Question 1

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 he has to pay is the right of

Accepted Answer

Indemnification is the right to be compensated by another party for losses or damages suffered as a result of their actions. In this case, if Sylvia sues Quince and wins, Quince can hold Ray liable and seek indemnification from him to cover the damages. Choice A, avoidance, refers to the right to cancel a contract due to a breach by the other party. Choice B, cooperation, is not relevant in this situation as it does not address the legal right to hold someone liable for damages. Choice D, reimbursement, is similar to indemnification but usually refers to the act of repaying someone who has already covered the costs, rather than compensating them for losses.

Question 2

Dakota Energy Company employs Evan to negotiate the purchase of mineral rights for future mining projects.Evan secretly buys some of the property and sells it to Dakota at a profit.Evan has breached

Accepted Answer

Evan breached the agent's duty of loyalty by secretly buying and selling the property for his own profit without disclosing it to Dakota, his principal.

Question 3

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

The answer of Spicy Wonder Hot Dog Vendors,Inc.,grants its agent...

Question 4

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

Accepted Answer

The key factor in determining whether Ike is an employee of HomeBaked Bread Company is the level of control that the company exerts over the details of Ike's work. This includes factors such as the methods and hours during which Ike can sell the company's bread products. If HomeBaked Bread has significant control over these details, then it is more likely that Ike would be considered an employee rather than an independent contractor.

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

Emmett is an agent for Fridley, so notice to Emmett is notice to Fridley.

Question 6

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 another party liable for damages that the first party is required to pay due to a breach of contract. In this case, John made a contract with Kelly to buy a certain number of cattle, but Kelly failed to pay the rest of the price. When Lawson sues John for breach of contract, John has the right to hold Kelly liable for any damages that he has to pay, which is an example of indemnification.

Question 7

Limon,an agent for Mindwonder Games LLC,executes an unauthorized contract with NOW Marketing,Inc.The deal is highly advantageous to Mindwonder,and the company ratifies the contract.The contract is

Accepted Answer

The answer of Limon,an agent for Mindwonder Games LLC,executes an...

Question 8

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

Vladimir may demand an accounting, which means that Watercraft must provide a detailed record of all sales made by Vladimir and the commissions he is owed. This will help clarify any discrepancies and ensure Vladimir is paid the correct amount for his sales.  A constructive trust and specific performance are not appropriate remedies in this situation, and there is no indication that Vladimir has waived his right to demand payment. Choosing "nothing" would not address the issue at hand and potentially harm Vladimir's financial interests.

Question 9

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 often be established through custom or past practice, where it is understood that the representative has the power to act on behalf of the principal in certain situations.

Question 10

Alexandra manages a Beans Bistro for Coffee Shops,Inc.To manage the business,Alexandra's authority can be inferred

Accepted Answer

Alexandra's authority can be inferred from the position she occupies as the manager of the Beans Bistro. As the manager, Alexandra is given certain responsibilities and authority to make decisions related to the business.

Question 11

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

Kelvin has made payments on behalf of Lookout Mountain Accountants and has a right to obtain reimbursement from Lookout. This arises under the principal's duty of reimbursement, which requires the principal to reimburse the agent for any authorized payments made on the principal's behalf.

Question 12

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

Apparent authority is the authority that someone appears to have based on the actions of the principal, even if that person does not actually have express or implied authority. In this scenario, Nan's conduct has created the appearance that Poppy has the authority to act on her behalf, and Odel has reasonably relied on those actions. Therefore, Poppy has apparent authority in this situation.

Question 13

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

The relationship described is that of a principal and an agent, with Kit being the principal and Jim being the agent. The principal-agent relationship is where one person (the principal) gives another person (the agent) the authority to act on their behalf, subject to their control and trust.

Question 14

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. However, it cannot be created for an illegal purpose.

Question 15

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 16

Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and duties of both parties.This is

Accepted Answer

Express authority is the authority that is explicitly given by the principal to the agent in writing or verbally. In this scenario, the written agreement between Cory and Daily Delivery Agency specifically outlines the rights and responsibilities of both parties, which identifies the express authority given to the agency by Cory.

Question 17

Rondi holds herself out as possessing special accounting skills.As an agent,she must exercise the degree of skill or care expected of

Accepted Answer

As Rondi holds herself out as possessing special accounting skills, she must exercise the degree of skill or care expected of a person having those skills.

Question 18

Mountain States Distribution Inc.hires Norris to work on Mountain States's shipping dock,accepting deliveries,dispatching trucks,and dealing with customers and other companies' drivers.With respect to Mountain States,Norris is most likely

Accepted Answer

Norris is working for Mountain States and has the authority to act on their behalf in certain matters (accepting deliveries, dispatching trucks, etc.) which makes him an agent of the company.

Question 19

Brenda,a salesperson at a Cabinets & Countertops store,tells D'Antoni,a customer,"Buy your cabinets here,and I'll install them for half of what the store would charge." D'Antoni buys the cabinets,which Brenda installs for half the store's price.Brenda keeps the money.Brenda has breached

Accepted Answer

Brenda, as a salesperson, owes a duty of loyalty to the store. By offering to install the cabinets for half the price without the store's knowledge or consent, Brenda was acting in her own interest rather than in the store's interest, thus breaching her duty of loyalty.

Question 20

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

Accepted Answer

The written document and the agreement between Jim and Joyce clearly establish the existence of an agency relationship where Jim will act on behalf of Joyce, subject to her control. This arrangement is based on their agreement and mutual understanding, making it an agency by agreement.

Quiz 26: Agency