Question 1

There are two basic types of power of attorney: special and allocated.

Accepted Answer

A) True 
 B)False  False

Question 2

If a manager has business transactions in one of the European Union countries and wants to terminate an agency relationship, he or she would want to have access to knowledge about which of the following?

Accepted Answer

A)  Chapter IV of the Agency Relationship Law 
B)  Chapter VII of the Employment Relationship 
C)  Article VI of the European Union Regulations 
D)  Article VII of the European Union Regulations 
A)  Chapter IV of the Agency Relationship Law 
B)  Chapter VII of the Employment Relationship 
C)  Article VI of the European Union Regulations 
D)  Article VII of the European Union Regulations A

Question 3

If an agent has no authority to act on behalf of a principal, but the agent still enters into a contract with a third party, the principal is not bound unless ________.

Accepted Answer

A)  the principal ratifies the agreement. 
B)  the principal is an unidentified principal. 
C)  the principal is a partially disclosed principal. 
D)  the principal is expressly barred from disaffirming the agreement. 
E)  a court finds that principal should be bound. 
A)  the principal ratifies the agreement. 
B)  the principal is an unidentified principal. 
C)  the principal is a partially disclosed principal. 
D)  the principal is expressly barred from disaffirming the agreement. 
E)  a court finds that principal should be bound. A

Question 4

An agency relationship is always terminated by insolvency on the part of either the principal or agent.

Accepted Answer

A) True 
 B)False

Question 5

When an agent is an employee and commits a tort, which of the following is true regarding liability of a principal/employer who controls the employee's behavior?

Accepted Answer

A)  The employer can be liable. 
B)  The employer is not liable because as a matter of public policy, a person is singularly liable for his or her torts. 
C)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least thirty days. 
D)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least seven days. 
E)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least six months. 
A)  The employer can be liable. 
B)  The employer is not liable because as a matter of public policy, a person is singularly liable for his or her torts. 
C)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least thirty days. 
D)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least seven days. 
E)  In order to give the employer a chance to evaluate the employee, the employer is liable only if the employee has worked for the employer for at least six months.

Question 6

Carlos wants to purchase a lot, owned by Sarah, that is next door to Sarah's home. Carlos knows Sarah will not sell the lot to him because of his barking dogs that she dislikes. Carlos agrees with Jasmine that Jasmine will purchase the lot from Sarah for him. Jasmine and Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to Jasmine for a price within the scope of Jasmine's authority. Jasmine tells Sarah nothing about her plan to later transfer the lot to Carlos. Before title to the lot is transferred to Jasmine, Carlos tells Jasmine that he no longer wants the lot. Jasmine tells Sarah about Carlos. Sarah tells Jasmine that as far as she is concerned, Jasmine has bought the lot. Sarah says that she plans to move anyway and really does not care whether Jasmine or Carlos ends up with the lot. She just wants her money and is unconcerned about barking dogs, which will be the next owner's problem. Which of the following is true regarding whether Jasmine is personally bound on the contract with Sarah?

Accepted Answer

A)  Jasmine is not personally bound because she was acting on behalf of Carlos. 
B)  Jasmine is personally bound unless she can establish that Sarah would not have sold her the lot if she had known that Carlos was involved; and the contract is, therefore, void. 
C)  Jasmine is personally bound unless she can establish that Carlos has the funds with which to pay Sarah. 
D)  Jasmine is not personally bound unless Carlos has legally filed for bankruptcy. 
E)  Jasmine is personally bound. 
A)  Jasmine is not personally bound because she was acting on behalf of Carlos. 
B)  Jasmine is personally bound unless she can establish that Sarah would not have sold her the lot if she had known that Carlos was involved; and the contract is, therefore, void. 
C)  Jasmine is personally bound unless she can establish that Carlos has the funds with which to pay Sarah. 
D)  Jasmine is not personally bound unless Carlos has legally filed for bankruptcy. 
E)  Jasmine is personally bound.

Question 7

Delorian hires Tiffany as an independent contractor to perform some restoration work. Delorian indicates that if Tiffany will use poisonous lead paint on the walls, she will pay her double for the job. Would Delorian be liable for a tort?

Accepted Answer

A)  No, because Tiffany is not an employee and should have known better. 
B)  No, because companies are not liable for acts of an independent contractor. 
C)  No, because the independent contractor did not have to obey the company. 
D)  Yes, because Delorian directed Tiffany to commit the tort. 
E)  Yes, because the company should have known the independent contract would do what it asked. 
A)  No, because Tiffany is not an employee and should have known better. 
B)  No, because companies are not liable for acts of an independent contractor. 
C)  No, because the independent contractor did not have to obey the company. 
D)  Yes, because Delorian directed Tiffany to commit the tort. 
E)  Yes, because the company should have known the independent contract would do what it asked.

Question 8

In In re Estate of Kurrelmeyer, the case in the text in which the decedent's son sued the wife of the decedent, alleging that in violation of the power of attorney that she held, she invalidly transferred the decedent's home into a trust, which of the following was the result on appeal?

Accepted Answer

A)  That because no extrinsic evidence existed to clarify the meaning of the power of attorney, the transfer was invalid. 
B)  That because no extrinsic evidence existed to clarify the meaning of the power of attorney, the transfer was valid. 
C)  That because the power of attorney did not specifically give the wife the power to transfer property into the trust, the transfer was invalid. 
D)  That based on extrinsic evidence showing the decedent's intent, the power of attorney included the power to transfer the property. 
E)  That based on extrinsic evidence showing the decedent's intent, the power of attorney did not include the power to transfer the property. 
A)  That because no extrinsic evidence existed to clarify the meaning of the power of attorney, the transfer was invalid. 
B)  That because no extrinsic evidence existed to clarify the meaning of the power of attorney, the transfer was valid. 
C)  That because the power of attorney did not specifically give the wife the power to transfer property into the trust, the transfer was invalid. 
D)  That based on extrinsic evidence showing the decedent's intent, the power of attorney included the power to transfer the property. 
E)  That based on extrinsic evidence showing the decedent's intent, the power of attorney did not include the power to transfer the property.

Question 9

Courts must first identify whether property damage or personal injury, or both, is at issue when making decisions about an agency relationship's liability to third parties.

Accepted Answer

A) True 
 B)False

Question 10

What type of principal exists when his or her identity is not known and the third party is not aware that the agent is making an agreement on behalf of the principal?

Accepted Answer

A)  Partially disclosed principal 
B)  Identified principal 
C)  Disclosed principal 
D)  Partially identified principal 
E)  Undisclosed principal 
A)  Partially disclosed principal 
B)  Identified principal 
C)  Disclosed principal 
D)  Partially identified principal 
E)  Undisclosed principal

Question 11

While making a delivery, Elliott, a delivery driver for Sira's Sandwiches, went through the drive through at a local restaurant to get a cup of coffee and bumped into the car in front of him resulting in some damage to the car's bumper. Which of the following is true regarding the liability of Sira's Sandwiches for the damage to the car?

Accepted Answer

A)  As a matter of law, Sira's Sandwiches is not liable because Elliott was acting on his own behalf. 
B)  As a matter of law, Sira's Sandwiches is not liable because only property damage is involved. 
C)  As a matter of law, Sira's Sandwiches is liable because a company is liable for any torts committed by an employee during working hours. 
D)  Whether or not Sira's Sandwiches is liable depends on whether Elliott's acts are seen as substantial departure from his work. 
E)  Whether or not Sira's Sandwiches is liable depends on how long Elliott has worked for the company. 
A)  As a matter of law, Sira's Sandwiches is not liable because Elliott was acting on his own behalf. 
B)  As a matter of law, Sira's Sandwiches is not liable because only property damage is involved. 
C)  As a matter of law, Sira's Sandwiches is liable because a company is liable for any torts committed by an employee during working hours. 
D)  Whether or not Sira's Sandwiches is liable depends on whether Elliott's acts are seen as substantial departure from his work. 
E)  Whether or not Sira's Sandwiches is liable depends on how long Elliott has worked for the company.

Question 12

Daphne was working for Barrett at his jewelry store. She was asked to deliver a piece of jewelry to a homebound client for Barrett. When she was leaving the store, she backed into a customer who was pulling into he parking lot. Barrett had to pay $3,000 to the customer due to Daphne's negligence. Barrett could seek ________ from Daphne for the injuries she caused.

Accepted Answer

A)  reimbursement 
B)  indemnification 
C)  indemnitee 
D)  retainers 
E)  proceeds 
A)  reimbursement 
B)  indemnification 
C)  indemnitee 
D)  retainers 
E)  proceeds

Question 13

[Club Security] Trevor works security at Night Club and often has to escort rowdy patrons outside of the club. One night Trevor was called to separate a fight that started between Zack and Pat. When Trevor approached the fight, he saw Zack on top of Pat, punching him repeatedly. Trevor approached Zack and yelled, "Stop!" and "Security!" Zack would not stop punching Pat. Trevor removed Zack from Pat and tried to restrain him as he was thrashing around the bar. Zack head-butted Trevor in attempt to get away, causing Trevor to fallback. When Trevor stood back up, he threw a chair toward Zack but hit Pat on accident, resulting in a broken leg. Trevor then observed Zack attempting to fight with other customers and tried to take him down by jumping on his back. Zack was injured and suffered a pelvic fracture. Trevor received help from other bar patrons and Zack was escorted out of the building and detained until the police arrived.
-John hired Alex to fly to California and drive back a new car he purchased. Alex successfully drove the car back and John was satisfied with Alex's services. Has the agency relationship terminated?

Accepted Answer

A)  Yes, by fulfillment of purpose. 
B)  No, John must put the termination in writing. 
C)  No, John must put the termination in form of a publication. 
D)  Yes, by lapse of time. 
E)  Yes, by mutual agreement of the parties. 
A)  Yes, by fulfillment of purpose. 
B)  No, John must put the termination in writing. 
C)  No, John must put the termination in form of a publication. 
D)  Yes, by lapse of time. 
E)  Yes, by mutual agreement of the parties.

Question 14

An agent who commits a tort that injures a third party is personally liable for his or her actions, ________.

Accepted Answer

A)  but the principal can also be liable. 
B)  only if the agent was on a mission for an identified principal or a partially disclosed principal. 
C)  regardless of both the classification and the liability of the principal. 
D)  but can also seek indemnification from the principal. 
E)  only if the principal had the agent sign a waiver. 
A)  but the principal can also be liable. 
B)  only if the agent was on a mission for an identified principal or a partially disclosed principal. 
C)  regardless of both the classification and the liability of the principal. 
D)  but can also seek indemnification from the principal. 
E)  only if the principal had the agent sign a waiver.

Question 15

Constructive notice that an agency relationship has terminated is usually completed by publication.

Accepted Answer

A) True 
 B)False

Question 16

[Beach Home] Wendy hires Rob to find and negotiate a price for her perfect vacation home. Rob previously helped Wendy find a home and Wendy was very satisfied with his service. Wendy had many demands for her dream vacation home and told Rob that each demand was nonnegotiable. Wendy desired her home to have five bedrooms, seven bathrooms, a large master suite with a balcony, a pool house, and she wanted the property to be within a block of the beach. Rob informed Wendy this was a high demand and he was not confident he could find a property that met all of Wendy's requirements within her price range. Wendy thought Rob was underestimating himself and told him that she was not willing to budge. Rob finds a home that meets all of her requirements, except it is five blocks from the beach. Rob informed the seller he was working on behalf of a principal and the property met all of her requirements. Rob negotiates an outstanding price and is excited to share it with Wendy. Rob tells Wendy about the stellar price and Wendy is devastated that the property is not in her defined location. She immediately calls the seller to rescind the offer but the seller declines, stating the offer is binding because as the seller knew, Rob had authority to contract and the seller was not aware of Wendy's requirements.
-What is Wendy's best cause of action?

Accepted Answer

A)  Wendy should sue the seller for breach of implied warranty. 
B)  Wendy should sue Rob for breach of implied warranty. 
C)  Wendy should sue the seller for breach of contract. 
D)  Wendy should sue Rob for breach of contract. 
E)  Wendy does not have a valid cause of action against the seller or Rob. 
A)  Wendy should sue the seller for breach of implied warranty. 
B)  Wendy should sue Rob for breach of implied warranty. 
C)  Wendy should sue the seller for breach of contract. 
D)  Wendy should sue Rob for breach of contract. 
E)  Wendy does not have a valid cause of action against the seller or Rob.

Question 17

The text discussed the case of Burlington Industries, Inc. v. Ellerth, where the U.S. Supreme Court addressed workplace harassment and defined two ways an employer may be liable for torts of its employees while acting outside the scope of employment. Which of the following is one of those ways?

Accepted Answer

A)  The employer knew or should have known of the employee's harm and failed to stop it. 
B)  The employer outsourced its human resources overseas and failed to follow traditional U.S. human resources procedures. 
C)  The employer failed to conduct a semi-annual training on appropriate workplace behavior. 
D)  The employer failed to monitor its employees. 
E)  The employer had bad hiring practices. 
A)  The employer knew or should have known of the employee's harm and failed to stop it. 
B)  The employer outsourced its human resources overseas and failed to follow traditional U.S. human resources procedures. 
C)  The employer failed to conduct a semi-annual training on appropriate workplace behavior. 
D)  The employer failed to monitor its employees. 
E)  The employer had bad hiring practices.

Question 18

In Larry S. Lawrence v. Bainbridge Apartments, the case in the text in which the window washer argued that he was entitled to recover against the building owner for his injuries in a fall, which of the following was the result?

Accepted Answer

A)  The window washer was entitled to workers' compensation as an employee. 
B)  The window washer was entitled to a recovery in tort based on the inherently dangerous activity at issue and the defendant's failure to take sufficient precautions. 
C)  The window washer was entitled to recovery for breach of contract. 
D)  The window washer was not entitled to recover because he took insufficient precautions for his own safety. 
E)  The window washer was entitled to no recovery based on his status as an independent contractor. 
A)  The window washer was entitled to workers' compensation as an employee. 
B)  The window washer was entitled to a recovery in tort based on the inherently dangerous activity at issue and the defendant's failure to take sufficient precautions. 
C)  The window washer was entitled to recovery for breach of contract. 
D)  The window washer was not entitled to recover because he took insufficient precautions for his own safety. 
E)  The window washer was entitled to no recovery based on his status as an independent contractor.

Question 19

If an agent makes a contract with a third party that expressly excludes the principal from the contract, which statement effectively describes the liability of the principal?

Accepted Answer

A)  The principal is liable on the contract because it is unconscionable to exclude a principal from a contract. 
B)  The principal is liable on the contract only if the principal is an unidentified principal. 
C)  The principal is liable on the contract only if the principal is a partially disclosed principal. 
D)  The principal is liable on the contract unless the principal gave the agent authority in writing to make the agreement with the third party. 
E)  The principal is not liable on the contract. 
A)  The principal is liable on the contract because it is unconscionable to exclude a principal from a contract. 
B)  The principal is liable on the contract only if the principal is an unidentified principal. 
C)  The principal is liable on the contract only if the principal is a partially disclosed principal. 
D)  The principal is liable on the contract unless the principal gave the agent authority in writing to make the agreement with the third party. 
E)  The principal is not liable on the contract.

Question 20

When would an agent who breaches his or her agreement be liable for a breach of implied warranty?

Accepted Answer

A)  When the principal is undisclosed. 
B)  When the principal is partially disclosed. 
C)  When the principal is disclosed. 
D)  When the principal is disclosed or partially disclosed. 
E)  When the principal is partially undisclosed. 
A)  When the principal is undisclosed. 
B)  When the principal is partially disclosed. 
C)  When the principal is disclosed. 
D)  When the principal is disclosed or partially disclosed. 
E)  When the principal is partially undisclosed.

Exam 34: Liability to Third Parties and Termination

There are two basic types of power of attorney: special and allocated.

If a manager has business transactions in one of the European Union countries and wants to terminate an agency relationship, he or she would want to have access to knowledge about which of the following?

If an agent has no authority to act on behalf of a principal, but the agent still enters into a contract with a third party, the principal is not bound unless ________.

An agency relationship is always terminated by insolvency on the part of either the principal or agent.

When an agent is an employee and commits a tort, which of the following is true regarding liability of a principal/employer who controls the employee's behavior?

Delorian hires Tiffany as an independent contractor to perform some restoration work. Delorian indicates that if Tiffany will use poisonous lead paint on the walls, she will pay her double for the job. Would Delorian be liable for a tort?

In In re Estate of Kurrelmeyer, the case in the text in which the decedent's son sued the wife of the decedent, alleging that in violation of the power of attorney that she held, she invalidly transferred the decedent's home into a trust, which of the following was the result on appeal?

Courts must first identify whether property damage or personal injury, or both, is at issue when making decisions about an agency relationship's liability to third parties.

What type of principal exists when his or her identity is not known and the third party is not aware that the agent is making an agreement on behalf of the principal?

An agent who commits a tort that injures a third party is personally liable for his or her actions, ________.

Constructive notice that an agency relationship has terminated is usually completed by publication.

The text discussed the case of Burlington Industries, Inc. v. Ellerth, where the U.S. Supreme Court addressed workplace harassment and defined two ways an employer may be liable for torts of its employees while acting outside the scope of employment. Which of the following is one of those ways?

In Larry S. Lawrence v. Bainbridge Apartments, the case in the text in which the window washer argued that he was entitled to recover against the building owner for his injuries in a fall, which of the following was the result?

If an agent makes a contract with a third party that expressly excludes the principal from the contract, which statement effectively describes the liability of the principal?

When would an agent who breaches his or her agreement be liable for a breach of implied warranty?

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

Filters