Deck 37: Agency Formation, Categories, and Authority

Question 1

Agency is a legal relationship in which the parties agree that one party will act as an agent for another party, called the principal, subject to the control of the principal.

Answer 1

True

Question 2

Much of agency law exists on the state statutory level and is based on the Restatement (Second) of Agency.

Answer 2

False

Question 3

In addition to consent, the parties must have an understanding that the agent is in control of the agency relationship.

Answer 3

False

Question 4

Agency is described as a fiduciary relationship that results when a principal manifests consent to an agent to act on the principal's behalf subject to the principal's control.

Question 5

Agents are classified into one of three broad categories: (1) employee agents, (2) independent contractors, or (3) gratuitous agents.

Question 6

An agent classified as an independent contractor is considered an employee and has no legal protections of employees such as minimum wage and overtime compensation laws.

Question 7

Courts look to state common law and statutes for guidance in determining independent contractor status.

Question 8

Because so many questions regarding agency status occur in an employment tax context the Internal Revenue Service (IRS) has devised a five-prong test to determine an agent's status.

Question 9

Only an agent may end the agency through termination simply by communicating the desire to terminate the relationship.

Question 10

One who agrees to act and is authorized to act on behalf of another, a principal, to legally bind the principal in particular business transactions with third parties pursuant to an agency relationship is the __________.

A) offeror
B) agent
C) actor
D) None of the choices are correct.

Question 11

The person from whom an agent has received instruction and authorization and to whose benefit the agent is expected to perform and make decisions pursuant to an agency relationship is called the __________.

A) offeror
B) principal
C) agent
D) offeree

Question 12

An agency transaction ends when the agency is terminated by the __________.

A) principal
B) agent
C) parties
D) None of the choices are correct.

Question 13

The Restatements define the creation of an agency relationship in terms of consent and __________.

A) control
B) acquiescence
C) notice
D) registration

Question 14

Agency is described as a __________ relationship that results when a principal manifests consent to an agent to act on the principal's behalf subject to the principal's control.

A) necessary
B) business
C) layperson
D) fiduciary

Question 15

To create an agency relationship, a/an __________ first must manifest some offer to form an agency.

A) attorney
B) agent
C) principal
D) party

Question 16

__________ occurs when an agent agrees to act for the principal.

A) Consent
B) Charge
C) Calamity
D) None of the choices are correct.

Question 17

The parties must have an understanding that the __________ is in control of the agency relationship.

A) borrower
B) lender
C) principal
D) offeror

Question 18

A __________ of states have a statutory equal dignity rule that sets out formalities for certain principal-agent transactions.

A) few
B) minority
C) majority
D) None of the choices are correct.

Question 19

Agents who act on behalf of a principal without receiving any compensation are called __________ agents.

A) secret
B) spy
C) free
D) gratuitous

Question 20

Agents are classified into one of __________ broad categories.

A) two
B) three
C) four
D) five

Question 21

Individual employees who are authorized to transact business on behalf of the employer/principal are called __________ agents.

A) marked
B) free
C) overworked
D) employee

Question 22

Courts look to state __________ law and statutes for guidance in determining independent contractor status.

A) primary
B) secondary
C) special
D) common

Question 23

Many states have adopted the __________ test in their agency law as a standard for determining agency status.

A) ABC
B) CBD
C) HGH
D) XYZ

Question 24

Statutes that set out the ABC factors typically create a presumption that the agent is an employee unless __________ tests are satisfied.

A) two
B) three
C) four
D) six

Question 25

In Avanti Press v. Employment Department Tax Section, 274 P. 3d 190 (Or. Ct. App. 2012), the Oregon Court of Appeals:

A) affirmed the findings of the ALJ and ruled in favor of Avanti
B) reversed the findings of the ALJ and ruled in favor of Avanti
C) overruled the findings of the ALJ and ruled in favor of Avanti
D) None of the choices are correct.

Question 26

What company agreed to settle a class action lawsuit by paying approximately $100 million to roughly 385,000 drivers where drivers were claiming that they were actually employees under the California Labor Code and they should receive worker protections and benefits under California law?

A) CabbiesRUs
B) Lyft
C) United Taxi
D) Uber

Question 27

What agency created a three-prong test to determine an agent's status?

A) IRS
B) FTC
C) DOL
D) DOJ

Question 28

The consequences of a business owner or manager misclassifying an employee may be __________.

A) detrimental
B) material
C) severe
D) nominal

Question 29

Tom has been injured on the job, so his employer hires Harry to fill in for him. The agreement with Harry is that he will work until Tom is ready to return. When Tom is indeed ready to return, Harry's position is terminated by an express act defined as __________.

A) expiration
B) offering up
C) quitting
D) trumping

Question 30

Termination is an important issue for business owners and managers because termination of the agency relationship also terminates the principal's duties and obligations to the agent and to __________.

A) other principals
B) other agents
C) third parties
D) potential parties

Question 31

Termination by the principal is known as __________.

A) negligence
B) revocation
C) intentional
D) None of the choices are correct.

Question 32

When the agent initiates the termination, it is known as __________.

A) execution
B) discharge
C) revocation
D) renunciation

Question 33

More often than not, the parties in an agency relationship will have agreed to a fixed term for the representation. In that case, the agency relationship may be terminated by __________.

A) expiration
B) discharge
C) investigate
D) revocation

Question 34

At the local campus of Bowen University, the advisor is an employee agent of Bowen University who is authorized to conduct certain limited transactions (such as registering students) on Bowen University's behalf. The Registrar Director at Bowen University is also an employee agent, and her agency is likely wider in scope to include approval of financial aid and similar transactions. What would the maintenance worker who cleans the campus be classified as? Why?

Question 35

Mike calls Beth and asks her to referee a soccer game. Beth is not obligated to work the game. If she accepts the assignment and works the game, she is told the time of the game, she must wear an approved uniform, and she is paid a fee. Once on the field, she is in complete control. Beth would be considered what type of agent?