Question 1

Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a contract on her behalf on Tuesday. Largo has breached​

Accepted Answer

Largo has breached the duty of obedience as he did not follow MaryElise's explicit instructions to only enter into contracts on Mondays, Wednesdays or Fridays.

Question 2

Roman is the chief executive officer of Salty Snax Corporation. Roman's responsibilities include decisions on product development, marketing, and other significant business directions. Roman is subject to the approval and oversight of Salty Snax's board of directors. Teri is a Salty Snax manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Umberto is a Salty Snax salesperson, whose daily activities are controlled by Teri. Velma writes sales manuals and promotional materials for Salty Snax's products according to Roman's instructions and subject to Salty Snax's control, but has no dealings with the company's customers or suppliers. Warren writes copy on a contract-per-project basis and is not otherwise subject to Salty Snax's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?

Accepted Answer

The answer of Roman is the chief executive officer of...

Question 3

Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales's right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of​

Accepted Answer

The right of avoidance allows a principal, in this case, Insurance Sales Corporation, to refuse to perform a contract entered into by its agent, Jeremy, if he breaches their agency agreement. This right is exercised to avoid the obligations of a contract that was entered into by an agent who was not acting within the scope of their authority or who violated the terms of the agency agreement.

Question 4

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

Accepted Answer

A principal has a duty of cooperation with its agent, which includes refraining from competing with the agent in their exclusive territory. The other options listed (compensation, indemnification, and reimbursement) are not directly related to this duty.

Question 5

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

Accepted Answer

An agent's knowledge is imputed to the principal, so notice to Emmett is considered notice to Fridley.

Question 6

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

Accepted Answer

Quince has the right of indemnification, which means Ron is responsible for compensating or reimbursing Quince for any damages or losses resulting from Ron's breach of Quince's instructions. Indemnification allows Quince to shift the burden of liability from himself to Ron.

Question 7

Business Travelers Hotel Corporation hires Conrad, a real estate agent, to locate hotel properties for the company. Conrad learns of a hotel available for $3.2 million, informs Business Travelers, and makes an offer of $2.9 million on Business Travelers's instruction. The offer is rejected. Conrad​

Accepted Answer

Conrad followed the instructions of Business Travelers Hotel Corporation by making an offer on the property as directed, which demonstrates compliance with his duties as an agent to act on behalf of and for the benefit of the principal.

Question 8

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

Accepted Answer

Kevin's right to obtain the amount of payments made on Lookout Mountain's behalf arises under the principal's duty of reimbursement, which requires the principal to indemnify the agent for any expenses incurred within the scope of the agency relationship. Choice A (compensation) is incorrect because it relates to the payment of compensation to the agent for services rendered, whereas the question pertains to reimbursement for expenses incurred. Choice B (cooperation) is incorrect because it does not apply to the payment or reimbursement of expenses. Choice C (indemnification) is also incorrect because it pertains to the principal's duty to protect the agent from any losses suffered as a result of performance of the agency relationship.

Question 9

Global Games Corporation employs Heidi as an agent. Global Games gives Heidi an exclusive territory in which to sell its products. Global Games cannot compete with Heidi in that territory under the duty of​

Accepted Answer

The duty that prohibits Global Games Corporation from competing with Heidi in the exclusive territory is known as the duty of cooperation. This duty requires the principal to assist and cooperate with the agent in the performance of the agency relationship.

Question 10

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. Vladimir may demand​

Accepted Answer

An accounting is the correct choice because it would involve a detailed record of all sales made by Vladimir and the commission amounts to which he is entitled. This would help to resolve the dispute in a fair and reasonable manner. A constructive trust, specific performance, or nothing are not appropriate remedies for a commission dispute.

Question 11

Desmond agrees to act as Evie's agent in settlement negotiations with Fawlty Investment Company. Desmond works out a profitable compromise for Evie, but deposits the company's payment in his own account and refuses to give it to Evie. She files a suit against Desmond. What remedies might the court impose?

Accepted Answer

The answer of Desmond agrees to act as Evie's agent...

Question 12

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 liable for any damages or losses incurred by the party who is being sued. In this case, John has a right to hold Kelly liable for any damages he may have to pay to Lawson due to Kelly's breach of contract.

Quiz 32: Agency Formation and Duties

Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a contract on her behalf on Tuesday. Largo has breached​

Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales's right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of​

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

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

Global Games Corporation employs Heidi as an agent. Global Games gives Heidi an exclusive territory in which to sell its products. Global Games cannot compete with Heidi in that territory under the duty of​

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. Vladimir may demand​

Largo is an agent for MaryElise. MaryElise gives Largo clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. Largo enters into a contract on her behalf on Tuesday. Largo has breached

Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales's right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of

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

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

Global Games Corporation employs Heidi as an agent. Global Games gives Heidi an exclusive territory in which to sell its products. Global Games cannot compete with Heidi in that territory under the duty of

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. Vladimir may demand