Question 1

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

Accepted Answer

A fiduciary duty is established when one party (the fiduciary) acts on behalf of another party (the principal) in a relationship of trust, confidence, and reliance. The correct answer, D, highlights the need for evidence of the plaintiff's reliance, trust, and vulnerability towards the defendant, which are key elements in establishing that a fiduciary duty exists.

Question 2

Although he had no actual or implied authority to do so,while the owner of Acta Investments was away,her long-time executive assistant entered into a one-year lease contract with a photocopier company.As it turns out,the contract is very favourable to Acta.In which situation would Acta be unable to ratify the lease contract by its "agent"?

Accepted Answer

Ratification must occur within a reasonable time frame. If Acta fails to act within this period, it cannot later ratify the contract.

Question 3

Are principal's vicariously liable for torts committed by their agents?

Accepted Answer

Principals are vicariously liable for torts committed by their agents if the agents are acting within the scope of their authority.

Question 4

Although he was not really an agent and had no authority to do so,Gordon thought his employer would be delighted when he purchased a truck "on behalf of" his employer.Although the price was very reasonable,his employer now refuses to ratify the contract.Which statement best describes the parties' liability under the contract?

Accepted Answer

Since Gordon acted without authority and his employer refuses to ratify the contract, Gordon is personally liable for the contract. The employer is not bound because they did not authorize the transaction nor did they agree to ratify it after the fact.

Question 5

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?

Accepted Answer

Phillip's acceptance of the $1500 and his signing of the receipt after the fact indicate agency by ratification. This means Phillip retroactively approved Marta's unauthorized action by accepting the benefits of the sale.

Question 6

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

Accepted Answer

The answer of Which of the following is considered,as a...

Question 7

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

Accepted Answer

Agency by estoppel occurs when the principal's actions lead a third party to reasonably believe that an agency relationship exists, even if it has not been formally established. This is confirmed by the principal's actions or circumstances that make it appear to outsiders that an agency relationship is in place, rather than by formal agreements or the necessity of acting without authority.

Question 8

Karim's agent,Monica,was instructed to negotiate a contract to buy a new delivery truck for Karim's courier business but not to disclose Karim's identity,other than to indicate she is acting for 'an undisclosed buyer'.Which statement best describes this situation?

Accepted Answer

In this situation, Monica is acting as an agent for Karim, who is the principal. When an agent enters into a contract on behalf of a disclosed principal, the principal is bound by the contract, not the agent. Since Monica is negotiating on behalf of Karim without disclosing his identity, Karim, as the undisclosed principal, will be bound by the contract.

Question 9

What are the duties required of an agent?

Accepted Answer

An agent is required to abide by the terms of the agency agreement, which outlines the duties and responsibilities of the agent towards the principal.

Question 10

Which of the following is a duty owed by a principal in an agency relationship?

Accepted Answer

A principal has a duty to reimburse the agent for any out-of-pocket expenses incurred while acting on the principal's behalf. This is part of the financial obligations principals have towards their agents in an agency relationship.

Question 11

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

Accepted Answer

Damages for breach of fiduciary duty can encompass contract, tort, and equitable remedies, reflecting the multifaceted nature of such breaches. This includes compensatory damages (contract and tort) and equitable remedies like disgorgement of profits.

Question 12

Which statement best exemplifies the liability of an agent who acts without authority and contracts with a third party?

Accepted Answer

The agent who acts without authority and enters into a contract with a third party is liable to that third party for breach of warranty of authority. This means the agent implied they had the authority to act on behalf of the principal, and when it turns out they did not, they can be held responsible for misleading the third party.

Question 13

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.What would be the most likely outcome of any dispute challenging the existence of an agency relationship?

Accepted Answer

Estoppel prevents a principal from denying the existence of an agency relationship when the principal's conduct reasonably led the third party to believe that an agency relationship existed.

Question 14

Dora is an investment advisor who is also part owner of a new business.Without disclosing her ownership,Dora has recommended that clients purchase shares in her new business.Which of the following wrongs has Dora likely committed?

Accepted Answer

Dora has likely committed a breach of fiduciary duty by not disclosing her ownership in the business she is recommending to her clients. As an investment advisor, she has a fiduciary duty to act in her clients' best interests, which includes disclosing any potential conflicts of interest.

Question 15

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

Accepted Answer

A court would likely deny the third party's claim based on the principal's stated limitation of authority, which was communicated in the cover letter, limiting Kuan's authority to transactions under $33,000.

Question 16

Which statement best describes fiduciary relationships?

Accepted Answer

Fiduciary relationships are characterized by a high level of trust and responsibility, where one party (the fiduciary) acts in the best interest of another (the principal). Agents, by definition, act on behalf of another person or entity, often making them fiduciaries because they must prioritize their principal's interests above their own. Not all fiduciaries are agents, employees, or vice versa, making option B the most accurate description.

Question 17

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

Accepted Answer

An insurance agent has a fiduciary duty to their client, which includes the responsibility to communicate important information about coverage availability. Failing to advise a client that a requested form of coverage is unavailable could be seen as a failure to fulfill this duty, leading to a breach of fiduciary duty.

Question 18

What constrains a lawyer's ability to place herself in a position where her own interests conflict with the interests of the principal?

Accepted Answer

The correct answer is D) a conflict rule. This rule is designed to prevent lawyers from placing themselves in situations where their personal interests might conflict with the interests of their clients, ensuring that the lawyer's loyalty to the client remains undivided and that the integrity of the legal profession is maintained.

Question 19

From which of the following does a third party typically derive an agent's ostensible authority?

Accepted Answer

Ostensible authority arises when a principal's conduct leads a third party to reasonably believe that an agent has the authority to act on the principal's behalf.

Question 20

Connect Industries manufactures electrical components and conducts its sales through its agent who finds customers and enters into sales agreements on Connect's behalf.Which statement best describes the relationship between Connect Industries and its agent?

Accepted Answer

The agent is in a fiduciary relationship with Connect Industries, which means they owe a duty of loyalty to Connect Industries and cannot secretly act for other electrical component manufacturers while working for them. This is to prevent conflicts of interest and ensure the agent acts in the best interest of Connect Industries.

Quiz 13: The Agency Relationship