Question 1

A principal is liable on a contract made by his agent if the agent had actual authority to make the contract.

Accepted Answer

The principal in an agency relationship is liable on a contract made by the agent if the agent had actual or apparent authority to make the contract.

Question 2

Estoppel is the concept that a principal may be liable to a third party if that party justifiably believed that the agent had authority to act for the principal and there was a detrimental change in the third party's position.

Accepted Answer

Estoppel is when a person may be liable for an actor's transaction with a third party who justifiably is induced into detrimental change because he believed the actor had authority to act for the person.

Question 3

It is always necessary for an agent to disclose the identity of the principal to any third person with whom he is contracting;otherwise the contract becomes void.

Accepted Answer

When the contract or other act occurred,the agent must have indicated to the third party that she was acting for a principal and not for herself.The agent need not,however,have disclosed the principal's identity.

Question 4

Ratification is a process whereby a principal binds himself to an unauthorized act done by an agent,or by a person purporting to act as an agent.

Accepted Answer

Ratification is a process whereby a principal binds himself to an unauthorized act done by an agent,or by a person purporting to act as an agent.

Question 5

An agent who has total control over a piece of property has implied authority to contract for repairs.

Accepted Answer

An agent given full control over real property has implied authority to contract for repairs.

Question 6

The principal's ratification of a contract can be implied from his conduct,even if the principal says nothing to ratify.

Accepted Answer

Implied ratification arises when the principal's conduct justifies a reasonable assumption that he consents to the agent's act.

Question 7

A principal is liable for the misrepresentations made by an agent during a transaction with a third party.

Accepted Answer

A principal is directly liable for the misrepresentations made by the agent during authorized transactions.

Question 8

Direct liability is also known as respondeat superior liability.

Accepted Answer

A principal's direct liability for an agent's torts differs considerably from respondeat superior liability.

Question 9

Express authority is usually created by detailed language.

Accepted Answer

Express authority is actual authority that the principal has specified in very specific or detailed language.

Question 10

Apparent authority protects third parties who reasonably rely on the principal's manifestations that the agent has authority.

Accepted Answer

Apparent authority protects third parties who reasonably rely on the principal's manifestations that the agent has authority.It assumes special importance in cases where the principal has told the agent not to make certain contracts that the agent ordinarily would have actual authority to make,but the third party knows nothing about this limitation and has no reason to know about it.

Question 11

Respondeat superior makes a principal liable for an employee's negligence but not for her intentional torts.

Accepted Answer

Respondeat superior makes the principal liable both for an employee's negligence and for her intentional torts.

Question 12

In some cases,both principal and agent may be liable for an agent's torts.

Accepted Answer

Sometimes both principal and agent are liable for an agent's torts.Here,the parties are jointly and severally liable.

Question 13

To be within the scope of employment,the agent's conduct must have been completely motivated by the desire to serve his employer.

Accepted Answer

To be within the scope of employment,the agent's conduct must be motivated at least in part by the purpose of serving the employer.This test is met when the employee's conduct was motivated to any appreciable extent by the desire to serve the employer.

Question 14

An agent who purports to act for a legally nonexistent principal is personally liable when the agent knows or has reason to know the principal does not exist.

Accepted Answer

Unless there is an agreement to the contrary,an agent who purports to act for a legally nonexistent principal,such as an unincorporated association,is personally liable when the agent knows or has reason to know the principal does not exist.

Question 15

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal,the principal is bound to the subagent's contract.

Accepted Answer

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal,the principal is bound to the subagent's contract.

Question 16

A principal can ratify an agent's unauthorized contract even if the third party withdrew from the contract prior to ratification.

Accepted Answer

Certain events occurring after an agent's contract but before the principal's ratification may cut off the principal's power to ratify.These include (1)the third party's withdrawal from the contract; (2)the third party's death or loss of capacity; (3)the principal's failure to ratify within a reasonable time;and (4)where it would be inequitable to bind the third party.

Question 17

An agent's implied authority is always considered superior in law,and thus can contradict principal's express statements.

Accepted Answer

An agent's implied authority cannot contradict the principal's express statements.

Question 18

As a general rule,a principal is not liable for torts committed by independent contractors while performing the principal's business.

Accepted Answer

A principal ordinarily is not liable for torts committed by nonemployee agents (independent contractors).

Question 19

Exculpatory clauses that try to relieve a principal of liability for an agent's misrepresentations usually insulate the principal from tort liability and prevent the third party from rescinding the contract.

Accepted Answer

An exculpatory clause may eliminate the principal's tort liability,but the third party still can rescind the contract.

Question 20

Respondeat superior liability depends on whether the principal himself was at fault.

Accepted Answer

Respondeat superior makes the principal liable both for an employee's negligence and for her intentional torts.A principal's direct liability for an agent's torts differs considerably from respondeat superior liability.Here,the principal himself is at fault,and there is no need to impute liability to him.

Quiz 36: Third-Party Relations of the Principal and the Agent

A principal is liable on a contract made by his agent if the agent had actual authority to make the contract.

Estoppel is the concept that a principal may be liable to a third party if that party justifiably believed that the agent had authority to act for the principal and there was a detrimental change in the third party's position.

It is always necessary for an agent to disclose the identity of the principal to any third person with whom he is contracting;otherwise the contract becomes void.

Ratification is a process whereby a principal binds himself to an unauthorized act done by an agent,or by a person purporting to act as an agent.

An agent who has total control over a piece of property has implied authority to contract for repairs.

The principal's ratification of a contract can be implied from his conduct,even if the principal says nothing to ratify.

A principal is liable for the misrepresentations made by an agent during a transaction with a third party.

Direct liability is also known as respondeat superior liability.

Express authority is usually created by detailed language.

Apparent authority protects third parties who reasonably rely on the principal's manifestations that the agent has authority.

Respondeat superior makes a principal liable for an employee's negligence but not for her intentional torts.

In some cases,both principal and agent may be liable for an agent's torts.

To be within the scope of employment,the agent's conduct must have been completely motivated by the desire to serve his employer.

An agent who purports to act for a legally nonexistent principal is personally liable when the agent knows or has reason to know the principal does not exist.

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal,the principal is bound to the subagent's contract.

A principal can ratify an agent's unauthorized contract even if the third party withdrew from the contract prior to ratification.

An agent's implied authority is always considered superior in law,and thus can contradict principal's express statements.

As a general rule,a principal is not liable for torts committed by independent contractors while performing the principal's business.

Exculpatory clauses that try to relieve a principal of liability for an agent's misrepresentations usually insulate the principal from tort liability and prevent the third party from rescinding the contract.

Respondeat superior liability depends on whether the principal himself was at fault.