Question 1

An agent is not required to keep which of the following information confidential?

Accepted Answer

A)  Unique business methods 
B)  Customer lists 
C)  Information that his or her principal is engaged in criminal activity 
D)  Business plans 
A)  Unique business methods 
B)  Customer lists 
C)  Information that his or her principal is engaged in criminal activity 
D)  Business plans

Question 2

A principal has no duty to compensate his or her agent if:

Accepted Answer

A)  the agent breached the duty of obedience. 
B)  the agent breached the duty of loyalty. 
C)  it is a gratuitous agency. 
D)  All these are correct. 
A)  the agent breached the duty of obedience. 
B)  the agent breached the duty of loyalty. 
C)  it is a gratuitous agency. 
D)  All these are correct.

Question 3

An attorney retained to handle a particular transaction is an independent contractor and also an agent regarding that transaction.

Accepted Answer

A) True 
 B)False

Question 4

Contractual duties of a principal to an agent include all but the duty to:

Accepted Answer

A)  pay the agent for losses suffered while acting legally as directed by the principal. 
B)  account for financial benefits. 
C)  pay for authorized expenses incurred. 
D)  compensate the agent as specified in the contract. 
A)  pay the agent for losses suffered while acting legally as directed by the principal. 
B)  account for financial benefits. 
C)  pay for authorized expenses incurred. 
D)  compensate the agent as specified in the contract.

Question 5

Agents and principals have mutual fiduciary duties to one another.

Accepted Answer

A) True 
 B)False

Question 6

When is an agency relationship irrevocable?

Accepted Answer

A)  It is never irrevocable. 
B)  When the agency is coupled with an interest of the agent in the subject matter 
C)  When the principal violates his duties to the agent 
D)  When the agency is gratuitous 
A)  It is never irrevocable. 
B)  When the agency is coupled with an interest of the agent in the subject matter 
C)  When the principal violates his duties to the agent 
D)  When the agency is gratuitous

Question 7

An agency will terminate on the occurrence of all but which one of the following?

Accepted Answer

A)  The goal of the agency is accomplished. 
B)  The agent decides to quit. 
C)  The subject matter of the agency is destroyed. 
D)  The principal leaves the country. 
A)  The goal of the agency is accomplished. 
B)  The agent decides to quit. 
C)  The subject matter of the agency is destroyed. 
D)  The principal leaves the country.

Question 8

Steven is a manufacturer's representative for Sellmed Corporation. One day he receives a big-screen television as a gift from one of the clients he contacts on behalf of Sellmed. In this case:

Accepted Answer

A)  Steven must account to Sellmed for the gift he has received. 
B)  the big-screen television belongs to Sellmed rather than to Steven. 
C)  if Steven keeps the TV without telling Sellmed, he will have breached his fiduciary duty to Sellmed. 
D)  All of these are correct. 
A)  Steven must account to Sellmed for the gift he has received. 
B)  the big-screen television belongs to Sellmed rather than to Steven. 
C)  if Steven keeps the TV without telling Sellmed, he will have breached his fiduciary duty to Sellmed. 
D)  All of these are correct.

Question 9

According to the Restatement, whether an agency relationship has been created is determined by using a subjective test.

Accepted Answer

A) True 
 B)False

Question 10

"Electronic agents" are not considered agents despite their name.

Accepted Answer

A) True 
 B)False

Question 11

According to the Second Restatement, in which of the following situations would an agency be terminated by operation of law?

Accepted Answer

A)  An outbreak of war places the principal and agent in the position of alien enemies. 
B)  The death of the individual principal, only upon the agent's notice of the death. 
C)  The agent gives notice to the principal that she is renouncing the authority given to her. 
D)  None of these. 
A)  An outbreak of war places the principal and agent in the position of alien enemies. 
B)  The death of the individual principal, only upon the agent's notice of the death. 
C)  The agent gives notice to the principal that she is renouncing the authority given to her. 
D)  None of these.

Question 12

Carl loans Dan $1,500 for Dan's honeymoon. Dan gives Carl his ruby ring as security for the loan and after a year, tells Carl he may as well sell it to recoup the $1,500. When Dan's wife hears of this, she persuades Dan to call Carl and get back the ring. Can Carl sell it anyway?

Accepted Answer

A)  No, because Carl's agency has been revoked 
B)  No, because an unreasonable amount of time has elapsed 
C)  Yes, because Carl has apparent authority 
D)  Yes, because Dan cannot terminate this agency 
A)  No, because Carl's agency has been revoked 
B)  No, because an unreasonable amount of time has elapsed 
C)  Yes, because Carl has apparent authority 
D)  Yes, because Dan cannot terminate this agency

Question 13

Agency relationships are governed primarily by federal statute.

Accepted Answer

A) True 
 B)False

Question 14

Robert advances money to John so that John can purchase inventory for his business. In return and for security on the loan, John makes Robert his agent. If John:

Accepted Answer

A)  becomes incapacitated, Robert's agency is terminated by operation of law. 
B)  files for bankruptcy, Robert's agency is terminated by operation of law. 
C)  dies, Robert's agency is terminated by operation of law. 
D)  Robert's agency is irrevocable. 
A)  becomes incapacitated, Robert's agency is terminated by operation of law. 
B)  files for bankruptcy, Robert's agency is terminated by operation of law. 
C)  dies, Robert's agency is terminated by operation of law. 
D)  Robert's agency is irrevocable.

Question 15

All employees are agents, but not all agents are employees.

Accepted Answer

A) True 
 B)False

Exam 19: Relationship of Principal and Agent

An agent is not required to keep which of the following information confidential?

A principal has no duty to compensate his or her agent if:

An attorney retained to handle a particular transaction is an independent contractor and also an agent regarding that transaction.

Contractual duties of a principal to an agent include all but the duty to:

Agents and principals have mutual fiduciary duties to one another.

When is an agency relationship irrevocable?

An agency will terminate on the occurrence of all but which one of the following?

Steven is a manufacturer's representative for Sellmed Corporation. One day he receives a big-screen television as a gift from one of the clients he contacts on behalf of Sellmed. In this case:

According to the Restatement, whether an agency relationship has been created is determined by using a subjective test.

"Electronic agents" are not considered agents despite their name.

According to the Second Restatement, in which of the following situations would an agency be terminated by operation of law?

Carl loans Dan $1,500 for Dan's honeymoon. Dan gives Carl his ruby ring as security for the loan and after a year, tells Carl he may as well sell it to recoup the $1,500. When Dan's wife hears of this, she persuades Dan to call Carl and get back the ring. Can Carl sell it anyway?

Agency relationships are governed primarily by federal statute.

Robert advances money to John so that John can purchase inventory for his business. In return and for security on the loan, John makes Robert his agent. If John:

All employees are agents, but not all agents are employees.

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 With Third Parties

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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