agency

Question 37

Canton has listed his house for sale,but cannot be present to take care of the sale as he needs to go out of town.He intends to give his brother,Stratham,the power of attorney to just make decisions regarding selling of his house while he is gone.What kind of power of attorney should Canton execute?

A) a general power of attorney
B) a special power of attorney
C) a universal power of attorney
D) an implied power of attorney

Question 38

The crucial factor in determining whether someone is an independent contractor or an employee is the ________.

A) amount of time the worker has been associated with the principal
B) degree of control the principal has over the worker
C) degree of skill necessary to complete the assigned task
D) job title the principal assigns to the worker

Question 39

Which of the following statements best describes imputed knowledge?

A) It refers to information collected by a principal prior to engaging in an agency.
B) It refers to information collected by a principal on an agency.
C) It refers to information learned by an agent that is attributed to the principal.
D) It refers to information learned by a principal that is attributed to an agent.

Question 40

An agency by ratification occurs when the principal ________.

A) accepts an unauthorized act created by an unauthorized agent
B) accepts an authorized act created by an authorized agent
C) creates the appearance of an agency that in actuality does not exist
D) accepts an act carried out under the implied authority of an agent

Question 41

________ is a situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's.

A) Frolic and detour
B) Coming and going rule
C) Dual-purpose mission
D) Vicarious mission

Question 42

________ says that a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work.

A) Vicarious rule
B) Coming and going rule
C) Frolic and detour
D) Dual-purpose rule

Question 43

Ryan,an owner of a farm employs Jason,a real estate agent,to sell the farm for $2 million.The agent thereafter learns that oil has been discovered on the property,which increases the property's worth to $7 million.The agency relationship would be ________.

A) wrongfully terminated
B) terminated by operation of law
C) terminated by impossibility of performance
D) terminated by an unusual change in circumstances

Question 44

Termination of an agency by ________ is a situation where the parties to an agency contract terminate their contract by mutual agreement or when a previously agreed upon event occurs.

A) an act of the parties
B) an unusual change in circumstances
C) impossibility of performance
D) operation of law

Question 45

The outbreak of a war between the principal's country and the agent's country would lead to a ________.

A) termination by an unusual change in circumstances
B) termination by operation of law
C) termination by impossibility of performance
D) wrongful termination

Question 46

Which of the following would lead to the termination of an agency by operation of law?

A) loss or destruction of the subject matter of the agency
B) death of either the principal or agent
C) loss of a required qualification
D) a change in the law

Question 47

Keith appoints Peter,a real estate agent,to sell his house for him,but Peter's real estate agency license is revoked before he can sell Keith's house.This would result in the agency being ________.

A) terminated by an unusual change in circumstances
B) terminated by impossibility of performance
C) terminated by operation of law
D) wrongfully terminated

Question 48

________ is a situation that occurs when a principal requests an employee or agent to run an errand or do another act for the principal while the agent is on his or her own personal business.

A) Coming and going rule
B) Frolic and detour
C) Vicarious mission
D) Dual-purpose mission

Question 49

Which of the following statements best defines a fully disclosed agency?

A) It refers to an agency in which a contracting third party does not know the identity of the principal.
B) It refers to an agency in which a contracting third party does not know of either the existence of the agency or the principal's identity.
C) It refers to an agency in which a contracting third party knows that the agent is acting for a principal and knows the identity of the principal.
D) It refers to an agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal.

Question 50

A(n)________ occurs when an agent negligently makes a falsification to a third party.

A) intentional misrepresentation
B) fraud
C) deceit
D) innocent misrepresentation

Question 51

A nonbreaching party may recover damages from the breaching party in the event of a ________.

A) wrongful termination
B) termination of an agency by an act of the parties
C) termination of an agency by operation of law
D) termination of an agency by impossibility of performance

Question 52

________ is a rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer's authority.

A) Restatement
B) Vicious rule
C) Respondeat superior
D) Coming and going rule

Question 53

Which of the following qualifies as termination of an agency by impossibility of performance?

A) the loss of a required qualification
B) the bankruptcy of the principal
C) the insanity of either the principal or the agent
D) the conviction of either the principal or the agent

Question 54

The loss or destruction of the subject matter of the agency will result in the termination of an agency by ________.

A) operation of law
B) an act of the parties
C) unusual change in circumstances
D) impossibility of performance

Question 55

Which of the following statements is true about a notice of termination?

A) A principal is under an obligation to give a notice of termination to strangers who have no knowledge of the agency.
B) Constructive notice is valid against strangers who assert claims of apparent agency.
C) Constructive notice of termination has to be provided to all persons with whom the agent dealt.
D) Direct notice of termination has to be provided to any third party who has knowledge of the agency but with whom the agent has not dealt.

Question 56

Which of the following is a similarity between a partially disclosed and an undisclosed agency?

A) The principal and the agent are jointly liable to the third party.
B) The principal's identity is disclosed to the third party.
C) The agent's identity is disclosed to the third party.
D) The method of payment by the third party is the same.

Question 57

Which of the following statements best defines a partially disclosed agency?

A) It refers to an agency in which a contracting third party does not know of either the existence of the agency or the principal's identity.
B) It refers to an agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal.
C) It refers to an agency in which a contracting third party does not know the identity of the principal.
D) It refers to an agency in which a contracting third party knows that the agent is acting for a principal.

Question 58

The termination of an agency contract in violation of the terms of the agency contract is referred to as ________.

A) termination by an unusual change in circumstances
B) termination by impossibility of performance
C) termination by operation of law
D) wrongful termination

Question 59

________ occurs where a principal is liable for an agent's tortious conduct because of the employment contract between the principal and agent,not because the principal was personally at fault.

A) Enterprise liability
B) Restatement liability
C) Inherent liability
D) Vicarious liability

Question 60

________ occur when an agent makes statements that he or she knows are not true.

A) Intentional misrepresentations
B) Innocent misrepresentations
C) Negligent misrepresentations
D) Frolic misrepresentations

Question 61

Independent contractors are personally liable for their own torts.

Question 62

Agency relationships are formed by the mutual consent of a principal and an agent.

Question 63

Any property,money,or other benefit received by the agent in the course of an agency belongs to the agent.

Question 64

Principals are not bound by the authorized contracts of their independent contractors.

Question 65

The term "respondeat superior" means "buyer beware."

Question 66

Principals are bound by authorized or unauthorized contracts made by their independent contractors.

Question 67

The legal rule of imputed knowledge means that the principal is assumed to know what the agent knows.

Question 68

In a vicarious liability,a principal is liable owing to his or her employment contract with the negligent agent because the principal was personally at fault.

Question 69

It is the agent's actions,not the principal's actions,which create an apparent agency.

Question 70

An agent who does not perform his or her express duties or fails to use the standard degree of care,skill,or diligence is liable to the principal for damages.

Question 71

Labeling someone an independent contractor is only one factor in determining whether independent contractor status exists.

Question 72

The principal is not liable for tortious conduct of its employees committed while acting within the scope of their employment as the employee may not have contracting authority.

Question 73

If an agency is an exclusive agency,the principal can employ more than one agent to try to accomplish a stated purpose.

Question 74

Principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors.

Question 75

A critical factor in determining independent contractor status is the amount of time that the agent works for the principal.

Question 76

In the event of an agency by ratification,an agent is liable for any misrepresentation.

Question 77

The agent is liable for the tortious conduct of the principal only if he or she directly or indirectly participates in or aids and abets the principal's conduct.

Question 78

The duty of accountability requires the agent to use the principal's property in an authorized manner.

Question 79

Unless otherwise agreed upon,the principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency.

Question 80

The extent of the agent's authority under an implied agency is determined from the facts and circumstances of the particular situation.