Deck 18: Agency Law

Question 1

Which of the following types of relationships 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 his or her behalf?

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

Answer 1

A

Question 2

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 must not hire another broker to sell that piece of land until the expiration of the contract period.Nita finds a suitable buyer,makes the sale in time,and Marlon pays for her services.Which of the following types of agencies had Marlon and Nita entered into?

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

Answer 2

D

Question 3

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

A)An employee has implied power of attorney toward 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.

Answer 3

D

Question 4

An employer-employee relationship occurs when an employer gives an employee the authority to act and enter into contracts on his or her behalf.

Question 5

A principal-agent relationship exists when an employer hires an employee to perform some form of physical service.

Question 6

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

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

Question 7

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

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

Question 8

Martin,who wants to sell his house,authorizes his concierge,William,to find a potential buyer and finalize a deal above a stipulated price.William contracts Chris,a real estate broker,and intends him to only find a potential buyer and send him or her over to William for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company,to renovate the house.ReNowait completes its work and Martin pays the company.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.In this scenario,who is the principal during the land sale transaction?

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

Question 9

A party that employs an independent contractor is called an agent.

Question 10

Agency law is a mixture of contract law and tort law.

Question 11

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 12

Who is an agent?

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

Question 13

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

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

Question 14

The ________ is the party who employs another person to act on his or her behalf.

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

Question 15

Which of the following constitutes an agency?

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

Question 16

A principal works on behalf of an agent.

Question 17

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

Question 18

Which of the following 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 19

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 must not hire another broker to sell that piece of land until the expiration 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 20

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)agent-agent relationship
D)employer-employee relationship

Question 21

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 the 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)an unlimited power of attorney
D)an implied power of attorney

Question 22

Which of the following is true of an apparent agency?

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

Question 23

Which of the following describes an agency by estoppel?

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

Question 24

Which of the following is true of an express agency?

A)It can be either oral or written unless the Statute of Frauds stipulates that it must be written.
B)It is implied from the actions or conduct of the parties.
C)It originates when the principal ratifies an unauthorized act.
D)It arises when a principal creates the appearance of an agency that does not exist.

Question 25

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." As 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 26

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

A)It is only effective for as long as the principal has contractual capacity.
B)It remains effective even though the principal is incapacitated.
C)It is effective even when the agency is based on an oral agreement.
D)It is only effective if the attorney-in-fact is a licensed attorney.

Question 27

A special power of attorney empowers an agent to act in any matters on the principal's behalf without limitation.

Question 28

A power of attorney is an example of an ________ agreement.

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

Question 29

A power of attorney gives an agent the power to sign legal documents on behalf of the principal.

Question 30

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 31

Only a lawyer can become an attorney-in-fact.

Question 32

An express agency contract cannot be orally agreed upon.

Question 33

If a principal and an agent enter into an express agency contract,the principal cannot employ any agent other than the agent who entered into the contract.

Question 34

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 complete a deal without Marcus's 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 35

An agent given a power of attorney is known as an attorney-in-fact.

Question 36

A general power of attorney limits an agent to those acts enumerated by the agreement.

Question 37

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

A)It is an implied form of power of attorney.
B)It limits the agent's 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 a licensed attorney to act as the attorney-in-fact.

Question 38

An express agency agreement that is often used to give an agent the power 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 39

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 to 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.What kind of power of attorney confers 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 40

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

A)It can be based on a conversation between the principal and agent.
B)It must appoint a licensed attorney to act as the attorney-in-fact.
C)It is one of the most informal types of express agency agreements.
D)It allows the agent to sign legal documents on the principal's behalf.

Question 41

What is an implied agency?

Question 42

The agent's actions-not the principal's-create an apparent agency.

Question 43

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

Question 44

A durable power of attorney remains effective even if the principal is incapacitated.

Question 45

What is imputed knowledge?

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

Question 46

An agency by ratification occurs when a principal ratifies an authorized act.

Question 47

If an agency is not an exclusive agency,the principal can employ more than one agent to try to accomplish a stated purpose.

Question 48

A principal is not bound to a contract made by an apparent agency.

Question 49

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(n)________.

Question 50

Ratification of a contract is a situation in which a principal accepts an agent's unauthorized contract.

Question 51

Martin,who wants to sell his house,authorizes his concierge,William,to find a potential buyer and finalize a deal above a stipulated price.William contracts Chris,a real estate broker,and intends him to only find a potential buyer and send him or her over to William for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company,to renovate the house.ReNowait completes its work and Martin pays the company.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.In this scenario,what role does ReNowait Goodhouses perform?

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

Question 52

An apparent agency is also known as an agency by estoppel.

Question 53

Which of the following is a course of action for a principal if an agent is found competing with him or her?

A)The principal can recover damages from the agent if the competition continues after the agency has ended.
B)The principal can recover profits made by the agent in the competing venture.
C)The principal has the option of buying the agent's competing venture.
D)The principal is not allowed to recover lost sales due to the agent's competing venture.

Question 54

Ronald,the purchasing manager of Telly's Supermarket in Georgia,was asked to purchase the latest video game console,FunCase,to be kept in the supermarket.Due to a truckers' strike,Ronald had to personally make the trip to the FunCase warehouse in Florida to pick up the console.Ronald paid for the trip himself,went to the warehouse,procured the console,and returned.After he got back,Telly's Supermarket paid Ronald for the personal expenses he incurred in making the trip to Florida.What duty of the principal did Telly's Supermarket satisfy when it paid Ronald for the trip?

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

Question 55

Which of the following is a fiduciary duty owed by an agent not to act adversely to the interests of the principal?

A)duty of loyalty
B)duty of undertaking
C)duty of discharge
D)duty of resolution

Question 56

A(n)________ is an agency that occurs when a principal and an agent do not expressly create an agency,but it is inferred from the conduct of the parties.

Question 57

Martin,who wants to sell his house,authorizes his concierge,William,to find a potential buyer and finalize a deal above a stipulated price.William contracts Chris,a real estate broker,and intends him to only find a potential buyer and send him or her over to William for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company,to renovate the house.ReNowait completes its work and Martin pays it.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.In this scenario,what role does Chris perform?

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

Question 58

Which of the following statements is true of an agent taking an opportunity?

A)An agent can legally take an opportunity to which the principal is entitled.
B)A third-party offer to an agent need not be conveyed to the principal.
C)An agent cannot appropriate an offer for himself or herself once the principal rejects it.
D)A principal is permitted to recover for a usurped opportunity taken by the agent.

Question 59

In an agency by ratification,the agent is relieved of any liability for misrepresentation.

Question 60

An orally agreed upon power of attorney is acceptable in court.

Question 61

A principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal's conduct.

Question 62

An agent is not liable to the principal for any injuries resulting from a breach of the duty to notify.

Question 63

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

Question 64

If a casting agent works for two Hollywood actors,the agent is liable for ________.

A)dual agency
B)competing with the principal
C)usurping an opportunity
D)self-dealing

Question 65

Dual agency occurs when an agent acts for two or more different principals in the same transaction.

Question 66

If an agent reveals confidential information about a principal to a third party,the principal's course of action is to obtain an injunction against the third party.

Question 67

An agent does not violate his or her duty of loyalty by serving two parties with the same interest.

Question 68

If there is no agreement about the amount of compensation,the law implies a promise that a principal will pay the agent the customary fee paid in the industry.

Question 69

Which of the following is true of dual agency?

A)An undisclosed dual agent is allowed to retain compensations of the transaction provided he or she discontinues the dual agency.
B)Examples of dual agents are finders and marketing intermediaries.
C)Dual agency is permitted if all parties in the transaction agree to it.
D)Dual agency is permitted as long as the interests of both principals are similar.

Question 70

Which of the following is an instance of misuse of confidential information?

A)An agent gives the seller the principal's name and phone number in a fully disclosed transaction.
B)A principal gives the contact details of an agent to a third-party without the agent's knowledge.
C)An agent withholds critical information from the principal about the agency.
D)An agent divulges details of his past employer to the principal.

Question 71

If an agent competes with the principal without the principal's permission,the principal may recover profits made by the agent.

Question 72

Undisclosed self-dealing by an agent is not regarded as a violation of the duty of loyalty.

Question 73

Dual agency is permitted if all parties in a transaction agree to it.

Question 74

The duty of loyalty is a fiduciary duty owned by an agent not to act adversely to the interests of the principal.

Question 75

Unless otherwise agreed,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 76

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

Question 77

A principal can authorize an independent contractor to enter into contracts.

Question 78

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.What important agent's duty has Warren failed to perform?

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

Question 79

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 80

An agent does not owe a duty to notify the principal of important information he learns concerning the agency.