Deck 37: Third Persons in Agency

Question 1

An agent is considered a party to a contract when the principal is partially disclosed.

Answer 1

True

Question 2

The liability of an agent to a third person depends on the existence of authority and the manner of executing the contract.

Answer 2

True

Question 3

Agents may intentionally make themselves contractually liable to third persons.

Answer 3

True

Question 4

The liability of a buyer for the purchase price of goods is terminated by the fact that the buyer gave the buyer's agent the purchase price to remit to the seller.

Question 5

If an agent commits a crime, the agent's liability will depend on the nature of the agency relationship.

Question 6

A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent's authority.

Question 7

When a third person makes payment to an authorized agent, such payment is deemed made to the principal at the time the agent remits the payment to the principal.

Question 8

If an agent makes a properly authorized contract with a third person on behalf of a disclosed principal, the agent is personally liable on the contract.

Question 9

An agent is liable for harm caused to a third person as a result of the agents' fraudulent, intentional, or negligent acts.

Question 10

When a disclosed principal authorizes an agent's transaction with a third person, the principal and the third person may each sue the other in the event of a breach of the contract.

Question 11

An agent should never sign a contract using "by" or "per" and then his or her name.

Question 12

Subject to certain limitations, a third person, on learning of the existence of an undisclosed principal, may sue the principal.

Question 13

In a simple contract made by an authorized agent on behalf of a disclosed principal, the third person may sue either the agent or the principal in the event of a breach.

Question 14

An agent's liability to a third person is not affected by the degree of the principal's disclosure.

Question 15

A third person dealing with the agent of a disclosed principal ordinarily intends to make a contract with the principal, not the agent.

Question 16

An implied warranty arises when a person purports to act as an agent for a principal.

Question 17

Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity.

Question 18

Even after there is an effective ratification, the original action of an agent is still considered as unauthorized.

Question 19

If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss.

Question 20

An agent is necessarily liable if the principal is undisclosed.

Question 21

If a contract is ambiguous regarding whether the agent has signed in a representative or an individual capacity:

A) there is a presumption that the agent signed in a representative capacity.
B) there is a presumption that the agent signed in an individual capacity.
C) the agent and the principal will both be liable on the contract.
D) parol evidence is admissible to establish the character in which the agent was acting.

Question 22

Modern law holds that an employer is liable for an intentional tort committed by an employee for the purpose of furthering the employer's business.

Question 23

An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.

Question 24

Hiring an individual with a criminal record is conclusive proof that the employer is liable for the tort of negligent hiring.

Question 25

The fact that a tort or crime is committed by an employee imposes vicarious liability on an employer.

Question 26

The rule of law imposing vicarious liability on an innocent employer for the wrong of an employee is known as the doctrine of respondeat superior.

Question 27

John Smyth is an agent for L. T. Adams. To avoid becoming a party to any contract that Smyth signs for Adams, Smyth should sign in which of the following ways?

A) John Smyth, agent
B) John Smyth, for the principal
C) John Smith, as agent for the principal
D) L. T. Adams, per John Smyth

Question 28

If an agent is sued for breach of implied warranty of authority by a third party, none of the following are defenses except: ______.

A) the agent acted in good faith.
B) the agent misunderstood the scope of authority.
C) the third party knew the agent was acting beyond her authority.
D) the agent had written authorization.

Question 29

John is an agent for Peabody. John tells Wanda (a third party) of Peabody's existence, but not its identity, therefore John is an agent for a(n) ______ principal. If John signs a contract with Wanda on behalf of Peabody, John is ______ on the contract.

A) undisclosed, personally liable.
B) partially disclosed, not personally liable.
C) partially disclosed, personally liable.
D) undisclosed, not personally liable.

Question 30

An agent making a proper contract with a third person on behalf of a disclosed principal:

A) has no personal liability on the contract.
B) is liable only to the principal on the contract.
C) is liable only to the third party on the contract.
D) is personally liable to both the principal and the third person on the contract.

Question 31

The principal is bound by knowledge but not by notice of any fact that is acquired by an agent while acting within the scope of actual or apparent authority.

Question 32

Different rules of law govern the vicarious liability of principals and employers.

Question 33

__________ liable on contracts with third persons.

A) Agents may intentionally make themselves
B) Agents are never able to make themselves
C) Agents are always
D) Principals are rarely

Question 34

In which of the following scenarios is the agent exposed to the greatest risk of liability?

A) disclosed principal and authorized contract
B) undisclosed principal and authorized contract
C) partially disclosed principal and authorized contract
D) authorized receipt of money from third person remitted to disclosed principal

Question 35

In which of the following situations is the principal - and not the agent - liable to a third party for breach of contact?

A) signature by partially disclosed principal
B) signature by undisclosed principal
C) ratification by disclosed principal
D) ratification by undisclosed principal

Question 36

An agent who commits a crime is:

A) always liable.
B) only liable if acting in self-interest.
C) only liable if the act is done to advance the interest of the principal.
D) never liable when acting in the role of an agent.

Question 37

In general, a principal is liable for crimes of the agent committed while acting within the scope of the agency, even if the principal did not authorize commission of the crimes.

Question 38

When a fact is known to the agent of a seller, the sale is deemed made by the seller with knowledge of that fact.

Question 39

When an agent who lacks a principal's authority executes a contract with a third party, the contract: ______.

A) binds the principal but not the agent.
B) binds both the principal and the agent.
C) does not bind the principal.
D) binds the third party only.

Question 40

A customer who has given a purchase order to a salesperson is not bound by any contract until the employer of the salesperson accepts the order.

Question 41

Payment to an authorized agent is:

A) payment to the principal only if the agent remits the payment.
B) payment to the principal if the third person informs the principal.
C) payment to the principal, provided the agent does not misappropriate the payment.
D) payment to the principal.

Question 42

Pamela was the agent in charge of distribution and collections for the Coble Dairy Products Cooperative. Thrower operated a grocery store and purchased dairy products from Coble. Pamela made false invoice sheets, showing delivery to Thrower of greater quantities than Thrower actually had ordered or received. Pamela collected from Thrower on the basis of these increased amounts, and then kept for herself the difference between the increased amounts and the amounts that should have been charged. When Thrower learned of this, he sued Coble for the excess payments he had made. Coble denied that Pamela was its agent in making excess collections. Will Thrower win?

Question 43

A principal is liable for the crimes of its agent in all of the following scenarios except when: ______.

A) the crime is committed at the principal's direction.
B) the agent is an employee and sells liquor to a minor without permission.
C) the agent in the course of employment violates environmental protection laws.
D) the agent is an independent contractor.

Question 44

The employer of a salesperson:

A) is only bound by a contract if the employee is acting as a soliciting agent.
B) is not bound by a contract if the employee is acting as a contracting agent.
C) is not bound by a contract until the contract is accepted.
D) is always bound by contracts made by all employee salespersons.

Question 45

When a business owner uses an independent contractor to perform work, the owner is not liable in any of the situations below except:

A) for the contractor's direct harm to third persons or their property.
B) breach of contract by the contractor.
C) for the negligence of the contractor's employees.
D) for harm resulting from a contractor's inherently dangerous work.

Question 46

Apparent authority has the same effect as:

A) undisclosed authority.
B) actual authority.
C) partially disclosed authority.
D) imputation authority

Question 47

The concept of imposing liability for the fault of another is known as __________ liability.

A) imperious
B) gregarious
C) vicarious
D) virtual

Question 48

Sid worked as the agent of Rosemary. Rosemary was in the business of buying antique clocks and selling them to the public. She became so successful at this that people began to become reluctant to sell to her, feeling that if she was buying the clock, it probably could be sold for more. Rosemary instructed Sid to purchase several clocks but not to reveal that the purchases were being made on her behalf. Sid contracted to buy several clocks and gave his own check as down payment to keep Rosemary's identity concealed. Although Rosemary had authorized the contracts, she reneged on the contracts. Sid thereupon told the seller what had happened and stopped payment on the down payment check. The seller of the clocks sued Rosemary on the bounced check and for breach of contract. Sid was sued on the same causes of action. Decide all cases.

Question 49

An employer may be liable on the theory of negligent hiring:

A) when it is shown the employer knew the employee would create an undue risk of harm in carrying out job responsibilities.
B) by hiring an individual with a criminal record.
C) whether or not prospective employees fill out applications forms and are subject to pre-employment background checks and character qualifications.
D) if he participates in the agent's tortious conduct.

Question 50

Daisy was the owner of Bloomers, a garden shop. On the recommendation of a friend she hired Gordon, who was just out of jail, to assist her but really did not interview him. Gladys purchased plants labeled "Basil" and used them in her cooking but her entire family became seriously ill and had to be hospitalized. In fact the plant was semi-poisonous and was mislabeled by Gordon. Who is liable for the customer's illness?

A) Only Gordon is liable if his actions were criminal.
B) Only Daisy is liable based on a breach of care in hiring.
C) Gordon is liable based on his own negligence. And Daisy is liable based on a breach of care in hiring.
D) Only Gordon is liable because this was an intentional tort.

Question 51

Eric is a driver for UPS. While delivering packages in the rain, he accidentally hits Lou, causing him serious physical injuries. Lou comes to you asking for advice on who is liable; what do you advise?

A) File a claim against Eric only based on respondeat superior because the injuries were outside the scope of employment.
B) File a claim against UPS based on respondeat superior because the injuries occurred within the scope of employment
C) Contact the prosecutor for criminal charges.
D) File a claim against UPS based on negligent hiring.

Question 52

Tom Creighton hired Destroy, Inc., a demolition company, to level an old building on a busy downtown lot. Destroy, Inc. was given full rein to decide on the amount of explosives needed and the placement of the charges. Security for the site on the day of the explosion was contracted out to a private security firm. When the appointed day arrived, the building was brought down. However, the building fell in a slightly different direction than that anticipated by Destroy, Inc. Numerous pieces of adjoining property, both real and personal, were severely damaged. Creighton claims that the use of an independent contractor such as Destroy, Inc. has insulated him from liability. How do you respond to Creighton's claim?

Question 53

Statements by an agent ______ bind the principal unless ________.

A) will not, the principal is disclosed.
B) will, they were made at the time of performance.
C) will not, they were made at the time of performance.
D) will not, the principal is disclosed.