Question 1

Miklos grants an ordinary power of attorney to Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on
A) any transaction causing a loss to Miklos.
B) Miklos's death or incapacity.
C) Miklos's sixty-fifth birthday.
D) Nathalie's handling of one of each stipulated transaction.

Accepted Answer

An ordinary power of attorney terminates upon the death or incapacity of the principal. None of the other choices are typical conditions for termination of a power of attorney.

Question 2

Elin, an agent for First Credit Corporation (FC), enters into an unau?thorized contract with Great Expectations, Inc. (GE), purportedly on FC's behalf. This contract will be enforceable if it is ratified by
A) any third party.
B) Elin.
C) FC.
D) GE.

Accepted Answer

Since Elin acted without authorization, the contract is not initially enforceable. However, if FC ratifies the contract, it will become enforceable. Ratification is the act of affirming, approving, or accepting a previously unauthorized act. Therefore, only FC can ratify the contract and make it enforceable. The other options (A) any third party, (B) Elin, and (D) GE, do not have the power to ratify an unauthorized contract on behalf of FC.

Question 3

Neighborly Insurance Company and Ollie put their agency agreement into a written document that describes the rights and duties of both parties. Ollie, as the agent, has
A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Accepted Answer

The fact that Neighborly and Ollie put their agreement into a written document indicates that Ollie has express authority, meaning the authority that is explicitly granted to the agent through a written agreement or contract.

Question 4

Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract re?lat?ing to the exterior. This attempt will be
A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Accepted Answer

Since Sari ratified the contract, she essentially acknowledged and accepted the terms of the agreement, including the part relating to the exterior. Therefore, she cannot later rescind only that part of the contract. Rescinding the entire contract may be possible, but that would depend on the circumstances and the specific terms of the contract.

Question 5

Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by
A) an inference from the position Sonia occupies.
B) any inference a reasonable customer or supplier would make.
C) any inference Sonia chooses to make.
D) no inference.

Accepted Answer

Sonia's authority can be implied by her position as a manager of the Tasty Pastry store, as managers typically have the authority to make decisions regarding the operation of their store. However, this authority may be limited by company policies and procedures. The other choices (B, C, D) are not accurate because Sonia's authority cannot be inferred solely from the perceptions of customers or suppliers, nor can Sonia choose to assert authority that she does not actually have.

Question 6

Supplies Company requires its customers to pay by check. Tylo, a Supplies driver, tells customers on her route that they can pay her with cash. When Supplies learns of Tylo's collections, it takes no action to stop it. Tylo steals some of the cash. Supplies may suffer the loss under the doc?trine of
A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Accepted Answer

Apparent authority arises when a principal's actions lead a third party to believe that an agent has authority to act on the principal's behalf. By not taking action to stop Tylo, Supplies Company may have created apparent authority, making them liable for Tylo's actions.

Question 7

Bud approves on behalf of Cody-but without authorization-a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be
A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Accepted Answer

Since Cody did not authorize the contract and did not ratify it later, Dik cannot enforce the contract. Bud had no legal authority to enter into a contract on Cody's behalf without authorization, so the contract is considered void. Therefore, Dik's attempt to enforce the deal will be totally unsuccessful.

Question 8

Nehru serves in a representative capacity for Olin. With respect to binding Olin to contracts, Nehru's authority
A) may be express, implied, or apparent.
B) may be express or implied, but not apparent.
C) must be express, oral or written, but not implied or apparent.
D) must be express, written, and not oral, implied, or apparent.

Accepted Answer

Nehru's authority may be express, meaning specifically given to him by Olin, implied, meaning inferred from his position or actions, or apparent, meaning perceived by a third party as authorized. All three types of authority can bind Olin to contracts.

Question 9

Based on Bluto's conduct, Cass reasonably believes that Dee has the authority to act on Bluto's behalf even though Dee does not have the actual authority to do so. Cass makes a payment to Dee for Bluto. Dee keeps the money and disappears. Bluto
A) can demand that Cass make a repayment directly to Bluto.
B) can obtain damages from Cass for Dee's misconduct.
C) may be estopped from denying that Dee had authority.
D) must repudiate Dee's misconduct to avoid liability.

Accepted Answer

Cass reasonably believed that Dee had authority to act on Bluto's behalf, and Bluto did not take any action to clearly notify Cass that Dee did not have actual authority. As a result, Bluto may be estopped from denying that Dee had authority and may have to accept the consequences of Dee's actions.

Question 10

Kady, an agent for Lebron, enters into a contract on Lebron's behalf with Madge that must be in writing to be enforceable under the Statute of Frauds. Kady's authority to enter into this contract is not in writing. Under the equal dignity rule, this contract is
A) enforceable.
B) void.
C) voidable at Lebron's option.
D) voidable at Madge's option.

Accepted Answer

The answer of Kady, an agent for Lebron, enters into...

Question 11

Fact Pattern 32-1A 
Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana.
-Refer to Fact Pattern 32-1A. The unidentified client is
A) a disclosed principal.
B) a non-existent principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Accepted Answer

A partially disclosed principal is one whose identity is not revealed to the third party, but the third party knows that the agent is acting on behalf of a principal.

Question 12

Jen, an agent for Kip, enters into a contract on Kip's behalf with Leon that must be in writing to be enforceable under the Statute of Frauds. Under the equal dignity rule, Jen's authority to enter into this contract
A) may be express, implied, or apparent.
B) may be express or implied, but not apparent.
C) must be express, oral or written, but not implied or apparent.
D) must be express, written, and not oral, implied, or apparent.

Accepted Answer

The equal dignity rule requires that if a contract must be in writing to be enforceable, then the agent's authority to enter into that contract must also be in writing. Therefore, the authority must be express and written, not oral, implied, or apparent.

Question 13

Cory employs Daily Delivery Agency as an agent under a writ?ten agreement that describes the rights and duties of both parties. This is
A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Accepted Answer

The written agreement that describes the rights and duties of both parties indicates express authority, which is a specific and clearly stated authority given by the principal to the agent. Therefore, the best choice is (C) express authority.

Question 14

Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is
A) a disclosed principal.
B) an implied principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Accepted Answer

The answer of Iggy hires Joy to act as his...

Question 15

Marky holds a power of attorney for Nuncio. Marky is
A) an attorney-in-fact.
B) an attorney-in-law.
C) a durable attorney.
D) a notary public.

Accepted Answer

An attorney-in-fact, also known as a power of attorney, is a person designated by another to act on their behalf in legal and business matters. Marky has been given this authority by Nuncio.

Question 16

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
A) apparent authority.
B) express authority.
C) implied authority.
D) no authority.

Accepted Answer

Poppy has apparent authority, which means that even though she does not actually have the authority to act on Nan's behalf, Odel reasonably believes that she does based on Nan's conduct. This can occur when Nan has led Odel to believe that Poppy has the authority, or when Poppy's actions or position with Nan's business would make it reasonable for Odel to assume she has authority.

Question 17

Trey, an agent for Uno Music Corporation, executes an unau?thor?ized contract with Variety Recording, Inc., that is highly ad?vanta?geous to Uno. Variety withdraws from the deal before Uno ratifies the con?tract. The contract is
A) valid.
B) variable.
C) void.
D) voidable.

Accepted Answer

The contract is void because Trey did not have the authority to enter into the contract on behalf of Uno Music Corporation. Therefore, there was no valid contract to be ratified by Uno. As a result, there is no legal effect of the contract, and it cannot be enforced by either party.

Question 18

Hu is an officer of International Corporation. With respect to binding International to contracts, Hu's authority
A) may be actual or apparent.
B) must be actual and express, not implied or apparent.
C) must be actual and may be express or implied, but not apparent.
D) need not be actual or apparent.

Accepted Answer

Hu's authority to bind International Corporation to contracts can be actual (either express or implied) or apparent. Actual authority is given directly by the corporation, while apparent authority arises when a third party reasonably believes that Hu has the authority to act on behalf of the corporation based on the corporation's representations.

Question 19

Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied
A) by contradiction.
B) by custom.
C) by lack of reason.
D) under no circumstances.

Accepted Answer

Implied authority can be established through custom or practice, meaning it is understood based on the usual way things are done between parties in similar relationships. Therefore, choice B is the best option. Choice A (contradiction) and C (lack of reason) do not make sense in the context of implied authority, and choice D (under no circumstances) is too extreme and doesn't acknowledge the possibility of implied authority.

Question 20

Jock hires Kym to act as his agent to purchase Little Gym & Fitness, Inc. Jock tells Kym to reveal that she is buying the firm on behalf of a third party and to tell Little's seller who that third party is. Jock is
A) a disclosed principal.
B) an apparent principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Accepted Answer

Jock is a disclosed principal because he has instructed Kym to reveal his identity to the seller.

Quiz 32: Liability to Third Parties and Termination

Miklos grants an ordinary power of attorney to Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on

Elin, an agent for First Credit Corporation (FC) , enters into an unau?thorized contract with Great Expectations, Inc. (GE) , purportedly on FC's behalf. This contract will be enforceable if it is ratified by

Neighborly Insurance Company and Ollie put their agency agreement into a written document that describes the rights and duties of both parties. Ollie, as the agent, has

Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract re?lat?ing to the exterior. This attempt will be

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

Supplies Company requires its customers to pay by check. Tylo, a Supplies driver, tells customers on her route that they can pay her with cash. When Supplies learns of Tylo's collections, it takes no action to stop it. Tylo steals some of the cash. Supplies may suffer the loss under the doc?trine of

Bud approves on behalf of Cody-but without authorization-a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be

Nehru serves in a representative capacity for Olin. With respect to binding Olin to contracts, Nehru's authority

Based on Bluto's conduct, Cass reasonably believes that Dee has the authority to act on Bluto's behalf even though Dee does not have the actual authority to do so. Cass makes a payment to Dee for Bluto. Dee keeps the money and disappears. Bluto

Kady, an agent for Lebron, enters into a contract on Lebron's behalf with Madge that must be in writing to be enforceable under the Statute of Frauds. Kady's authority to enter into this contract is not in writing. Under the equal dignity rule, this contract is

Fact Pattern 32-1A Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana. -Refer to Fact Pattern 32-1A. The unidentified client is

Jen, an agent for Kip, enters into a contract on Kip's behalf with Leon that must be in writing to be enforceable under the Statute of Frauds. Under the equal dignity rule, Jen's authority to enter into this contract

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

Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is

Marky holds a power of attorney for Nuncio. Marky is

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

Trey, an agent for Uno Music Corporation, executes an unau?thor?ized contract with Variety Recording, Inc., that is highly ad?vanta?geous to Uno. Variety withdraws from the deal before Uno ratifies the con?tract. The contract is

Hu is an officer of International Corporation. With respect to binding International to contracts, Hu's authority

Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied

Jock hires Kym to act as his agent to purchase Little Gym & Fitness, Inc. Jock tells Kym to reveal that she is buying the firm on behalf of a third party and to tell Little's seller who that third party is. Jock is