Question 1

Which of the following is true regarding an agent who is acting for an undisclosed principal?

Accepted Answer

A)  The agent with actual authority will bind both himself and the principal on most contracts. 
B)  The third party will never be bound in a contract with the principal. 
C)  An undisclosed principal will bind only himself and not the agent. 
D)  Failure to disclose the name of the principal is a form of fraud. 
A)  The agent with actual authority will bind both himself and the principal on most contracts. 
B)  The third party will never be bound in a contract with the principal. 
C)  An undisclosed principal will bind only himself and not the agent. 
D)  Failure to disclose the name of the principal is a form of fraud.

Question 2

A subagent owes a fiduciary duty to only the principal.

Accepted Answer

A) True 
 B)False

Question 3

Under the Second Restatement, which of the following is correct with regard to a contract entered into with a third person by an agent of an undisclosed principal?

Accepted Answer

A)  The agent has no liability to the third person if the agent has acted within the scope of her authority. 
B)  The agent is personally liable upon the contract unless the third person discovers the existence and identity of the principal and elects to hold the principal to the contract. 
C)  Once the third person learns of the existence and identity of the principal, that third person may hold both the principal and the agent to the performance of the contract. 
D)  If the third party obtains a judgment against the principal, the agent may still have liability to that third party. 
A)  The agent has no liability to the third person if the agent has acted within the scope of her authority. 
B)  The agent is personally liable upon the contract unless the third person discovers the existence and identity of the principal and elects to hold the principal to the contract. 
C)  Once the third person learns of the existence and identity of the principal, that third person may hold both the principal and the agent to the performance of the contract. 
D)  If the third party obtains a judgment against the principal, the agent may still have liability to that third party.

Question 4

Respondeat superior:

Accepted Answer

A)  imposes vicarious liability on the agent. 
B)  makes a principal liable for the acts of independent contractors. 
C)  imposes vicarious liability on the principal for employees' acts committed within the scope of employment. 
D)  makes the agent responsible for his own acts 
A)  imposes vicarious liability on the agent. 
B)  makes a principal liable for the acts of independent contractors. 
C)  imposes vicarious liability on the principal for employees' acts committed within the scope of employment. 
D)  makes the agent responsible for his own acts

Question 5

If an agent at his principal's direction fixes prices with the principal's competitors:

Accepted Answer

A)  only the agent is criminally liable. 
B)  only the principal is criminally liable. 
C)  both the principal and agent are criminally liable. 
D)  any liability would be civil only. 
A)  only the agent is criminally liable. 
B)  only the principal is criminally liable. 
C)  both the principal and agent are criminally liable. 
D)  any liability would be civil only.

Question 6

The principal may ratify either the entire contract or certain parts of it.

Accepted Answer

A) True 
 B)False

Question 7

If an agent exceeds his actual and apparent authority, the principal is not bound, which makes the agent a party to the contract.

Accepted Answer

A) True 
 B)False

Question 8

Apparent authority arises out of words or conduct of a disclosed or unidentified principal manifested to third persons.

Accepted Answer

A) True 
 B)False

Question 9

Julie writes a letter to Mitchell authorizing him to sell her boat and sends a copy of the letter to Jared, a prospective buyer. The next day, Julie writes Mitchell a letter revoking his authority to sell the boat, but she does not send a copy of the second letter to Jared. Although Mitchell has no actual authority to sell the boat now, he continues to have apparent authority with respect to Jared.

Accepted Answer

A) True 
 B)False

Question 10

Under the Uniform Durable Power of Attorney Act, if a principal who has executed a written durable power of attorney becomes incapacitated, the actual authority of an agent survives.

Accepted Answer

A) True 
 B)False

Question 11

Samuel writes to Emma authorizing her to sell his automobile for $3,000. Emma, although she has no authority to delegate this task, asks Renaldo to try to sell the car. If Renaldo makes a contract with Michelle for the sale of the car, Samuel is not obligated to sell to Michelle, and Samuel acquires no rights against Michelle.

Accepted Answer

A) True 
 B)False

Question 12

If Sierra orally requests her agent Scott to sell her desk for at least $450, Scott's authority to sell the desk for this
amount is actual and express.

Accepted Answer

A) True 
 B)False

Question 13

There can be apparent authority where a third party knows the agent has no actual authority.

Accepted Answer

A) True 
 B)False

Question 14

Leonard is a traveling salesman for Bighorn, Inc. He calls on Ralphyl, one of his regular accounts, in order to solicit another order. While in the store, Leonard collects a past due account for Bighorn, but he doesn't get another order. It has been a bad day in which Leonard hasn't had any orders. He is so angry about this when he leaves the store that he drives negligently and hits a pedestrian with his car. In this case:

Accepted Answer

A)  Bighorn has no liability for Leonard's negligence, because Leonard is responsible for his own negligent conduct. 
B)  since he was driving at the time of the negligent conduct, Leonard was no longer within the scope of his employment. 
C)  Bighorn will be liable for Leonard's negligence under the doctrine of respondeat superior. 
D)  Leonard is an independent contractor and, therefore, Bighorn will have no liability for his negligence. 
A)  Bighorn has no liability for Leonard's negligence, because Leonard is responsible for his own negligent conduct. 
B)  since he was driving at the time of the negligent conduct, Leonard was no longer within the scope of his employment. 
C)  Bighorn will be liable for Leonard's negligence under the doctrine of respondeat superior. 
D)  Leonard is an independent contractor and, therefore, Bighorn will have no liability for his negligence.

Question 15

A principal may be held liable for the torts of an independent contractor:

Accepted Answer

A)  whenever the contractor is performing work or rendering services for the principal. 
B)  if the principal fails to supervise the contractor. 
C)  if the contractor negligently performs an inherently dangerous activity. 
D)  All of these. 
A)  whenever the contractor is performing work or rendering services for the principal. 
B)  if the principal fails to supervise the contractor. 
C)  if the contractor negligently performs an inherently dangerous activity. 
D)  All of these.

Question 16

An employer may not be held liable if her employee sells liquor to an underage person if this criminal act was unauthorized by the employer.

Accepted Answer

A) True 
 B)False

Question 17

John agreed to build a new house for Ted. Unknown to John, Ted was an agent for Russell Realty. John built the house as agreed. When Ted refused to pay, John became aware that Ted was an agent for Russell. John wants to sue on the contract. Under the Second Restatement, John:

Accepted Answer

A)  must sue Ted, because Ted is the person with whom he dealt. 
B)  can collect judgments against Ted and Russell. 
C)  must sue Russell, because Russell is the principal. 
D)  can sue either Ted or Russell. 
A)  must sue Ted, because Ted is the person with whom he dealt. 
B)  can collect judgments against Ted and Russell. 
C)  must sue Russell, because Russell is the principal. 
D)  can sue either Ted or Russell.

Question 18

Discuss apparent authority and some common ways in which it might arise.

Accepted Answer

Apparent authority is the power arising

Question 19

Bryant, doing business as Fair Realty, employs Chris and Deborah as salespersons. Tammy contracts with Bryant to sell her house because she is aware of the good reputation of Fair Realty's salespersons. In this situation:

Accepted Answer

A)  Chris and Deborah are agents of Tammy and Fair Realty but they have no authority to show Tammy's house to prospective purchasers and to make representations about the house unless Tammy expressly and explicitly grants this authority directly to them. 
B)  Chris and Deborah are employees/agents of Fair Realty and subagents of Tammy, and they have authority to show Tammy's house to prospective purchasers and to make representations about the house. 
C)  Bryant cannot appoint subagents because Tammy's appointment of him reflected her confidence in and reliance upon his personal skill, integrity, and other qualifications. 
D)  Chris and Deborah are subagents of Fair Realty and, as such, have a fiduciary duty only to Fair Realty. 
A)  Chris and Deborah are agents of Tammy and Fair Realty but they have no authority to show Tammy's house to prospective purchasers and to make representations about the house unless Tammy expressly and explicitly grants this authority directly to them. 
B)  Chris and Deborah are employees/agents of Fair Realty and subagents of Tammy, and they have authority to show Tammy's house to prospective purchasers and to make representations about the house. 
C)  Bryant cannot appoint subagents because Tammy's appointment of him reflected her confidence in and reliance upon his personal skill, integrity, and other qualifications. 
D)  Chris and Deborah are subagents of Fair Realty and, as such, have a fiduciary duty only to Fair Realty.

Question 20

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.

Accepted Answer

A) True 
 B)False

Exam 20: Relationship With Third Parties

Which of the following is true regarding an agent who is acting for an undisclosed principal?

A subagent owes a fiduciary duty to only the principal.

Under the Second Restatement, which of the following is correct with regard to a contract entered into with a third person by an agent of an undisclosed principal?

Respondeat superior:

If an agent at his principal's direction fixes prices with the principal's competitors:

The principal may ratify either the entire contract or certain parts of it.

If an agent exceeds his actual and apparent authority, the principal is not bound, which makes the agent a party to the contract.

Apparent authority arises out of words or conduct of a disclosed or unidentified principal manifested to third persons.

Under the Uniform Durable Power of Attorney Act, if a principal who has executed a written durable power of attorney becomes incapacitated, the actual authority of an agent survives.

If Sierra orally requests her agent Scott to sell her desk for at least $450, Scott's authority to sell the desk for this amount is actual and express.

There can be apparent authority where a third party knows the agent has no actual authority.

A principal may be held liable for the torts of an independent contractor:

An employer may not be held liable if her employee sells liquor to an underage person if this criminal act was unauthorized by the employer.

John agreed to build a new house for Ted. Unknown to John, Ted was an agent for Russell Realty. John built the house as agreed. When Ted refused to pay, John became aware that Ted was an agent for Russell. John wants to sue on the contract. Under the Second Restatement, John:

Discuss apparent authority and some common ways in which it might arise.

Bryant, doing business as Fair Realty, employs Chris and Deborah as salespersons. Tammy contracts with Bryant to sell her house because she is aware of the good reputation of Fair Realty's salespersons. In this situation:

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

Contracts

Agency

Sales

Negotiable Instruments

Unincorporated Business Associations

Corporations

Debtor and Creditor Relations

Regulation of Business

Property

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