Question 1

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

Accepted Answer

An accounting is a detailed statement of the financial transactions and is often used to resolve disputes over amounts owed, such as commissions in this case.

Question 2

Orina hires Padget, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Padget is

Accepted Answer

Padget is no longer Orina's agent since the house was destroyed before being sold. The agency relationship between the two parties is terminated in case the subject matter of the agency is lost or destroyed.

Question 3

Refer to Fact Pattern 17-1. With respect to third parties, Nadya is Purified's

Accepted Answer

Nadya is likely considered both an employee and an agent of Purified, as employees typically act as agents for their employers in business dealings with third parties.

Question 4

Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied

Accepted Answer

Implied authority can arise by custom, meaning that if it is customary for someone in Geoff's position to have certain powers, those powers can be implied.

Question 5

Churchy hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to increase considerably. The agency agreement is likely

Accepted Answer

The answer of Churchy hires Danielle, a real estate broker,...

Question 6

Roberta introduces Steve to her friends as "my associate." Steve purports to act as Roberta's agent in several business transactions with those friends. If Roberta is liable for Steve's actions, it will be because their relationship is

Accepted Answer

Roberta's introduction of Steve as "my associate" to her friends could lead them to reasonably believe that Steve has the authority to act on her behalf, making her liable for his actions under the principle of agency by estoppel. This occurs when a principal's behavior causes a third party to believe that an agent has authority, even if no formal agreement exists.

Question 7

Kelvin is an agent for Lookout Mountain Accountants, Inc. On Lookout's behalf and at its request, Kelvin pays Nerdlinger for custom software designed for the management of Lookout's services. Kelvin's right to obtain the amount of those payments from Lookout arises under the principal's duty of

Accepted Answer

The right of an agent to obtain the amount of payments made on behalf of the principal arises under the principal's duty of reimbursement, which refers to the principal's obligation to compensate the agent for the expenses incurred on the principal's behalf.

Question 8

Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred

Accepted Answer

If Mirena's conduct occurred in the course and scope of her employment, then Netanya is likely to be liable for Orla's injuries. This means that Mirena was acting within the scope of her job and carrying out duties assigned to her by Netanya at the time of the injury. It does not matter whether the conduct was intentional or negligent.

Question 9

Reynaldo is a delivery driver for Southeast Asian Noodle Company. Reynaldo follows detailed instructions of the company in carrying out his work. Reynaldo is

Accepted Answer

Reynaldo is an employee because he follows detailed instructions from the company, indicating control over how he performs his work, which is characteristic of an employer-employee relationship.

Question 10

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

Accepted Answer

The key factor in determining whether someone is an employee or an independent contractor is the degree of control the employer has over the details of the work. If Baked Bread controls how Connie performs her work, she is likely an employee.

Question 11

Spicy Hot Dog Vendors, Inc., grants its agent Teona an exclusive territory in which to sell Spicy Hot Dog products. Spicy Hot Dog cannot compete with Teona in that territory under the principal's duty of

Accepted Answer

The principal's duty of cooperation requires that the principal not compete with the agent within the agent's exclusive territory, allowing the agent to effectively perform their duties.

Question 12

Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between

Accepted Answer

This relationship describes the relationship between a principal and an agent, where Jim is the agent and Kit is the principal who controls their actions.

Question 13

Emmett, an agent for Fridley, signs an agreement with Grover on Fridley's behalf but neglects to tell Fridley that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. Fridley is

Accepted Answer

In agency law, the principle of imputed knowledge applies, meaning that notice to an agent is considered notice to the principal. Therefore, Fridley is liable because Emmett, as Fridley's agent, had knowledge of the tax requirement.

Question 14

Quince owns a used-car lot where Ray works as a salesperson. Quince tells Ray not to make any warranties for the cars. To make a sale to Sylvia, however, Ray adds a 50,000-mile warranty. Later, Sylvia sues Quince for breach of warranty. Quince's right to hold Ray liable for any damages arises from the following

Accepted Answer

Ray acted outside the scope of his authority by making an unauthorized warranty, which gives Quince the right to hold Ray liable for any resulting damages.

Question 15

Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf. In this relationship, Jewelry & Coin is

Accepted Answer

The answer of Jewelry & Coin Company hires Kelly Ann...

Question 16

Refer to Fact Pattern 17-1. With respect to third parties, Owen is Purified's​

Accepted Answer

The answer of Refer to Fact Pattern 17-1. With respect...

Question 17

Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on

Accepted Answer

The power given to Nathalie will terminate upon Miklos's death or incapacity, which is a common provision in power of attorney documents. The other options do not typically serve as termination events in a power of attorney agreement.

Question 18

Dimitri, a certified public accountant and an investor, and Elinor, an insurance salesperson and a realtor, may create an agency relationship for

Accepted Answer

An agency relationship can be created for any legal purpose, as long as it is not illegal or against public policy.

Question 19

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

Accepted Answer

Poppy has apparent authority, meaning that based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf, even though she does not actually have the authority.

Question 20

John contracts with Kelly to buy a certain number of cattle for Kelly's Circle K ranch. John makes a deal with Lawson, the owner of a local herd, and makes a down payment. Kelly fails to pay the rest of the price. Lawson sues John for breach of contract. John's right to hold Kelly liable for any damages that he has to pay is the right of

Accepted Answer

Indemnification is the right to hold someone else (in this case, Kelly) liable for any damages that may arise from a breach of contract, such as the damages that John may have to pay to Lawson. It allows John to recover the amount he paid to Lawson from Kelly, who failed to pay the agreed-upon price.

Quiz 17: Agency Relationships in Business