Question 1

Fact Pattern 9-1
Nadine and Orin work at Pumps & Pipes Inc. Nadine is a sales representative who works with Pumps's customers, including contractors, government agencies, farmers, and others, as well as individual consumers. Pumps closely supervises all of its sales reps, and dictates their schedules. Orin is an engineer who works in Pumps's design department.
-Refer to Fact Pattern 9-1.With respect to third parties, Orin is Pumps's​

Accepted Answer

Orin is an employee because he works in the design department, but he is not an agent because he does not interact with third parties on behalf of Pumps & Pipes Inc.

Question 2

An agent's deviation from the lawful clearly stated instructions of the principal is a violation of the duty of obedience.

Accepted Answer

The duty of obedience requires an agent to follow the lawful instructions of the principal, and any deviation from those instructions without proper authority or justification would be a violation of that duty.

Question 3

High Plains Distribution Inc. hires Inez to work on its shipping dock, accepting deliveries, dispatching trucks, and dealing with customers and other companies' drivers. With respect to High Plains, Inez is most likely​

Accepted Answer

Inez is performing tasks for High Plains Distribution Inc. and dealing with customers and drivers on behalf of the company. This indicates that she is serving as an agent, acting on behalf of High Plains.

Question 4

Generally, the law assumes that the principal is aware of any information acquired by the agent that is relevant to the agency.

Accepted Answer

This is known as the doctrine of imputed knowledge, and it is a fundamental principle of agency law. Therefore, the principal is considered to be aware of any relevant information that the agent has obtained, even if the agent has not explicitly communicated it to them.

Question 5

Unless an agent does not act in exchange for payment, the principal must pay the agreed-on value for the agent's services.

Accepted Answer

According to the principle of agency, a principal is obligated to compensate an agent for their services, unless both parties have agreed to a different arrangement. Therefore, unless an agent is offering their services free of charge, the principal must pay the agreed-upon value for the work performed.

Question 6

Dewey is a corporate officer of Energy Corporation. Dewey serves in a representative capacity for the corporation's owners. With respect to binding the corporation to contracts, Dewey is​

Accepted Answer

Dewey is considered an agent of the corporation and has the authority to bind the corporation to contracts in his representative capacity as a corporate officer.

Question 7

An agent's duties to the principal are implied from the agency relationship only if the identity of the principal is disclosed to a third party.

Accepted Answer

An agent's duties to the principal are implied from the agency relationship whether or not the identity of the principal is disclosed to a third party.

Question 8

Under the law of agency, notice to the agent is notice to the principal.

Accepted Answer

Notice given to the agent, who is acting on behalf of the principal, is considered notice given to the principal themselves. This is one of the fundamental principles of agency law.

Question 9

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

Accepted Answer

An agency by estoppel is a concept in agency law where the principal's actions or words create an appearance of an agency relationship, even if no actual agency agreement exists between the principal and the purported agent.

Question 10

Ray is a delivery driver for Sicilian Pasta Company. Ray does exactly what the company tells him. Ray is​

Accepted Answer

Ray is following the instructions of Sicilian Pasta Company and is therefore considered an employee. The company has control over his work schedule, the methods he uses to complete his tasks, and the delivery vehicle he uses.

Question 11

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf.

Accepted Answer

This duty is known as fiduciary duty and is a fundamental responsibility of agents towards their principals.

Question 12

Anything that an agent obtains by virtue of the agency relationship is his or hers to keep.

Accepted Answer

Anything obtained by an agent while acting on behalf of the principal belongs to the principal, not the agent. The agent has a duty to act in the best interest of the principal and may not use their position for personal gain without the principal's consent.

Question 13

Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.

Accepted Answer

When a principal breaches their duty towards the agent, the agent has the right to seek normal contract and tort remedies, including damages, specific performance, and/or termination of the agency relationship.

Question 14

The agent has the right to be reimbursed and indemnified.

Accepted Answer

According to agency law, the agent has the right to be reimbursed for any expenses incurred while performing their duties and to be indemnified for any liabilities or losses suffered as a result of carrying out their duties on behalf of the principal.

Question 15

The agent has the right to a safe working environment.

Accepted Answer

All workers, including agents, have the right to a safe and healthy working environment. This is outlined in many labor laws and regulations.

Question 16

When the principal-agent relationship is not contractual, the agent has no right to specific performance.

Accepted Answer

Specific performance is a legal remedy that requires a party to fulfill their contractual obligations. When the principal-agent relationship is not contractual, there is no agreement that outlines specific duties and obligations, so the agent does not have a right to specific performance.

Question 17

An agent can represent two principals in the same transaction as long as neither of them knows about it.

Accepted Answer

It is unethical and illegal for an agent to represent two principals in the same transaction without disclosing it to both parties and obtaining their informed consent. This is known as dual agency and is prohibited in some states.

Question 18

A principal owes an agent a duty of estoppel.

Accepted Answer

The principal owes an agent a duty of indemnification, not estoppel. Estoppel is a legal principle that prevents someone from arguing against something they previously said or did, and it does not typically apply to principal-agent relationships.

Question 19

An agency relationship is enforceable even if it is created for a purpose that is contrary to public policy.

Accepted Answer

An agency relationship that is created for a purpose that is contrary to public policy is not enforceable.

Question 20

Fact Pattern 9-1
Nadine and Orin work at Pumps & Pipes Inc. Nadine is a sales representative who works with Pumps's customers, including contractors, government agencies, farmers, and others, as well as individual consumers. Pumps closely supervises all of its sales reps, and dictates their schedules. Orin is an engineer who works in Pumps's design department.
-Refer to Fact Pattern 9-1.With respect to third parties, Nadine is Pumps's​

Accepted Answer

Nadine is an employee and agent of Pumps because she works for Pumps and represents Pumps when dealing with customers. She is not an independent contractor because her schedule is dictated by Pumps and she is closely supervised. Orin is not relevant to this question.

Quiz 9: Agency Formation and Duties