Question 1

You cannot be held liable for the actions of your agents if the agents are violating your instructions.

Accepted Answer

As the principal, you can still be held liable for the actions of your agents even if they are violating your instructions. It is important to properly train and supervise your agents to ensure they are following your instructions and not engaging in any illegal or unethical behavior.

Question 2

An agent must obey all instructions of the principal.

Accepted Answer

An agent must act within the scope of the authority given by the principal and is not obligated to obey instructions that are illegal, unethical, or outside the bounds of their agreed-upon duties.

Question 3

Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both parties.

Accepted Answer

This is known as dual agency, which means the real estate agent represents both the buyer and the seller in a transaction with their written consent.

Question 4

If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.

Accepted Answer

When apparent authority is present, a third party reasonably believes that the agent has authority to act on behalf of the principal, even if the principal did not actually give that authority. In such cases, the principal can still be held liable for the actions of the agent.

Question 5

Mohammad was an employee in the new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months. Estay took great care to keep information concerning the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to leave Estay to direct Ceries' marketing department. Which statement is correct?

Accepted Answer

Mohammad has a duty not to disclose confidential information he acquired during the agency with Estay, even though his agency relationship with Estay is terminated. This is because he has a duty of loyalty to Estay and is obligated to keep its confidential information secret. The equal dignities rule is not relevant in this scenario. Therefore, Mohammad cannot legally share Estay's confidential information with Ceries.

Question 6

Becky asks her friend Maggie to walk her dog for her, and Maggie agrees. While out walking, the dog gets away from Maggie and runs into Mr. Edwards' garden, digging up some expensive plants. Which statement best characterizes this situation?

Accepted Answer

Becky is liable for the damages because, in legal terms, Maggie acted as her agent in performing a task on her behalf, which in this case was walking the dog. The principle of agency holds the principal (Becky) responsible for the actions of the agent (Maggie) conducted within the scope of their agreement.

Question 7

As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal.

Accepted Answer

An agent is generally not liable on contracts entered into on behalf of a fully disclosed principal, as the liability rests with the principal in such cases.

Question 8

Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.

Accepted Answer

As a sales representative, Kaiya has a duty to act in the best interests of TriColor and not to disclose confidential information to competitors or use information for personal gain. This is a fiduciary duty.

Question 9

A principal must indemnify an agent for any reasonable expenses incurred in carrying out his or her responsibilities.

Accepted Answer

According to the principle of indemnification, the principal is obligated to reimburse the agent for any reasonable expenses incurred while carrying out their responsibilities. Therefore, statement A is true.

Question 10

Erica's supervisor told her to arrange for a conference room at the Kelly Inn. Erica has express authority to contract for the room.

Accepted Answer

Erica has been given express authority by her supervisor to contract for a conference room at the Kelly Inn.

Question 11

If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job.

Accepted Answer

This is a general principle of agency law, known as implied authority. When someone is hired to perform a certain job, they are generally understood to have the authority to do acts that are reasonably necessary to carry out that job. As a cashier, Denise would be expected to perform tasks such as handling cash, processing transactions, and interacting with customers. These are all acts that are reasonably necessary to carry out her job, and she would therefore have implied authority to do them.

Question 12

Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.

Accepted Answer

It is actually the other way around. Rob has a duty of loyalty to Diane as her agent, as he is obligated to act in her best interests when selling her car.

Question 13

Which of the following persons is NOT an agent?

Accepted Answer

A trustee is not an agent, as they are responsible for managing and distributing assets to beneficiaries, but do not act on their behalf in making decisions or conducting transactions. The other choices involve individuals who act as agents in their respective industries.

Question 14

Which of the following states that if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written?

Accepted Answer

The equal dignities rule states that if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written. This rule helps to prevent fraud and ensure clarity in contractual agreements.

Question 15

Generally, either party to an agency relationship has the power to terminate it at any time.

Accepted Answer

Generally, either party to an agency relationship has the power to terminate it at any time.

Question 16

If a person accepts the benefits of an unauthorized transaction, or fails to repudiate it, then he is bound by the act as if he had originally authorized it.

Accepted Answer

This is known as the principle of ratification, which means that if someone knowingly accepts or benefits from an unauthorized transaction, they are legally bound by it as if they had given their permission for it.

Question 17

Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer and contract for the sale of his house in the United States. The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.

Accepted Answer

According to the statute of frauds, a contract for the sale of real property or an agency agreement relating to the sale of real property must be in writing to be enforceable. Therefore, in this scenario, a written agreement between Larry and Happy Homes is necessary to evidence their agency relationship.

Question 18

The bankruptcy of an agent automatically terminates an agency relationship.

Accepted Answer

The bankruptcy of an agent does not automatically terminate an agency relationship. The agency relationship may continue if the bankrupt agent is able to continue performing their duties or if a new agent is appointed by the principal. However, the bankruptcy may affect the agency relationship in other ways, such as limiting the ability of the bankrupt agent to act on behalf of the principal.

Question 19

An agent is always liable for his or her own torts committed within the scope of the agency relationship.

Accepted Answer

This is known as the principle of vicarious liability, where the agent's actions are attributed to the principal and the principal can be held responsible for the agent's torts committed within the scope of the agency relationship. However, the agent is still personally liable for their own actions that caused harm or damages.

Question 20

How is consent established in an agency relationship?

Accepted Answer

Consent is established in an agency relationship when the principal asks the agent to do something and the agent agrees to do it, thereby creating a contractual relationship between them. The other options (B and C) are not necessary for establishing consent in an agency relationship.

Quiz 28: Agency Law

You cannot be held liable for the actions of your agents if the agents are violating your instructions.

An agent must obey all instructions of the principal.

Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both parties.

If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.

Becky asks her friend Maggie to walk her dog for her, and Maggie agrees. While out walking, the dog gets away from Maggie and runs into Mr. Edwards' garden, digging up some expensive plants. Which statement best characterizes this situation?

As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal.

Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.

A principal must indemnify an agent for any reasonable expenses incurred in carrying out his or her responsibilities.

Erica's supervisor told her to arrange for a conference room at the Kelly Inn. Erica has express authority to contract for the room.

If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job.

Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.

Which of the following persons is NOT an agent?

Which of the following states that if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written?

Generally, either party to an agency relationship has the power to terminate it at any time.

If a person accepts the benefits of an unauthorized transaction, or fails to repudiate it, then he is bound by the act as if he had originally authorized it.

Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer and contract for the sale of his house in the United States. The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.

The bankruptcy of an agent automatically terminates an agency relationship.

An agent is always liable for his or her own torts committed within the scope of the agency relationship.

How is consent established in an agency relationship?