Deck 33: Agency Formation and Duties

Question 1

An agency relationship may be created only for a lawful purpose.

Answer 1

True
Explanation: Agencies can be created only for a lawful purpose.

Question 2

All employees are agents of their employers,and all agents are employees.

Answer 2

False
Explanation: Generally, all employees are considered agents of the employer, even those not legally authorized to enter into contracts binding their employer or to interact with third parties. However, not all agents are employees.

Question 3

Agents may have contract remedies available against a principal,but not tort remedies.

Answer 3

False
Explanation: The principal owes specific duties to the agent. Failure to fulfill these rights provides the basis for a tort or contract action against the principal.

Question 4

Agents in Australia are obligated to act personally on behalf of the principal.

Question 5

Deep Check
Which of the following was the result in Ralph T.Leonard v.Jerry

A) That company executives are liable for wages, but not for benefits, and only if the company is bankrupt.
B) That company executives are liable for benefits, but not for wages, and only if the company is bankrupt.
C) That only if the company is bankrupt, company executives are liable for wages and benefits in an amount up to $5,000 per employee.
D) That only if the company is bankrupt, company executives are liable for wages and benefits in an amount up to $50,000 per executive to be allocated equally among employees.
D) McMorris, the case in the text involving whether under the Colorado Wage Claim Act, company executives of a bankrupt company were liable to employees for unpaid wages and benefits?

Question 6

Agency law is primarily federal law.

Question 7

Which of the following is a document that gives an agent authority to sign legal documents on behalf of the principal?

A) Order of authority
B) Power of order
C) Legal empowerment
D) Power of attorney
E) Respondeat superior

Question 8

A durable power of attorney is legally binding after the principal becomes incapacitated.

Question 9

While an agent owes duties to a principal,the principal owes no duties to an agent.

Question 10

Which of the following is a person who has a duty to act primarily for another person's benefit?

A) Principal
B) Employer
C) Fiduciary
D) Trustor
E) Benefitor

Question 11

Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal?

A) A general power of attorney
B) A specific order of authority
C) A localized legal empowerment
D) A broad power of responeat superior
E) A recognized power of order

Question 12

If a principal agrees to hire no other agent for a period of time or until a particular job is done,the principal and agent have entered into a[n] ______ agency contract.

A) Encompassing
B) Specific
C) Exact
D) Identified
E) Exclusive

Question 13

The law assumes that the principal is only aware of information actually provided to the principal by the agent.

Question 14

Which of the following is true regarding the form of authority upon which an agency relationship may be created?

A) Agency relationships can be created through expressed agency, but not through implied authority, apparent agency, or through ratification.
B) Agency relationships can be created through expressed agency or through implied authority, but not through apparent agency or through ratification.
C) Agency relationships can be created through ratification, but not through implied authority, apparent agency, or expressed authority.
D) Agency relationships can be created through ratification or expressed agency, but not through implied authority or apparent agency.
E) Agency relationships can be created through expressed agency, implied authority, apparent agency, and ratification.

Question 15

An individual who lacks contractual capacity may hire an agent to make contracts on his or her behalf.

Question 16

Which of the following was the result in Ackerman v.Sobol Family Partnership,LLP the case in the text involving whether the plaintiffs were bound by representations of their attorney regarding settlement that they had not approved?

A) That the agreement entered into by plaintiffs' attorney would not be enforced because the plaintiffs had not lead the opposing defense attorneys reasonably to believe that the plaintiffs' attorney had full and final authority to settle the litigation.
B) That the agreement entered into by plaintiffs' attorney would not be enforced because the plaintiffs had not signed it.
C) That the agreement entered into by plaintiffs' attorney would not be enforced because the plaintiffs had not given the attorney express authority to enter into the agreement.
D) That the agreement would be enforced because the plaintiffs' attorney had express authority to enter into the agreement.
E) That the agreement would be enforced because the plaintiffs' attorney had apparent authority to enter into the agreement.

Question 17

If an agent breaches duties owed to the principal,the principal can sue the agent; and the principal may be entitled to a variety of contract and tort remedies beyond those stated in the contract between the principal and agent.

Question 18

When parties form an agency relationship by making a written or oral agreement,the agency is known as a[n] ____.

A) Expressed agency
B) Implied agency
C) Apparent agency
D) Ratification
E) Endorsement

Question 19

Which of the following is the most common form of agency?

A) Expressed agency
B) Implied agency
C) Apparent agency
D) Ratification
E) Endorsement

Question 20

A gratuitous agent is one who acts without consideration.

Question 21

Which of the following is false regarding a principal's duties to an agent?

A) An agent can sue the principal if the principal does not fulfill duties owed to the agent.
B) An agent may be entitled to contract remedies but not tort remedies.
C) If the principal has failed to meet duties owed to the agent, the agent can refuse to act on behalf of the principal until the failure is remedied.
D) The principal has a duty to compensate an agent for services provided unless the parties have agreed that the agent will act gratuitously.
E) The principal has a duty of reimbursement and indemnification to the agent for authorized expenditures.

Question 22

Which of the following is true if there is no agreement between a principal and an agent regarding the amount for which the principal will compensate the agent?

A) It will be assumed that the agent agreed to work for free on a gratuitous basis.
B) The agent will be allowed to set the price which will be enforced unless it is unconscionable.
C) The principal will be allowed to set the price which will be enforced unless it is unconscionable.
D) The court will appoint a magistrate to set the price.
E) Compensation will be calculated according to the customary fee in the situation.

Question 23

Which of the following is a term for a person who contracts with another to do something for the other person,but is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking?

A) An employee
B) An independent contractor
C) An authorized contractor
D) A task-specific contractor
E) A partial contractor

Question 24

As set forth in the text,which of the following is false regarding agency law in relation to sports agents?

A) Over half of the states have enacted statutes governing the behavior of sports agents.
B) Efforts are underway to develop a uniform act addressing regulation of sports agents because none exists at the present time.
C) Players associations' model contracts describe the nature of the services agents can perform on behalf of their principals and the duties the parties owe to one another.
D) Some states have established criminal penalties for athletes who violate the state law addressing regulation of sports agents, but most states focus on criminalizing the activity of sports agents.
E) The Major League Baseball Players Association's Regulations Governing Player Agents expressly state that agents act in a fiduciary capacity vis-à-vis their athlete clients.

Question 25

Which of the following is not a type of independent contractor?

A) Building contractor
B) Stockbroker
C) Elementary school teacher
D) Lawyer
E) Doctor

Question 26

Which of the following is not one of the criteria listed in the text as indicative of whether a worker is an employee or an independent contractor?

A) Whether the worker is engaged in a distinct occupation or an independently established business.
B) The employer supplying the tools.
C) How the worker is paid.
D) The amount of time the worker has been involved in the trade or area at issue.
E) The length of time for which the worker is employed.

Question 27

Which of the following is false regarding civil law and a power of attorney in Luxembourg?

A) In civil law countries, a power of attorney authorizes the agent only to conduct a series of transactions under instruction from the principal.
B) In Luxembourg, the person on whose behalf the power of attorney is created is called a donor, instead of a principal.
C) One type of power of attorney in Luxembourg is a power of attorney that is valid until death.
D) One type of power of attorney in Luxembourg is a power of attorney that has unlimited validity even after death.
E) The law in Luxembourg requires that the power of attorney be authenticated by a public authority or a public notary.

Question 28

A ______ is a written document,created by a principal,expressing his or her wishes for an agent's authority not to be affected by the principal's subsequent incapacity.

A) General purpose order of authority
B) Living legal empowerment
C) Notarized order
D) Durable power of attorney
E) Lasting power of authority

Question 29

Which of the following is true regarding the result in the Case Opener,the case involving whether FedEx illegally refused to collectively bargain with single-route drivers on the basis that they were independent contractors,not employees?

A) To determine whether the FedEx drivers should be classified as employees or independent contractors, the court applied federal statutory law.
B) The court found that FedEx did not exercise the degree of control necessary for the relationship to be considered employer-employee.
C) The court found that at times the drivers acted as employees and that other times they acted as independent contractors and that they would, therefore, be classified as independent contractors.
D) The court found that at times the drivers acted as employees and that other times they acted as independent contractors and that they would, therefore, be classified as employees.
E) The court found that all the rights and duties of employees as agents applied to their relationship with FedEx.

Question 30

Which of the following is false regarding intellectual property rights?

A) The classification as an employee or independent contractor is also important in determining who owns the output of a work project.
B) When an employee completes work at the request of the employer, the product is considered a "work for hire."
C) The employer owns the copyright to a work for hire completed by an employee.
D) Federal law does not address the issue of when a work is a "work for hire" because such issues are left to state legislatures.
E) Only by an agreement of both parties that a specific work is a work for hire may an employer gain copyright ownership of the work of an independent contractor.

Question 31

Which of the following is true regarding the status of an agent as a fiduciary?

A) Although the principal is a fiduciary, an agent is not a fiduciary.
B) An agent is a fiduciary only if the principal and agent agreed by written contract that the agent is a fiduciary.
C) An agent is a fiduciary only if the principal and agent agreed by written or oral contract that the agent is a fiduciary.
D) An agent is only a fiduciary to the principal only if a transaction in excess of $10,000 is involved.
E) An agent is a fiduciary to the principal.

Question 32

Which of the following types of agency occurs when a principal leads a third party to believe another individual serves as his or her agent,but the principal has actually made no agreement with the so-called agent?

A) Expressed agency
B) Implied agency
C) Apparent agency
D) Ratification
E) Endorsement

Question 33

Which of the following is false regarding the duties a principal owes to an agent?

A) The principal owes a duty of cooperation to the agent.
B) The principal must assist the agent in the performance of his or her duties.
C) The principal can do nothing to interfere with the reasonable conduct of an agent.
D) The principal has a duty to provide safe working conditions for an agent.
E) The duty of reimbursement applies to employees only, not to independent contractors.

Question 34

Which of the following is false regarding implied agency and apparent agency?

A) An implied agency as well as an apparent agency may be created by conduct.
B) Circumstances may determine the extent of implied agency.
C) Implied agency may conflict with express authority.
D) Apparent agency is also known as agency by estoppel.
E) If a principal in an alleged apparent agency situation denies that an agency existed, the third party alleging agency must demonstrate that he or she reasonably believed, based on the principal's conduct, that an agency relationship existed.

Question 35

Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

A) A specific power of attorney
B) An exact order of authority
C) An exact legal empowerment
D) A limited power of responeat superior
E) A specific power of order

Question 36

Which of the following is another name for apparent agency?

A) Simplified agency
B) Equitable agency
C) Agency by law
D) Agency by estoppel
E) Approved agency

Question 37

Which of the following is true regarding the liability in tort of employers for the actions of employees and independent contractors?

A) Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors.
B) Employers are generally liable in tort for the actions of independent contractors, while they are generally not liable for the actions of employees.
C) Employers are not generally liable in tort for the actions of independent contractors or the actions of employees.
D) Employers are generally liable in tort for the actions of independent contractors and for the actions of employees.
E) Employers are generally liable in tort for the actions of independent contractors and for the actions of employees, but only if the employer has agreed to be liable in a written contract with the employee or independent contractor.

Question 38

Which of the following was the result in Penny Garrison et al.v.The Superior Court of Los Angeles,the case in the text in which the plaintiffs sought to sue a residential care facility and avoid the effect of a durable power of attorney by which the decedent's daughter signed agreements to arbitrate disputes involving the facility?

A) That the durable power of attorney was ineffective because it did not grant the holder authority to enter into arbitration agreements and that the arbitration agreements, therefore, were unenforceable.
B) That the durable power of attorney was ineffective because it did not specifically give the daughter authority to enter into agreements involving health care and that the arbitration agreements, therefore, were unenforceable.
C) That the durable power of attorney was ineffective because it was revoked after the decedent became ill and that the arbitration agreements, therefore, were unenforceable.
D) That the durable power of attorney was effective but that the arbitration agreements were void as against public policy.
E) That the durable power of attorney was effective and that the agreements to arbitrate would be upheld.

Question 39

Which of the following is false regarding the employer-employee relationship?

A) The employee is subject to the control of the employer.
B) Generally, all employees are considered to be agents of the employer.
C) Employees who are not legally authorized to enter into contracts binding their employer are nevertheless generally considered agents of the employer.
D) In an employer-employee relationship, the employee is subject to the employer's control.
E) Independent contractors fall under the employer-employee relationship.

Question 40

Which of the following is true regarding criteria needed for creation of the agency relationship?

A) The agency must be created for a lawful purpose, and the person hiring an agent must have contractual capacity.
B) The agency must be created for an equitable as well as a lawful purpose, and the person hiring an agent must have contractual capacity.
C) The agency must be created for a business and lawful purpose, and the person hiring an agent must have contractual capacity.
D) The agency must be created for a lawful purpose; and, although there is no requirement that the person hiring an agent have capacity, the person acting as an agent must have contractual capacity.
E) The agency must be created for an equitable as well as a lawful purpose; and, although there is no requirement that the person hiring an agent have capacity, the person acting as an agent must have contractual capacity.

Question 41

Which of the following is the term used to identify the duty of an agent to perform specified duties with reasonable skill and care?

A) Duty of action
B) Duty of contract
C) Express duty of action
D) Duty of performance
E) Duty of obedience

Question 42

Which of the following is the most likely result if Sue sues Ronnie for revealing confidential information?

A) Sue will lose because Ronnie was no longer her agent when he revealed the information.
B) Sue will lose because regardless of whether he was working for her or not, he had no legal duty to keep any information confidential.
C) Sue will lose unless she can establish that revealing the information caused her to suffer economic loss.
D) Sue will lose unless she can establish that revealing the information caused her to seek psychological counseling.
E) Sue will win.

Question 43

Which of the following is the most likely result if Sue sues Ronnie for purchasing the property from Bruce instead of offering it to her?

A) Sue will lose because Ronnie had the right to act in his own best interest.
B) Sue will lose but only because Ronnie was not involved in work duties when he heard about the property.
C) Sue will lose because Ronnie had validly assigned all duties to Rick.
D) Sue will win.
E) Sue will win only if she can establish that she expressly told Ronnie that he could not assign the contractual duties under the contract.

Question 44

Which of the following is true regarding any right of reimbursement Jason is due from Nick?

A) Jason is not due any reimbursement because he did not get permission from Nick before paying ABC Computers.
B) Jason is only due 50% of whatever he paid because he did not get permission from Nick before paying ABC Computers.
C) Jason is not due any reimbursement from Nick unless he can establish that Nick signed a written contract authorizing him to personally pay debts incurred.
D) Jason is not due any reimbursement from Nick unless Jason can establish by a preponderance of the evidence that ABC Computers would not have agreed to take a lesser amount.
E) Jason is entitled to reimbursement from Nick.

Question 45

What should Sue seek if she wants possession of the lakeside lot Ronnie purchased?

A) A resolute trust
B) An actual trust
C) A constructive trust
D) A defined trust
E) An absolute trust

Question 46

Which of the following refers to the right of a principal to sue an agent to recover any amount assessed against the principal for a breach of contract caused by the agent's negligence?

A) Reformation
B) Indemnification
C) Reimbursement
D) Contribution
E) Recoupment

Question 47

When a contract exists and a principal agrees to certain conditions,but fails to perform,which of the following would an agent seek in order to attempt to force the principal to perform the contract as stipulated?

A) Specific performance
B) Specific recoupment
C) Adequate performance
D) Reformation
E) Recognition

Question 48

Which of the following is the term used to describe the duty and responsibilities of the agent as specified in the agency agreement?

A) Duty of action
B) Duty of contract
C) Express duty of action
D) Duty of performance
E) Duty of obedience

Question 49

A ______ trust is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess.

A) Resolute
B) Actual
C) Constructive
D) Defined
E) Absolute

Question 50

Which of the following is the term used to describe the duty an agent has to follow the lawful instruction and direction of the principal?

A) Duty of action
B) Duty of contract
C) Express duty of action
D) Duty of performance
E) Duty of obedience

Question 51

Which of the following is the most likely result if Pam,the wholesaler jeweler,sues Paul for the price of the pearls?

A) Pam will win assuming that she can prove that she reasonably believed, based on Paul's conduct, that Jane was acting as his agent.
B) Pam will lose because it was her responsibility to ask Paul for written documentation that Jane was his agent.
C) Pam will lose unless it can be established that Jane at some time in the past had actual authority to act as Paul's agent.
D) Pam will win only if she can show that through reasonable investigative efforts on her part Jane cannot be located.
E) Pam will win only if she can show that Jane has no assets with which to pay for the necklace.

Question 52

An agent cannot represent both the principal and a third party in an agreement because there could be a ______.

A) Consortium
B) Disagreement
C) Conflict of interest
D) Delineation of interest
E) Absolution

Question 53

What type of agency,if any,did Jane have to act on behalf of Paul as far as Pam is concerned?

A) No type of agency was in effect because no written agreement was in place by which Jane was Paul's agent.
B) No type of agency was in effect because, in fact, Jane was not Paul's agent.
C) An express agency.
D) An implied agency.
E) An apparent agency.

Question 54

Which of the following is the most likely result if Ronnie sues Sue for the $300 paid to Rick?

A) Ronnie will lose.
B) Ronnie will win because an agent has an implied right to obtain help.
C) Ronnie will win only if he can establish by a preponderance of the evidence that he acted reasonably.
D) Ronnie will win unless Sue can establish beyond a reasonable doubt that he acted unreasonably.
E) Ronnie will lose only if Sue can establish that Rick is incompetent to deal in real estate.

Question 55

Which of the following may an agent demand if the agent believes that he or she is not being properly compensated?

A) Specific performance
B) Accounting performance
C) An accounting
D) A contractual documentation
E) A contractual audit

Question 56

Which of the following is the most likely result if Harry sues Paul for the price of the jacket?

A) Paul will win because he did nothing to cause Harry to believe that he would pay for the jacket.
B) Harry will win because Jane indicated that she had apparent authority to buy the jacket for Paul.
C) Harry will win only if he can show that through reasonable investigative efforts on his part Jane cannot be located.
D) Harry will win only if he can show that Jane has no assets with which to pay for the necklace.
E) Harry will win on an implied agency theory.

Question 57

Which of the following is a term used to describe the duty of an agent to communicate any information to the principal that the agent thinks could be important to the principal?

A) Duty of notification
B) Duty of information
C) Requirement of conveyance
D) Constructive notification
E) Constructive information

Question 58

Which of the following likely represents Jason's status in regards to his employment with Nick?

A) He was an independent contractor.
B) He was an employee.
C) He had a special status called employee-contractor, a term used to represent a contractor with some responsibilities indicating status as an employee and some responsibilities indicating otherwise.
D) He was an express contractor.
E) He was an implied contractor.

Question 59

In non-contractual relationships,which of the following may the agent seek in order to force the principal to perform the contract?

A) Specific performance
B) Specific recoupment
C) Adequate performance
D) Reformation
E) None of these

Question 60

Did Jason have any legal liability to ABC Computers?

A) Yes, because he made the purchase from ABC Computers without mention of Nick.
B) Yes, but only because office equipment is involved.
C) No, because his status was as an agent regardless of whether ABC Computers was aware of that fact.
D) Yes, but only if Nick refused to pay.
E) Yes, but only if Nick were declared judicially insolvent.

Question 61

Rita,a lawyer,hired Sam to do general clerical work for her.She maintained control over his work,gave him day-to-day instructions regarding his duties,paid him on an hourly basis,and furnished all equipment he needed.Rita for tax purposes claimed Sam as an independent contractor.She was audited by the IRS who took the position that Sam was an employee.Is Sam an independent contractor,why or why not,and what is the effect of a finding of employee or independent contractor as far as the IRS is concerned?

Question 62

According to the text,what is required by the duty of accounting an agent owes to a principal?

Question 63

Set forth the requirements for a finding of agency by ratification and also the requirements needed for ratification to be effective.

Question 64

Discuss why agency is especially important for modern firms doing business in foreign countries.

Question 65

When must agency agreements be in writing?