Question 1

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 be derived from custom or the usual practice in a particular industry or relationship.

Question 2

Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby. Jessie orally agrees to do so. This is

Accepted Answer

The answer of Gayla asks Jessie to contract with Jessie's...

Question 3

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

Accepted Answer

Sela and Thom have agreed to create an agency relationship, where Sela will act on Thom's behalf and Thom will have control over her actions. This is an example of an agency by agreement. A written document signed by both parties helps to clarify the terms and conditions of the agreement. Agency by estoppel occurs when a principal's actions lead a third party to believe that an agency relationship exists. Agency by ratification occurs when a principal approves or accepts the actions of an unauthorized agent after the fact. This scenario does not meet the criteria for either of those types of agencies.

Question 4

Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached

Accepted Answer

The answer of Bernard is an expert on exotic flowers....

Question 5

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

Accepted Answer

Will has breached the duty of obedience, which requires the agent to follow the instructions of the principal. By entering into a contract on Tuesday, Will did not follow MaryElise's clear instructions.

Question 6

Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's

Accepted Answer

The duty of reimbursement requires the principal (Kara's Knitting Company) to reimburse the agent (Julia) for any expenses incurred while performing for the principal. Therefore, Kara's Knitting Company must reimburse Julia for the gas and storage boxes she purchased.

Question 7

Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is

Accepted Answer

The answer of Mackenzie, an agent for Lindsay, signs an...

Question 8

Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is

Accepted Answer

Ester is hired on a per-project basis and is not an employee of any of these companies or venues. She is therefore an independent contractor.

Question 9

Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must

Accepted Answer

Since the agency agreement is silent about the level of sales that Rita is expected to achieve, she must use reasonable diligence and skill in selling as required by the law. It is implied in every agency relationship that an agent must act in the best interest of the principal by using reasonable efforts to achieve the objectives of the agency. Therefore, Rita must work hard to sell the products of Superior Sales, Inc. to the best of her abilities.

Question 10

Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of

Accepted Answer

The principal's duty of cooperation requires them to not only provide the agent with exclusive territory but also to refrain from competing with the agent in that territory. This duty ensures that the agent has a fair opportunity to succeed in their sales efforts without the principal undercutting them. Therefore, the correct answer is B) cooperation.

Question 11

Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite's employee is

Accepted Answer

The most important factor in determining whether Elton is an employee of Delite is the level of control Delite has over the details of Elton's work. Since Delite has given Elton flexibility in terms of the methods and hours he can use to sell the company's products, it suggests a lower level of control and makes it less likely that Elton is an employee. The other factors (salary, trial period, and job title) are not as significant in determining employee status.

Question 12

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

The written agreement between Cory and Daily Delivery Agency describes the rights and duties of both parties, indicating that Cory has provided express authority to the agency.

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 agreement between Jim and Kit, where Jim acts on behalf of Kit with Kit's control, describes a principal-agent relationship. Jim is the agent, and Kit is the principal. This type of relationship is commonly found in business, where agents act on behalf of their principals to make deals, sign contracts, and perform other responsibilities.

Question 14

George and James create an agency relationship to facilitate the sale of illegal narcotics. This agency relationship

Accepted Answer

Creating an agency relationship to facilitate the sale of illegal narcotics is illegal and therefore void. The law cannot recognize an illegal act, and any agency relationship created for an illegal purpose is unenforceable.

Question 15

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 arises when a principal creates the impression that an agent has the authority to act on their behalf, even if the agent does not have actual authority. In this case, Nan's conduct has led Odel to believe that Poppy has the authority to act on her behalf, which creates apparent authority. Therefore, Poppy has apparent authority in this circumstance.

Question 16

Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is

Accepted Answer

The answer of Carol is married to Andy. Carol buys...

Question 17

Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I'll install it for half of what the store would charge." Dita buys the carpet, which Bob installs for half the store's price. Bob keeps the money. Bob has breached

Accepted Answer

Bob, as a salesperson, owes a duty of loyalty to his employer, Carpets Galore. By offering a personal discount on installation services, he is essentially taking business away from the store and benefiting himself instead. This is a breach of his duty of loyalty to his employer.

Question 18

Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to affirm the contract. This is

Accepted Answer

This is an example of agency by ratification. Even though Dizzy was not initially authorized to act as Edwina's agent, Edwina later affirms the contract that Dizzy entered into with Frida, thereby ratifying the agency relationship.

Question 19

Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to pay the rest of the price. Timberline sues Rangle for breach of contract. His right to hold Siena 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 damages that the individual has to pay. In this scenario, Timberline Stables can hold Rangle liable for not paying the full price for the horse, and Rangle can hold Siena liable for any damages that he has to pay to Timberline Stables. Therefore, indemnification is the correct answer.

Question 20

Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by

Accepted Answer

Sonia's authority can be implied by the position she occupies as a manager of the Tasty Pastry store. This is known as implied authority, which is derived from the position one holds in an organization. It is not based on the individual's personal characteristics or preferences. Therefore, option A is the correct answer. Option B is incorrect because it implies that Sonia's authority is based on the perceptions of customers or suppliers, which is not true. Option C is also incorrect because it suggests that Sonia can choose to imply authority in any way she wants, which is not accurate. Option D is incorrect because it suggests that Sonia has no authority, which is not true considering her position as a store manager.

Quiz 23: Agency Relationships in Business