Question 1

If an agent is discovered to be representing conflicting interests,she has violated her duty of loyalty.

Accepted Answer

According to the duty of loyalty that agents owe to their principals, they must not represent conflicting interests without the principal's consent. If an agent is found to have violated this duty, they may be held liable for any damages caused to the principal.

Question 2

Agents have a fiduciary duty to their principals.

Accepted Answer

Agents have a legal obligation to act in the best interests of their principals and maintain loyalty, confidentiality, and accountability. This is known as a fiduciary duty.

Question 3

An agent has a duty to notify his principal of all facts relevant to the purpose of the agency.

Accepted Answer

This duty is known as the duty of disclosure or duty of loyalty, and it is a fundamental duty of the agent to keep the principal informed of all relevant information that may impact or affect the principal's interests. Failure to fulfill this duty can lead to legal consequences or termination of the agency relationship.

Question 4

Fiduciary duties apply to principals;agents have only non-fiduciary duties.

Accepted Answer

This statement is incorrect. Both principals and agents have fiduciary duties towards each other. The extent of these duties will depend on the specific agency relationship and the applicable laws and regulations.

Question 5

Principals only duty to agents is to compensate.

Accepted Answer

The principal-agent relationship involves the principal owing several duties to the agent, including but not limited to: providing a safe working environment, maintaining honest communication, and ensuring the agent is provided with necessary information and resources to perform their job effectively. Compensation is just one aspect of the relationship.

Question 6

In Town Center Shopping Center v.Premier Mortgage,a manager of a mortgage company was held to have apparent authority when she entered into a lease for office space,even though she did not have authority to commit her company to that.

Accepted Answer

The statement is true. The court decided that the manager had apparent authority based on her position and actions, which led the property owner to reasonably believe that she had the authority to enter into the lease on behalf of her company.

Question 7

If an agency relationship did not establish a rate of compensation for the duties of the agent,the principal must pay the "customary" rate for such services.

Accepted Answer

If there is no agreed upon rate of compensation, the customary rate for such services will be paid by the principal.

Question 8

Principals may be bound by the unauthorized acts of agents if the agent appears to third parties to have the authority to act.

Accepted Answer

This is known as the principle of apparent authority, where a principal is held responsible for the actions of an agent who appears to have authority to act on their behalf, even if the agent does not actually have such authority.

Question 9

Legal obligations in an agency run from agent to principal,not principal to agent.

Accepted Answer

In an agency relationship, legal obligations run both from the agent to the principal and from the principal to the agent, including duties such as loyalty, care, and obedience from the agent, and duties such as compensation, reimbursement, and indemnification from the principal.

Question 10

Agents have no obligation to engage in activity on behalf of principals that could lead to personal liability.

Accepted Answer

Agents are not required to perform any activity that could expose them to personal liability. They are expected to act in good faith and represent the interests of their principals, but they cannot be forced to undertake actions that carry substantial risk to themselves.

Question 11

An agent is expected to perform responsibilities with the degree of care that is called ordinary care under the circumstances.

Accepted Answer

The answer of An agent is expected to perform responsibilities...

Question 12

A major duty of principals to their agents is to indemnify them under most circumstances for liabilities incurred in completing the purpose of the agency.

Accepted Answer

Principals have a duty to indemnify their agents for liabilities incurred while completing the purpose of the agency, unless the agent acted outside the scope of their authority or committed a wrongful act.

Question 13

In Town Center Shopping Center v.Premier Mortgage,a lease for office space,made by a manager of a mortgage company,was negated by the courts because the leasing company should have known that a person in the position of the manager would not have such authority.

Accepted Answer

The lease was not negated by the courts because of the manager's lack of authority, but rather because the manager did not have the actual or apparent authority to bind the mortgage company to the lease.

Question 14

Principals have an obligation to reimburse their agents for their normal business expenses related to the agency,unless otherwise agreed.

Accepted Answer

This is a standard practice in agency relationships as agents are expected to incur certain expenses in the performance of their duties on behalf of the principal. However, this obligation may be subject to certain limitations or conditions as agreed upon between the parties.

Question 15

If money is commingled (funds of agent mixed with funds of the principal),a violation of duty to account occurs only if the principal can show actual harm.

Accepted Answer

Commingling of funds is considered a violation of duty to account, regardless of whether actual harm can be shown by the principal. This is because it creates a potential risk of harm or loss to the principal's funds.

Question 16

In Town Center Shopping Center v.Premier Mortgage,a lease for office space,made by a manager of a mortgage company,was negated by the courts because the manager did not have authority to commit her company to that.

Accepted Answer

The answer of In Town Center Shopping Center v.Premier Mortgage,a...

Question 17

In her relations with her principal,an agent must meet the "ordinary standard of conduct" imposed on people engaged in business dealings.

Accepted Answer

The answer of In her relations with her principal,an agent...

Question 18

Principals are presumed at common law to have no duties to their agents.

Accepted Answer

Principals do have duties to their agents at common law, such as the duty to indemnify and the duty to provide reasonable support and assistance.

Question 19

Principals are presumed to have a duty to cooperate with their agents.

Accepted Answer

The duty to cooperate with agents is a common law duty of principals.

Question 20

Agents have a duty of obedience to their principals,which means that if the agent ignores the principal's instructions,she violates her duty.

Accepted Answer

Agents are bound by a duty of obedience to their principals, which means that they must follow their principal's instructions and act in their best interests. Violating this duty can result in legal consequences for the agent.

Quiz 14: Agency and the Employment Relationship