Question 1

Bernard is an expert on exotic flowers.Custom Floral Arrangements,Inc.,hires Bernard to order exotic flowers for its arrangements.Bernard does not examine the quality of the flowers he orders on behalf of Custom Floral.Bernard has breached

Accepted Answer

Bernard was hired to order exotic flowers for Custom Floral Arrangements, Inc. This implies that Bernard has a duty to perform (i.e. order) the flowers with due care and diligence. Not examining the quality of the flowers could lead to poor quality arrangements and dissatisfied customers, which would be a breach of his duty of performance.

Question 2

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 that would be expected of a person having those skills.

Question 3

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

Accepted Answer

This is an agency by agreement because Jessie has agreed to perform a service (babysitting) on behalf of Ingmar. While the agreement was made orally, it is still a valid agency relationship.

Question 4

Global Games Corporation employs Hyacinth as an agent.Global Games gives her an exclusive territory in which to sell its products.Global Games cannot compete with her in that territory under the duty of

Accepted Answer

The duty described in the scenario is the duty of cooperation, which requires Global Games to not compete with their agent in the exclusive territory given to them. Compensation refers to payment for services rendered, indemnification is the duty to compensate an agent for losses incurred while performing duties for the principal, and reimbursement refers to reimbursing an agent for expenses incurred while performing duties for the principal. None of these accurately describe the duty mentioned in the scenario.

Question 5

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites,as well as to hosts of banquets,corporate meetings,concerts,weddings,and other events.In this capacity,Rosario is

Accepted Answer

Rosario is an independent contractor because they work on a per-project basis and are hired for their expertise and specialized services, rather than as an employee of the companies or hosts they work for. Rosario has control over how they complete their work and is not under direct supervision.

Question 6

Fact Pattern 25-1B (Questions B4-B6 apply)
Margo works as an administrator and receptionist in Neon's Garage Door Store.Neon withholds federal taxes from Margo's pay,and controls the methods and details of the performance of her work.Margo is not au?thorized to modify the prices or other terms of a sale at the store.Omar installs Neon's Garage Door products at the buyers' locations.
-Refer to Fact Pattern 25-1B.At the shop,Margo is

Accepted Answer

Margo is Neon's employee because Neon controls the methods and details of her work and withholds federal taxes from her pay. She is also an agent because she acts on behalf of Neon in her role as an administrator and receptionist, even though she does not have the authority to modify prices or terms of a sale.

Question 7

Lorena is appointed as an agent for Milled Grains,Inc.The agency agreement is silent as to the level of sales that Lorena is expected to achieve.She must

Accepted Answer

Since the agency agreement is silent on the level of sales that Lorena is expected to achieve, she is only obligated to use reasonable diligence and skill in selling Milled Grains' products. This is the standard duty of care that agents owe to their principals. Therefore, option D is the best choice.

Question 8

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

Accepted Answer

This is an example of an agency by operation of law, where the law recognizes an agency relationship to prevent injustice or to fulfill social or policy obligations, such as a spouse making necessary purchases for the family's welfare.

Question 9

Home Enterprises employs Itzak to buy property for a possible residential development.Itzak secretly buys some of the property and sells it to Home Enterprises at a profit.Itzak has breached

Accepted Answer

Itzak has breached the duty of loyalty by secretly buying some of the property and selling it to Home Enterprises at a profit. The duty of loyalty requires an agent to act solely in the interest of the principal and to avoid any conflicts of interest. Itzak's actions represent a conflict of interest because he acted in his own interest by buying the property and selling it to Home Enterprises at a profit.

Question 10

Investment Holdings Corporation hires Jerilyn,a business appraiser,to locate investment possibilities for Investment Holdings.Jerilyn learns of a salsa and hot sauce manufacturing company available for a reasonable price,but neglects to tell Investment Holdings.Most likely,Jerilyn

Accepted Answer

Jerilyn breached the agent's fiduciary duties to the principal by not disclosing the opportunity to Investment Holdings, as this would have been in the best interest of the principal. As an agent, Jerilyn had a legal obligation to act solely in the best interest of the principal and to disclose all relevant information.  Thus, failing to disclose the opportunity to Investment Holdings is a violation of the fiduciary duties.

Question 11

Sybil agrees with Tyrone and other professional athletes to sign contracts with promoters and others on the athletes' behalf.Sybil is

Accepted Answer

An agent is someone who acts on behalf of another person, representing their interests and making decisions and agreements on their behalf. In this scenario, Sybil is agreeing to sign contracts on behalf of the professional athletes, indicating that she is acting as their agent.

Question 12

Fact Pattern 25-1B (Questions B4-B6 apply)
Margo works as an administrator and receptionist in Neon's Garage Door Store.Neon withholds federal taxes from Margo's pay,and controls the methods and details of the performance of her work.Margo is not au?thorized to modify the prices or other terms of a sale at the store.Omar installs Neon's Garage Door products at the buyers' locations.
-Refer to Fact Pattern 25-1B.Neon hires Professional Janitorial Company to clean the store.Neon gives Professional Janitorial instructions as to what needs to be cleaned and when.Professional Janitorial is

Accepted Answer

Professional Janitorial Company is an independent contractor because they are hired to perform a specific task and are not under Neon's direct control in terms of how they perform their work, only what needs to be done and when.

Question 13

California Produce Company hires Drew to work on California Produce's shipping dock,checking outgoing loads and dispatching the company's drivers.With respect to California Produce,Drew is most likely

Accepted Answer

Drew is hired by California Produce to perform a specific task on their behalf, which involves handling and monitoring their outgoing shipments. As an agent, Drew is authorized to act on behalf of California Produce and make decisions that affect the company's operations.

Question 14

Fact Pattern 25-1B (Questions B4-B6 apply)
Margo works as an administrator and receptionist in Neon's Garage Door Store.Neon withholds federal taxes from Margo's pay,and controls the methods and details of the performance of her work.Margo is not au?thorized to modify the prices or other terms of a sale at the store.Omar installs Neon's Garage Door products at the buyers' locations.
-Refer to Fact Pattern 25-1B.Neon authorizes Omar to sell garage door upgrades and accessories at the buyers' locations at prices that Omar negotiates with those buyers.With respect to sales at those locations,Omar is

Accepted Answer

Since Neon authorizes Omar to negotiate prices with buyers on behalf of the company, Omar is acting as an agent of Neon in those transactions. Although Omar may also be an independent contractor for installation services, his role as an agent in sales makes him both an employee and agent of Neon for those specific transactions.

Question 15

Donato is Equipment Repair Service Company's chief executive officer.On Equipment Repair's behalf,Donato solicits business,hires and fires workers,and handles finances.Equipment Repair pays Donato varying amounts,depending on his "needs." Donato is most likely

Accepted Answer

Donato is acting on behalf of Equipment Repair, soliciting business, hiring and firing workers, and handling finances, which are all functions of an employee's role. Additionally, he is being paid by the company based on his "needs," which is indicative of an employer-employee relationship.

Question 16

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

Accepted Answer

Largo has breached the duty of obedience by failing to follow MaryElise's clear instructions regarding when to enter into contracts on her behalf.

Question 17

Insurance Sales Corporation hires Jeremy to act as its agent.Insurance Sales's right not to perform a contract entered into by Jeremy,if he breaches their agency agreement,is the right of

Accepted Answer

The right of avoidance allows a principal, in this case, Insurance Sales Corporation, to refuse to perform a contract entered into by its agent, Jeremy, if he breaches their agency agreement. This right is exercised to avoid the obligations of a contract that was entered into by an agent who was not acting within the scope of their authority or who violated the terms of the agency agreement.

Question 18

Elaine owns the Fabric & Yarn store.Goldie is a salesperson in the store.When Goldie makes a sale to Heather,the sale is binding on

Accepted Answer

As the owner of the store, Elaine is responsible for all sales made by her employees, including Goldie. Therefore, any sale made by Goldie is binding on Elaine.

Question 19

Bailey is an agent for Culinary Delites Company.In the course of Bailey's performance for Culinary Delites,she pays Drivers' Repair Service for certain vehicle maintenance and repair work.Bailey's right to obtain the amount of the payments from Culinary Delites arises under the principal's duty of

Accepted Answer

Bailey's right to obtain the amount of the payments from Culinary Delites arises under the principal's duty of reimbursement, which requires the principal to compensate the agent for expenses and costs incurred in the course of performing the agency duties. This duty is implicit in the agency relationship and is based on the principle that the agent should not bear the costs of performing the principal's business. Therefore, Culinary Delites has a duty to reimburse Bailey for the payments made to Drivers' Repair Service.

Question 20

Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf.In this relationship,Jewelry & Coin is

Accepted Answer

The answer of Jewelry & Coin Company hires Kelly Ann...

Quiz 25: Agency Formation and Duties