Deck 32: B: Agency Formation and Duties

Question 1

Agency relationships exist only within employment relationships.

Answer 1

False

Question 2

An agent is authorized to act on behalf of a principal in doing business with third parties.

Answer 2

True

Question 3

Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.

Answer 3

True

Question 4

A person must have contractual capacity to be an agent.

Question 5

When an agent fails to perform his or her duties,liability for breach of contract may result.

Question 6

Independent contractors have no control over the details of their work performance.

Question 7

A principal owes his or her agent a duty to act in good faith.

Question 8

When the principal-agent relationship is not contractual,the agent has no right to specific performance.

Question 9

A principal owes an agent a duty of estoppel.

Question 10

Agency relationships normally are consensual.

Question 11

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

Question 12

An agent's deviation from the lawful,clearly stated instructions of the principal is a violation of the duty of obedience.

Question 13

Normally,all employees who deal with third parties are deemed to be agents.

Question 14

A principal does not have the right to control an agent's conduct in matters entrusted to the agent.

Question 15

A person cannot be both an independent contractor and an agent.

Question 16

Employment laws do not apply to independent contractors.

Question 17

When an agency relationship is gratuitous,the agent does not act in exchange for payment.

Question 18

An agreement to form an agency relationship can be oral.

Question 19

An employee may not act in the capacity of an agent.

Question 20

Acts of a purported agent in and of themselves can create an agency by estoppel.

Question 21

Pam is an agent for Refined Chemicals Corporation.Refined Chemicals owes Pam the duty of

A)accounting.
B)obedience.
C)performance.
D)safe working conditions.

Question 22

Home Development Company employs llya to buy property for a future residential development.Ilya secretly buys some of the property and sells it to Home Development at a profit.Ilya has breached

A)no duty.
B)the duty of accounting.
C)the duty of loyalty.
D)the duty of notification.

Question 23

Sela agrees to act on Thom's behalf,subject to Thom's control,and Thom trusts Sela to so act.They set out the terms in a written document,which they both sign.This is

A)an agency by agreement.
B)an agency by estoppel.
C)an agency by ratification.
D)not the creation of an agency relationship.

Question 24

Miracle Motors employs Norris as a sales agent for a trial period.At the end of the period,Miracle Motors and Norris disagree on the amount of the commissions Norris is due for sales that he made.Norris may demand

A)a constructive trust.
B)an accounting.
C)nothing.
D)specific performance.

Question 25

Clearview 3D HD TV Company grants its agent Blossom an exclusive terri?tory in which to sell Clearview products.Clearview cannot compete with Blossom in that territory under the principal's duty of

A)avoidance.
B)cooperation.
C)indemnification.
D)reimbursement.

Question 26

Glen is an agent for Hi-Flite,Inc.On Hi-Flite's behalf and at its request,Glen pays Ian for certain plane maintenance and repair serv?ices.Glen's right to obtain the amount of those payments from Hi-Flite arises under the principal's duty of

A)avoidance.
B)cooperation.
C)indemnification.
D)reimbursement.

Question 27

Fact Pattern 32-1A
Janet and Julie work at ABC Interiors.Janet is a designer who works with cli?ents of ABC on interior design projects.ABC closely supervises all of its design?ers,and dictates their work schedules.Julie works part-time in the evenings cleaning the offices.
Refer to Fact Pattern 32-1A.Janet is ABC's

A)employee,agent,and independent contractor.
B)employee and agent.
C)employee but not agent.
D)independent contractor.

Question 28

Teresa owns a used-car lot where Salvatore works as a salesperson.Teresa tells Salvatore not to make any warranties for the cars.To make a sale to Rosa,however,Salvatore adds a 50,000-mile warranty.Later,Rosa sues Teresa for breach of warranty.Teresa's right to hold Salvatore liable for any damages she has to pay is the right of

A)avoidance.
B)cooperation.
C)indemnification.
D)reimbursement.

Question 29

Fact Pattern 32-1A
Janet and Julie work at ABC Interiors.Janet is a designer who works with cli?ents of ABC on interior design projects.ABC closely supervises all of its design?ers,and dictates their work schedules.Julie works part-time in the evenings cleaning the offices.
Refer to Fact Pattern 32-1A.Julie is ABC's

A)agent but not employee.
B)employee and agent.
C)employee or independent contractor,depending on whether ABC controls the details of her physical performance.
D)independent contractor.

Question 30

Calvin is a minor.In most states,Calvin may be

A)an agent but not a principal.
B)an agent or a principal.
C)a principal but not an agent.
D)neither an agent nor a principal.

Question 31

Mackenzie,an agent for Lindsay,signs an agreement with Kirk on Lindsay's behalf but ne?glects to tell her that the agreement requires the payment of a certain tax.The government prosecutes Lindsay for failing to pay the tax.She is

A)liable,because notice to Mackenzie is notice to Lindsay.
B)liable,because notice to Kirk is notice to Lindsay.
C)not liable,because Mackenzie did not tell Lindsay about the tax.
D)not liable,because Kirk did not tell Lindsay about the tax.

Question 32

Delicious Coffee Company hires Elton to sell Delicious's products in a certain area.Delicious agrees to pay Elton a salary,plus commission,for a trial period.They also agree that Elton can sell using any methods and during any hours that seem appropriate.The key factor in whether Elton is Delicious's employee is

A)the amount of Elton's salary.
B)the control Delicious has over the details of the work.
C)the length of the trial period.
D)the title that designates Elton's position.

Question 33

Ozzy is an officer of Prudent Financial Corporation.Ozzy serves in a representative capacity for Prudent Financial's owners.With respect to binding Prudent Financial to contracts,Ozzy is

A)an agent and has the authority.
B)an agent but does not have the authority.
C)not an agent and does not have the authority.
D)not an agent but does have the authority.

Question 34

Louis,a certified public accountant and an investor,and Maria,an in?surance salesperson and a realtor,may create an agency relationship for

A)a business purpose only.
B)a legal purpose only.
C)any purpose.
D)no purpose.

Question 35

Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob in?stalls for half the store's price.Bob keeps the money.Bob has breached

A)no duty.
B)the duty of loyalty.
C)the duty of notification.
D)the duty of obedience.

Question 36

Jill introduces Kelly to her friends as "my associate." Kelly purports to act as Jill's agent in several business transactions with those friends.If Jill is liable for Kelly's actions,it will be under

A)the doctrine of estoppel.
B)the equal dignity rule.
C)the fiduciary principle.
D)the good faith statute.

Question 37

Diego is a truck driver for Entertainment Supplies Company (ESC).Diego does exactly what ESC tells him.Diego is

A)an employee.
B)an employer.
C)an independent contractor.
D)a principal.

Question 38

Rangle contracts with Siena to buy a certain horse for her.Rangle makes a deal with Timberline Stables,the owner of the horse,and makes a down payment.Siena fails to pay the rest of the price.Timberline sues Rangle for breach of contract.His right to hold Siena liable for any damages that he has to pay is the right of

A)avoidance.
B)cooperation.
C)indemnification.
D)reimbursement.

Question 39

Tri-state Financial Corporation hires Uri,a real estate agent,to locate investment properties for Tri-state.Uri learns of a warehouse available for $100,000,informs Tri-state,and makes an offer of $90,000 on Tri-state's instruction.The offer is rejected.Uri

A)breached the agent's fiduciary duties to the principal.
B)did nothing wrong.
C)failed to take advantage of a business opportunity.
D)made an unreasonable offer based on current market value.

Question 40

Genetic Seed Company hires Howie to work on Genetic's shipping dock,accepting deliveries and dealing with other companies' drivers.With respect to Genetic,Howie is most likely

A)an agent.
B)an independent contractor.
C)a principal.
D)a work for hire.

Question 41

Ella agrees to act as Fab's agent in settlement negotiations with Global In?surance Company.Ella works out a profitable compromise for Fab,but deposits the company's payment in her own account and refuses to give it to Fab.Fab files a suit against Ella.What remedies might the court impose?

Question 42

Arnold is the chief executive officer of Beta Corporation.Arnold's re?sponsibilities include decisions on product development,marketing,and other significant business directions.Arnold is subject to the approval and oversight of Beta's board of directors.Carol is a Beta manager whose duties include the firm's day-to-day hiring,firing,purchasing,and sell?ing.Dave is a Beta salesperson,whose daily activities are con?trolled by Carol.Erin writes technical manuals for Beta products ac?cording to Arnold's instructions and subject to Beta's control,but has no dealings with Beta custom?ers or sup?pliers.Fred edits the manuals on a contract-per-manual basis and is not otherwise subject to Beta's control.Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?