Question 1

Sedate Investment Corporation (SIC)hires Tiger,a real estate agent,to locate investment properties for SIC.Tiger learns of a warehouse avail?able for $100,000,buys it himself,and offers it to SIC for $110,000.Tiger

Accepted Answer

Tiger breached the duty of loyalty by purchasing the property himself instead of presenting the opportunity to SIC. As a real estate agent working for SIC, Tiger had a fiduciary duty to act in the best interest of his client and not use his position to gain personal benefit. He should have presented the opportunity to SIC and not purchased it himself to sell at a higher price.

Question 2

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

Accepted Answer

Only FC, as the principal, can ratify the unauthorized contract entered into by Elin on its behalf.

Question 3

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

Accepted Answer

Sanitary may suffer the loss under the doctrine of apparent authority because by not taking action to stop Tyla, they gave the impression that she had the authority to collect cash payments, leading customers to reasonably believe she was acting within her authority.

Question 4

Jay holds himself out as possessing special accounting skills.As an agent,he must exercise the degree of skill or care expected of

Accepted Answer

Jay is holding himself out as possessing special accounting skills, therefore he must exercise the degree of skill or care expected of a person possessing those skills.

Question 5

Concession Sales,Inc. ,employs Darla as a sales agent.Concession gives Darla a furnished office and an expense account.Entertainment Stadium Corporation (ESC)orders supplies from Darla,who fills the order with goods from Food4U Company.The goods are defective.ESC may recover damages from Concession on the ground of

Accepted Answer

Apparent authority refers to the power that appears to be granted to an agent but is not explicitly authorized by the principal. In this case, ESC may reasonably assume that Darla has the authority to order supplies on behalf of Concession, and therefore Concession may be held liable for the defective goods supplied by Food4U Company. This is an example of apparent authority.

Question 6

Jill introduces Kelly to her friends as "my associate." Kelly purports to act as Jill's agent in several business transactions with those friends.If Jill is liable for Kelly's actions,it will be under

Accepted Answer

The answer of Jill introduces Kelly to her friends as...

Question 7

Bess,an agent for Calm Harbor Marina,Inc. ,enters into an unauthorized contract with Dropt Anchor Worx,Inc. ,purportedly on behalf of Calm Harbor,which refuses to perform.Bess is liable to

Accepted Answer

The answer of Bess,an agent for Calm Harbor Marina,Inc. ,enters...

Question 8

Cody contracts with Drew to act as her agent in a fraudulent marketing scheme.Cody does not successfully complete the scheme.Drew can re?cover from Cody for

Accepted Answer

Since the marketing scheme was fraudulent, it was illegal and therefore not enforceable under the law. Therefore, Drew cannot recover from Cody for any type of breach or damages resulting from the illegal scheme.

Question 9

Lauren may hire employees to work in the Main St.Computer Store that she manages de?spite the fact that her employment agreement with Main St.says noth?ing about her being able to hire employees.This is

Accepted Answer

Implied authority refers to the authority that an employee has to carry out tasks that are necessary to fulfill their designated role, even if these tasks are not explicitly mentioned in their employment agreement. Therefore, Lauren's ability to hire employees can be classified as implied authority.

Question 10

Gallopin' Galoshes Corporation and Hot2Trot Purchasing Company may create an agency agreement

Accepted Answer

Gallopin' Galoshes Corporation and Hot2Trot Purchasing Company can create an agency agreement by conduct, in writing, or orally. While a written agreement is always advisable for clarity and evidentiary purposes, an agency relationship can also be created through the actions of the parties or by oral agreement.

Question 11

Sunny is a salesperson for Tech Instruments,Inc.(TI).She misrepresents to Universal Piping Company,a customer,that a certain device has a certain ca?pability.In reliance,Universal buys the device.Liable for this misrepresen?ta?tion is

Accepted Answer

The answer of Sunny is a salesperson for Tech Instruments,Inc.(TI).She...

Question 12

Glenn is an agent for HiFlite,Inc.On HiFlite's behalf and at its request,Glenn pays Ilsa for certain plane maintenance and repair serv?ices.Glenn's right to obtain the amount of those payments from HiFlite arises under the principal's duty of

Accepted Answer

Glenn's right to obtain the amount of payments he made to Ilsa for maintenance and repair services arises under the principal's duty of reimbursement. This duty requires the principal to compensate the agent for expenses incurred in carrying out the principal's instructions or acting within the scope of the agency. In this scenario, Glenn acted on HiFlite's behalf and at its request, and therefore, HiFlite is responsible for reimbursing Glenn for the amount he paid to Ilsa.

Question 13

Igor,an agent for Jules,signs an agreement with Kali on Jules's behalf but ne?glects to tell Jules that the agreement requires the payment of a certain tax.The government prosecutes Jules for failing to pay the tax.Jules is

Accepted Answer

Jules is liable because an agent's knowledge is typically imputed to the principal. Since Igor, as Jules's agent, knew about the tax requirement, this knowledge is legally considered to be Jules's knowledge as well.

Question 14

Integrity Products,Inc. ,hires Josi to enter into a contract with Kym on Integrity's behalf.When Integrity breaches the contract,Kym sues Josi for damages.Josi's right to be compensated for costs incurred in defending against the suit is Integrity's duty of

Accepted Answer

Indemnification is the duty to compensate someone for any losses, costs or damages incurred due to the actions or breach of contract by the indemnifying party. In this scenario, since Josi was acting on behalf of Integrity, it is Integrity's duty to indemnify Josi for any costs incurred while defending the lawsuit.

Question 15

Patsy is an agent for Refined Chemicals Corporation.Refined Chemicals owes Pam the duty of

Accepted Answer

Refined Chemicals Corporation, as an employer, owes Pam, presumably an employee, the duty of providing safe working conditions. The other duties listed are typically obligations of an agent to a principal, not of an employer to an employee.

Question 16

Elle is an agent for Fresh Organics Corporation.Elle makes a mis?representa?tion when entering into a contract on be?half of Fresh with Gala Grocery Stores,Inc.Gala

Accepted Answer

Gala may rescind the contract because Elle's misrepresentation invalidates the contract. Gala would not be estopped from performing the contract unless they received a benefit from the misrepresentation, and Fresh cannot ratify the contract if the misrepresentation was material to the formation of the agreement. Gala is not obligated to perform the contract if it was entered into based on a misrepresentation.

Question 17

Biz-E-B.com uses an electronic agent,or e-agent,to perform certain tasks in e-commerce.With respect to the e-agent's actions,Biz-E-B.com is bound by

Accepted Answer

Biz-E-B.com is bound by all of the actions of its e-agent because electronic agents are programmed to perform tasks on behalf of the company, and the company is responsible for the actions taken by its agents in the scope of their authority.

Question 18

Dolly is a businessperson acting as an agent for Energy Green,Inc.(EGI).In an ordinary business situation,Dolly

Accepted Answer

In an ordinary business situation, an agent like Dolly can contract on behalf of the principal (EGI) if she has been given the authority to do so, either explicitly or implicitly, without needing further authority or ratification.

Question 19

Clearwater Irrigation Services,Inc. ,employs Daphne as an agent.During the agency,Daphne acquires new skills.After the termination of the relationship,Daphne uses those skills in a new job.Daphne has breached

Accepted Answer

Daphne has not breached any duty by using the skills she acquired during her employment in a new job. Skills and knowledge gained during employment are generally considered to be the employee's own to use after the employment ends.

Question 20

Chaz hires Darin to act as her agent in the purchase of Erector Steel Corporation.Chaz does not want the seller to know that she is the buyer,so she asks Darin to represent that he is buying the firm for himself.Chaz is

Accepted Answer

Chaz is not revealing her identity as the buyer, making her an undisclosed principal. Darin is representing himself as the buyer, which makes him the apparent buyer, and the seller is unaware of Chaz's involvement.

Quiz 22: Agency Relationships

Sedate Investment Corporation (SIC) hires Tiger,a real estate agent,to locate investment properties for SIC.Tiger learns of a warehouse avail?able for $100,000,buys it himself,and offers it to SIC for $110,000.Tiger

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