Deck 13: The Agency Relationship

Question 1

The contractor hired to manage the renovation and addition to the McLeod's country home has been given express authority to effect which of the following?

A) the McLeods' legal relations
B) the legal relationships of the McLeods and others
C) a wide array of commercial transactions
D) face-to-face negotiations between owners and subtrades

Answer 1

A

Question 2

Which of the following is a distinguishing characteristic of the implied authority of an agent?

A) It may be intuitively deduced by the agent's position.
B) It typically takes the form of an informal power of attorney.
C) It is customarily limited to a short time period.
D) It is inherently inflexible and narrowly defined.

Answer 2

A

Question 3

Which of the following is a distinguishing characteristic of the law of agency?

A) It is derived largely from special statutes.
B) It is derived largely from tort and contract law.
C) It is derived largely from provincial legislation
D) It is derived largely from contract law.

Answer 3

B

Question 4

Nabella is selling her house.She has asked a lawyer with Sheps & Shaps LLP to handle the legal aspects of the transaction.Which of the following will strongly support the creation of an agency relationship between Nabella and the lawyer?

A) the regulation of lawyer conduct
B) up-front payment of a retainer
C) an agreement on a hourly rate
D) the legal authority of a lawyer

Question 5

With respect to determining what kind of implied authority an agent has,which of the following would your law professor indicate to be the most likely approach employed by a court?

A) an inherently flexible inquiry
B) a fact-specific inquiry
C) a broad informal inquiry
D) a narrow informal inquiry

Question 6

Willliam and Leah are both registered real estate agents.If Ray becomes a mercantile agent,how will all three of these individuals share a commonality?

A) Statutory regulations apply to their conduct.
B) The need to regulate these relationships necessitated the law of agency.
C) The inherent conflicts in these relationships necessitated the law of agency.
D) The law of agency regulates their conduct.

Question 7

With respect to the determination of the nature and extent of an agent's authority,how would an agency contract be similar to other contracts?

A) formal terms
B) express terms
C) inherent terms
D) implied terms

Question 8

The employment contract of a manager of a business expressly recites her authority.How do other components of her authority come into existence?

A) via the more tangible form of a detailed job description
B) by conducting a fact-specific inquiry of the position's job description
C) via the nature of the position and business management requirements
D) by the strict utterance of instructions to the manager

Question 9

With respect to an actionable claim arising from an alleged agency relationship,which of the following would a law professor most likely identify as requiring formal recognition?

A) wide array of transactions
B) cornerstone of a business
C) delegation of authority
D) commonality of occurrence

Question 10

In what way are an agent's actual authority and an agent's apparent authority similar?

A) Both must be expressed in writing.
B) Both bind the principal.
C) Both restrict an agent to a single purpose.
D) Both are defined by statute.

Question 11

Which of the following would most strongly support a determination of the existence of a contract between a principal and a third party?

A) whether the principal actually likes the deal
B) the extent to which the agent is remunerated
C) the extent of the agent's actual authority
D) the timing of the agent's acceptance of a retainer

Question 12

Jacqueline has been given authority over her elderly mother's bank accounts and property.In this instance,what is the type of formal authority Jacqeline has been given?

A) a general power of attorney
B) a bank form of power of attorney
C) a personal care power of attorney
D) a specific power of attorney

Question 13

Which of the following terms would defendant's counsel identify as describing an outside party with whom the agent had conducted business on behalf of the principal?

A) subcontractor
B) agent
C) plaintiff
D) third party

Question 14

Bonita and Laraleigh want to create a relationship with insurance broker Lee Kim.If they want to use the most common method available to accomplish the desired outcome,how should they proceed?

A) deposit
B) retainer
C) contract
D) letter of intent

Question 15

Which of the following is a valid criticism of granting authority through a power of attorney?

A) the obvious potential for abuse presented by an attorney's unlimited power.
B) the confusion that arises over which particular form applies.
C) the obvious potential for the donor to accuse the attorney of wrongdoing.
D) the confusion that arises over who may witness a donor's signature.

Question 16

With respect to the law of agency,the term "ostensible authority" is synonymous with which of the following?

A) implicated authority
B) actual authority
C) expressed authority
D) apparent authority

Question 17

Why would your law professor say that agency relationships,in general,operate with few difficulties?

A) Agents simply represent principals in transactions with others.
B) Engaging external specialists is a cornerstone of business.
C) Businesspeople cannot operate their businesses alone.
D) Parties use agents instead of dealing face to face.

Question 18

An agent has been given authority to act for the principal in relation to a directive setting out conditions required for the removal of life-support systems.In these circumstances,what is the form of authority the agent has been given?

A) a general power of attorney.
B) a specific-care directive
C) a personal care power of attorney
D) a health care directive

Question 19

Tom's photographs will be exhibited for two weeks in Natural WildLife Gallery Inc.,commencing May 1.The gallery is authorized to sell any of Tom's works,as long as they adhere to the agreed price list.In these circumstances,what is the nature of the relationship between these parties?

A) agency by commitment
B) employment agreement
C) agency by agreement
D) retainer agreement

Question 20

Where a power of attorney states that the occurrence of a specific event will make it operational,it will operate as a variation of which of the following?

A) a general power of attorney
B) an enduring power of attorney
C) a springing power of attorney
D) a specific power of attorney

Question 21

Which of the following would a lawyer suggest exemplifies the liability of an agent who acts without authority and contracts with a third party?

A) The agent is liable to the principal for breach of warranty of authority.
B) The third party is liable to the principal for breach of warranty of authority.
C) The principal is liable to the agent for breach of agency by ratification.
D) The agent is liable to the third party for breach of warranty of authority.

Question 22

Marta sold Phillip's racing cycle to Bill while Phillip was away on business in Toronto.Phillip hadn't expected Marta to act in this way,but he happily accepted the $1500 cash and signed a receipt.In this instance,the agency relationship exemplifies which of the following?

A) implied authority
B) agency by estoppel
C) agency by ratification
D) actual authority

Question 23

A third party typically derives an agent's ostensible authority from which of the following?

A) the conduct of the principal
B) reasonable inference of usual authority
C) an expression of the limitations of authority
D) inferring typical authority

Question 24

In order to establish the validity of an agency relationship where circumstances involve agency by estoppel,which of the following would a court require confirmation of?

A) adoption by the principal of a contract the agent lacked authority to enter at the time
B) circumstances that necessitated acting without authority from the principal
C) agreement by the third party to be bound by commitments made to the agent
D) principal's actions readily viewed by outsiders as denoting an existing agency relationship

Question 25

A lawyer is researching the damages relating to his client's breach of a fiduciary duty that ought to be recoverable.Which of the following would the lawyer most likely have to consider?

A) damages arising from contract and the equities
B) contract, tort, and punitive remedies
C) damages arising from contract and tort remedies
D) contract, tort, and equitable remedies

Question 26

Kyrie negotiated a contract in good faith with a party whose introductory letter from his employer reasonably led her to believe he had the proper authority to do so.In these circumstances,which of the following would be the most likely outcome of any dispute challenging the existence of an agency relationship?

A) The law sides with the principal through ratification.
B) A court will determine the agent had actual authority.
C) The law sides with the customer through estoppel.
D) A court will determine the agent had apparent authority.

Question 27

Which of the following would a court require evidence of in order to establish the existence of a fiduciary duty owed to a plaintiff?

A) the principal's influence and trust
B) the defendant's reliance, power, and influence
C) the agent's influence and reliance
D) the plaintiff's reliance, trust, and vulnerability

Question 28

Which of the following is a common characteristic of agency by estoppel and agency by ratification?

A) the law typically favours the principal
B) the reasonable conclusion of existence of agency
C) the adoption of a contract after the fact
D) the lack of the agent's authority to act

Question 29

A lawyer's ability to place herself in a position where her own interests conflict with the interests of the principal is constrained by which of the following?

A) a profit rule
B) a trust rule
C) a constraint rule
D) a conflict rule

Question 30

With respect to equitable remedies,which of the following would your law professor most likely indicate as being important for agents to comprehend?

A) when a fiduciary relationship exists with the full scope of the duties
B) the whole range of equitable remedies that are available
C) business relationships that can be easily categorized as fiduciary
D) where fiduciary relationships are found to exist

Question 31

Geoff regularly calls his investment broker to discuss current market conditions.Occasionally,Geoff requires his agent to carry out his instructions involving maturing bonds and trades of shares.How will a court view the relationship of agency that exists between Geoff and his broker?

A) as a relationship that reposes itself in vulnerability
B) as relationship that reposes itself in reliance
C) as a fiduciary relationship.
D) as a non-fiduciary relationship

Question 32

Jack sent a cover letter with his new purchasing agent,Kuan Huo,advising suppliers of Kuan's authority to transact purchases under $33 000.A court considering a dispute in which a plaintiff alleges Kuan had apparent authority to enter into a $42 000 purchase contract would most likely resolve this dispute based on which of the following?

A) Deny the third-party's claim based on the principal's stated limitation.
B) Deny the second-party claim as the agent's limited authority was reasonably known.
C) Deny a first-party claim on grounds it ought to have known of the reasonable limitation.
D) Deny the outsider's claim based on the agent's unenduring authority.

Question 33

Which of the following is considered,as a general rule,to be within the scope of an agent's fiduciary duties?

A) full disclosure of acceptance of each secret commission and profit
B) absolute prohibition against acting for two principals
C) sending a client's file for storage with an outside storage facility
D) personal interests supercede the interests of the principal

Question 34

Which of the following would a lawyer most likely indicate as a duty owed by a principal in an agency relationship?

A) reimburse the agent for out-of-pocket expenses
B) fiduciary duty to uphold the trust placed by the agent
C) retroactively acknowledge authority of agents
D) ratify all contracts within prescribed time limits

Question 35

Which of following distinguishes agency by ratification from agency by estoppel?

A) Under agency by ratification, the principal is not bound unless she chooses to be.
B) Under agency by estoppel, the principal is not bound unless she chooses to be.
C) Under agency by estoppel, the principal can sue the third party for breach of contract.
D) Under agency by ratification, the principal can sue a third party for breach of contract.

Question 36

In which way are a reduction of an agent's authority and the severance of an agent's authority similar?

A) The same general principles will apply.
B) Both require representation by authority.
C) Both are governed by agency of estoppel.
D) Both require ratification by the principal.

Question 37

Which of the following is particularly relevant and therefore will most strongly support a plaintiff whose funds have been misappropriated by an investment advisor?

A) the doctrine of apparent authority
B) the doctrine of implied authority
C) the doctrine of actual authority
D) the doctrine of enduring authority

Question 38

An insurance agent who fails to advise a client that a form of requested coverage is unavailable would likely be found by a court to have committed which of the following?

A) breach of insurance standard
B) breach of fiduciary duty
C) breach of agency of insurance
D) breach of enduring contract

Question 39

In law,an agent's duty to show utmost good faith to the principal is synonymous with which of the following?

A) the ethics rule
B) the trust rule
C) the conflict rule
D) the profit rule

Question 40

Which of the following denotes the duties required of an agent?

A) reimburse the principal for out-of-pocket expenses
B) payment to the principal for services rendered
C) abide by the terms of the agency agreement
D) indemnify the principal for agency business losses

Question 41

There must be three key relationships at play in any given agency situation.

Question 42

The rules governing the relationship where one party acts as agent on behalf of a principal are known as the law of agency.

Question 43

Agency relationships generated difficult complications resulting from unethical practices,necessitating the legislation of numerous special statues to govern agents duties and responsibilities.

Question 44

An agency relationship created when one party adopts a contract entered into on his behalf by another who acted without authority at the time is legally known as an agency by estoppel.

Question 45

Actual authority is a relationship that exists when one party represents another party in the formation of legal relations.

Question 46

According to your law professor,the liability arising from agency principles with respect to employees and independent contractors is most likely to create an overlap with the application of which of the following?

A) the doctrine of vicarious liability
B) the common law principle of agency
C) the common law neighbour principle
D) the doctrine of primary liability

Question 47

The individual who permits another to act on his or her behalf is legally known as a principal.

Question 48

A duty imposed on a person who has a special relationship of trust with another is legally known as a fiduciary duty.

Question 49

Agency relationships are typical in the business context owing to a reliance on engaging external experts and specialists to act on a party's behalf in various transactions.

Question 50

"Agency" describes the power an agent derives from either express or implied agreement.

Question 51

A springing power of attorney is a form of power of attorney that springs into life when an event specified in the power of attorney has taken place.

Question 52

An insider is a party with whom the agent does business on behalf of the principal.

Question 53

An agent who has been given permission to "download responsibility for performance" is required to personally perform the obligations arising from the agency relationship.

Question 54

A large land developer granted Kyrie authorization to act as agent on its behalf,as an undisclosed principal,for the purchase of three tracts of land.Kyrie believes that,as long as she remains within the scope of that authority,the developer will be liable on the contracts.Which of the following is noted as being a valid criticism of this rule of agency law?

A) The agent has no liability.
B) It's an area of unsettled law.
C) It's inconsistent with the general principles of contract law.
D) The terminology in this area is not consistently employed by the judiciary.

Question 55

Which of the following would a risk manager indicate as being a key point with respect to managing agency relationships?

A) Choosing to avoid conflicts of interests is an agent's duty.
B) Choose wisely, instruct carefully, and review regularly.
C) Fiduciary duties must be specified in the agency agreement.
D) Fiduciary duties are automatically owed to the principal.

Question 56

An agent that has been given actual authority has the legal capacity to bind the principal to contractual relations with outsiders.

Question 57

Which of the following is a currently debated question regarding the legal effect of using e-agents to transact business?

A) What is the extent of an e-agent's authority?
B) How is an electrical impulse legally bound?
C) Why is there a legal effect of using an e-agent?
D) What is an e-agent?

Question 58

An agency relationship created when the principal acts such that third parties reasonably conclude that an agency relationship exists is legally described as an agency by ratification.

Question 59

A fiduciary owes a duty of good faith toward another because of their relationship.

Question 60

Express authority is a narrowly interpreted legal term describing the oral communication of authority to any agent.

Question 61

An agent automatically owes a fiduciary duty to his principal.

Question 62

Briefly discuss the importance of the agency relationship to business,including what it is,what it allows,how it is used,and the advantage derived from using it.

Question 63

A principal whose identity is unknown to a third party who has no knowledge that the agent is acting in an agency capacity is legally known as an undisclosed principal.

Question 64

Identify and briefly describe the typical forms of power of attorney.Provide an example of each form of power of attorney you have identified.

Question 65

An agent is bound by a fiduciary duty to avoid undisclosed,unauthorized conflicts of interest.

Question 66

Identify how a fiduciary duty arises,who is it owed to,and any requirements with regard to specifically state the duty.Provide a brief explanation of what the fiduciary duty is with regard to conflict of interest and how that obligation may be overcome.Provide an example of a conflict of interest situation.

Question 67

Identify and briefly describe the ways in which the nature of the authority given to an agent is inherently flexible and easily customized.

Question 68

Explain why agency by estoppel forces a principal to be bound by an unauthorized contract.Contrast and briefly discuss this with respect to a principal's position under agency by ratification.

Question 69

Identify each type of agency authority and describe what is required of the principal in each instance.

Question 70

Briefly describe the types of duties owed by an agent to his principal and indicate which of those duties would be considered to be the most important.Contrast the agent's duties with those owed to the agent by his principal.

Question 71

Identify the circumstances under which a principal would be permitted,by law,to ratify a contract.

Question 72

A representation of authority given by a person who purports to be an agent is legally known as a disclosed warranty.

Question 73

Identify and briefly describe the implied power a general manager of a hockey team presumably would have.Contrast the hockey team general manager's implied power with that presumably given to a manager of a convenience store.

Question 74

Identify and briefly describe how an employed clerk typist may be transformed into the business's agent.