Deck 36: Agency

Question 1

An employer does not have control over the performance of the work done by an independent contractor.

Answer 1

True

Question 2

The intention to ratify an unauthorized act may be expressed by words or conduct.

Answer 2

True

Question 3

An agent is distinguished from an ordinary employee in that employees are always hired to represent the employer in dealings with third persons.

Answer 3

False

Question 4

The third person who desires to bind the principal because of the act of an alleged agent has the burden of proving that the latter person was in fact the authorized agent of the principal and possessed the authority to do the act in question.

Question 5

The term apparent authority is used when an appearance of authority has been created by a principal, but actual authority does not exist.

Question 6

A contractor's work can be so controlled by the hiring party that the contractor is regarded as an employee of the hiring person.

Question 7

An agent has an interest in the authority when consideration has been given or paid for the right to exercise the authority.

Question 8

A principal may ratify an action taken by an agent that the principal would not have been capable of authorizing at the time that the action was taken.

Question 9

An agency may arise by appointment, conduct, ratification, or operation of law.

Question 10

The acts of the agent obligate the principal to third persons and give the principal rights against third persons.

Question 11

A universal agent is authorized by the principal to transact all affairs in connection with a particular type of business or trade or to transact all business at a certain place.

Question 12

A written authorization of agency is called a power of attorney.

Question 13

When an unauthorized act is ratified, the effect is the same as though the act had been originally authorized.

Question 14

A special agent is authorized by the principal to transact all affairs in connection with a particular type of business or trade or to transact all business at a certain place.

Question 15

Placing property in the possession of another gives that person apparent authority to sell the property.

Question 16

A general agent is authorized by the principal to do all acts that can be delegated lawfully to a representative.

Question 17

For ratification to occur, the agent must have purported to act on behalf of, or as agent for, the identified principal.

Question 18

For a principal to ratify the actions of an agent, all that is necessary is that the principal express the intention to ratify.

Question 19

The "right to control" test determines whether an individual is an agent, an employee, or an independent contractor.

Question 20

Notification to a principal may be implied when the principal does not object to a contract and accepts its benefits.

Question 21

A(n) _______ gives an agent an interest in the property with which she is dealing.

A) special agency
B) agency with an interest in the authority
C) general agency
D) agency with an interest in the subject matter

Question 22

A(n) ______ is bound by a contract to produce a certain result, with performance of the work controlled by the ______.

A) agent, principal.
B) employee, employer.
C) independent contractor, employer
D) independent contractor, contractor

Question 23

The scope of an agent's authority is always known by the third party.

Question 24

If a store owner places Joe as manager and gives him a special nametag, customers may assume that Joe has ______ for the owner in that respect.

A) apparent authority
B) ratification powers
C) special agency
D) universal agency

Question 25

When a principal dies, the agency is not terminated until the agent is notified of the principal's death.

Question 26

An agency coupled with an interest is not terminated by the death of the principal.

Question 27

An agent has incidental authority to perform any act reasonably necessary to execute the express authority given to the agent.

Question 28

A __________ agent is authorized by the principal to handle a definite business transaction or to do a specific act.

A) special
B) general
C) secret
D) universal

Question 29

A person has apparent authority as an agent when the principal's words or conduct leads a third person to reasonably believe that the person has that authority and the third person relies on that appearance.

Question 30

In performing agency duties, the agent must exercise the care that a reasonably prudent person would exercise under the same circumstances.

Question 31

Initially, ratification is a question of: ______.

A) intention.
B) consideration.
C) form.
D) implication.

Question 32

The Uniform Durable Power of Attorney Act (UDPAA) changes the general rule that insanity of a principal terminates an agent's authority to act for the principal.

Question 33

A third person who deals with a person claiming to be an agent has the right to rely on the statements made by the agent concerning the extent of the agent's authority.

Question 34

The most common method of creating an agency is by: ______.

A) express authorization.
B) conduct.
C) operation of law.
D) ratification.

Question 35

The term apparent authority is used when there is: ______.

A) no interaction between the principal and third persons.
B) actual authority.
C) only the appearance of authority and that appearance of authority was created by the principal.
D) only the appearance of authority and that appearance of authority was created by the agent.

Question 36

A party working for and under the control of another and authorized to enter into contracts for that other person or entity is called an: ______.

A) employee.
B) agent.
C) independent contractor.
D) attorney.

Question 37

A person who has knowledge of a limitation on an agent's authority cannot disregard that limitation.

Question 38

The scope of an agent's authority may be determined from all of the following except: ______.

A) express words of the principal.
B) actions of the principal.
C) customs of the trade or business.
D) consideration paid to agent

Question 39

An agent appointed by a power of attorney is referred to as an: ______.

A) implied attorney.
B) attorney in fact.
C) implied agent.
D) attorney at law.

Question 40

If a principal terminates an agency without giving notice of the termination to third persons, the agent may retain the power to make contracts that will bind the principal and third persons.

Question 41

A durable power of attorney may be terminated by: ______.

A) revocation by a competent principal.
B) the death of the principal.
C) revocation by a competent principal or by the death of the principal.
D) none of these, since a "durable" power of attorney is designed by law to be irrevocable under all circumstances.

Question 42

An agent has implied __________ authority to do any act that usually accompanies the transaction for which the agent is authorized to act.

A) express
B) apparent
C) customary
D) incidental

Question 43

An agent's implied authority to perform any act reasonably necessary to execute express authority is called __________ authority.

A) express
B) customary
C) apparent
D) incidental

Question 44

If the principal terminates the agency: ______.

A) the agent's authority to act for the principal is terminated automatically.
B) the right of the agent to bind the principal to third persons generally ends immediately.
C) the termination is not effective until notice is given to third parties.
D) the termination is not effective until the agent receives the notice.

Question 45

Ann was seriously ill and feared that she might lapse into a coma or somehow become unable to speak or act for herself in her medical emergency. She is aware that agents ordinarily lose their authority to act for principals who become mentally disabled. She nevertheless desires to have her husband Alberto make medical decisions and speak on her behalf. She is particularly concerned about existing on life support in a persistent and incurable vegetative state. Is there any action that she might take to enable Alberto to act for her?

Question 46

Which of the following is not a necessary condition for ratification?

A) The agent must have purported to act on behalf of or as an agent for the identified principal.
B) The third party benefiting from the ratification must give consideration for the ratification.
C) The principal must have been capable of authorizing the act both at the time of the act and at the time it was ratified.
D) The principal must have full knowledge of all material facts.

Question 47

Ames, an agent for Baker Antiques, had the authority to purchase early 20th-century American furniture costing a maximum of $1,500 per piece. Ames bought a 19th-century French desk for $3,000 from Carter. Baker was furious when she saw the desk, and she fired Ames. Nevertheless, she put the desk on display in the shop with a $5,000 price tag. When the best offer she got for the desk was $2,500, Baker returned the desk to Carter. Baker told Carter that Ames had exceeded his authority in purchasing the desk, and she demanded that Carter refund the $3,000 that Ames had paid for the desk. Will Carter have to do so?

Question 48

The principal has a duty to perform all of the following except: ______.

A) a duty to perform the contract according to its terms.
B) a duty to compensate the agent for services.
C) a duty to indemnify the agent for loss in some circumstances.
D) a duty of loyalty to the agent.

Question 49

It is the duty of an agent to act with the care that: ______.

A) the principal would exercise under the circumstances.
B) a reasonable principal would exercise under the circumstances.
C) a reasonable juror would exercise under the circumstances.
D) a reasonable person would exercise under the circumstances.

Question 50

John's son was not his agent but contracted to purchase a computer in John's name. When John learned of this, John sternly rebuked his son but continued to use the computer for several weeks. After losing interest in the computer, John offered to return it, saying that the purchase was unauthorized. John:

A) is not liable on the purchase.
B) expressly ratified the purchase.
C) is liable because all children have the apparent authority to contract for their parents.
D) ratified the purchase by John's conduct.

Question 51

Barnes agrees with Morgan to enter into the management of a new subdivision of residential housing. Morgan appoints Barnes as his manager for the duration of the development program. During the course of the construction, Barnes decides to use funds specified for the subdivision for an office space project that Barnes alone has been interested in completing. Morgan is very angry on learning of Barnes' actions and terminates the agency. Barnes insists that the agency cannot be terminated in this manner. Is Barnes correct?

Question 52

A third person who deals with a person claiming to be an agent: ______.

A) can rely on the statements made by the agent regarding the extent of the authority.
B) cannot ignore any knowledge regarding a limitation of the agent's authority.
C) is not required to take notice of any acts clearly adverse to the interest of the principal.
D) is bound by the agent's secret limitations, regardless of the third person's knowledge.

Question 53

An agent is under a duty to obey: ______.

A) all instruction given by the third party.
B) all lawful instructions given by the principal.
C) all instructions given by the principal.
D) none of these, since "obedience" is not an obligation of the agent.