Question 1

The laws that an employer must comply with relative to his employees also apply to his contracts with independent contractors.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following statements best defines customary authority?

Accepted Answer

A)  It is the authority specifically delegated to an agent by the agreement creating the agency. 
B)  It is the authority to do things not specifically listed in a contract so that the purpose of the agency can be fulfilled. 
C)  It is the authority to act on behalf of another that arises when such agents ordinarily possess such powers. 
D)  It is the authority that an agent is believed to have because of the principal's behavior. 
A)  It is the authority specifically delegated to an agent by the agreement creating the agency. 
B)  It is the authority to do things not specifically listed in a contract so that the purpose of the agency can be fulfilled. 
C)  It is the authority to act on behalf of another that arises when such agents ordinarily possess such powers. 
D)  It is the authority that an agent is believed to have because of the principal's behavior. C

Question 3

Which of the following tasks can be delegated to an agent?

Accepted Answer

A)  Voting in a public election 
B)  Executing a will 
C)  Signing a business merger 
D)  Publishing a libelous statement in a magazine 
A)  Voting in a public election 
B)  Executing a will 
C)  Signing a business merger 
D)  Publishing a libelous statement in a magazine C

Question 4

A(n) _____ is one who receives possession of another's property for the purpose of sale on commission.

Accepted Answer

A)  factor 
B)  factor del credere 
C)  broker 
D)  attorney in fact 
A)  factor 
B)  factor del credere 
C)  broker 
D)  attorney in fact

Question 5

Brokers are also known as commission merchants.

Accepted Answer

A) True 
 B)False

Question 6

The appointment of an agent to execute a formal contract requires a formal contract of appointment.

Accepted Answer

A) True 
 B)False

Question 7

Can anyone become an agent? Explain the requirements that one needs to become an agent.

Accepted Answer

Ordinarily, any person who has sufficien

Question 8

An attorney in fact is a special agent.

Accepted Answer

A) True 
 B)False

Question 9

The creation of an agency may be executed through an informal contract.

Accepted Answer

A) True 
 B)False

Question 10

A special agent is one who is authorized to carry out all of the principal's business of a particular kind.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true in the event of a person hiring an independent contractor to perform some tasks?

Accepted Answer

A)  The contract creates a principal-agent relationship. 
B)  The contractor is responsible for the proper performance of the contract. 
C)  The contract controls the contractor as to the manner in which the tasks are to be performed. 
D)  The contractor may be held liable for any injuries that he causes to third parties. 
A)  The contract creates a principal-agent relationship. 
B)  The contractor is responsible for the proper performance of the contract. 
C)  The contract controls the contractor as to the manner in which the tasks are to be performed. 
D)  The contractor may be held liable for any injuries that he causes to third parties.

Question 12

A contract of agency usually involves at least three parties.

Accepted Answer

A) True 
 B)False

Question 13

Agency by estoppel arises when:

Accepted Answer

A)  a person, by words or conduct, leads another to believe that a third party is an agent. 
B)  necessity and unforeseen circumstances force a person to act as an agency. 
C)  a person approves another party's unauthorized act committed in the former's name. 
D)  an agency acquires the authority to do things not specifically enumerated in the agreement. 
A)  a person, by words or conduct, leads another to believe that a third party is an agent. 
B)  necessity and unforeseen circumstances force a person to act as an agency. 
C)  a person approves another party's unauthorized act committed in the former's name. 
D)  an agency acquires the authority to do things not specifically enumerated in the agreement.

Question 14

A general agent may transact business that is outside the scope of his express authority.

Accepted Answer

A) True 
 B)False

Question 15

The principal in a contract of agency is always a corporation.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true of contracts of agency?

Accepted Answer

A)  The legal requirements to be an agent are always the same in all states. 
B)  Corporations cannot act as agents in contracts of agency. 
C)  Every agent must possess a valid license that authorizes him to act as one. 
D)  All people legally competent to act for themselves may act through an agent. 
A)  The legal requirements to be an agent are always the same in all states. 
B)  Corporations cannot act as agents in contracts of agency. 
C)  Every agent must possess a valid license that authorizes him to act as one. 
D)  All people legally competent to act for themselves may act through an agent.

Question 17

Which of the following statements best defines a power of attorney?

Accepted Answer

A)  It is a written instrument indicating how a person's property is to be divided in the event of his/ her death. 
B)  It is an official document that confers the rights of ownership of certain property to another person. 
C)  It is the power conferred by a court to enable a party to manage the financial affairs of another party. 
D)  It is a written instrument indicating the appointment of an agent for the performance of certain tasks. 
A)  It is a written instrument indicating how a person's property is to be divided in the event of his/ her death. 
B)  It is an official document that confers the rights of ownership of certain property to another person. 
C)  It is the power conferred by a court to enable a party to manage the financial affairs of another party. 
D)  It is a written instrument indicating the appointment of an agent for the performance of certain tasks.

Question 18

Which of the following is true when a person wants to ratify the unauthorized acts of an assumed agent?

Accepted Answer

A)  The one attempting to ratify must have been capable of authorizing the act at the time the act was done. 
B)  The one attempting to ratify need not be capable of authorizing the act at the time approval of the act is given. 
C)  It is permissible for the one attempting to ratify to approve part of the act and reject the rest. 
D)  The ratification cannot be made before the third party has withdrawn from the transaction. 
A)  The one attempting to ratify must have been capable of authorizing the act at the time the act was done. 
B)  The one attempting to ratify need not be capable of authorizing the act at the time approval of the act is given. 
C)  It is permissible for the one attempting to ratify to approve part of the act and reject the rest. 
D)  The ratification cannot be made before the third party has withdrawn from the transaction.

Question 19

A contract appointing an agent must be in writing if the agency is created to transfer title to real estate.

Accepted Answer

A) True 
 B)False

Question 20

Limitations upon an agent's authority can bind a third party who does not know of them.

Accepted Answer

A) True 
 B)False

Exam 26: Nature and Creation of an Agency

The laws that an employer must comply with relative to his employees also apply to his contracts with independent contractors.

Which of the following statements best defines customary authority?

Which of the following tasks can be delegated to an agent?

A(n) _____ is one who receives possession of another's property for the purpose of sale on commission.

Brokers are also known as commission merchants.

The appointment of an agent to execute a formal contract requires a formal contract of appointment.

Can anyone become an agent? Explain the requirements that one needs to become an agent.

An attorney in fact is a special agent.

The creation of an agency may be executed through an informal contract.

A special agent is one who is authorized to carry out all of the principal's business of a particular kind.

Which of the following is true in the event of a person hiring an independent contractor to perform some tasks?

A contract of agency usually involves at least three parties.

Agency by estoppel arises when:

A general agent may transact business that is outside the scope of his express authority.

The principal in a contract of agency is always a corporation.

Which of the following statements is true of contracts of agency?

Which of the following statements best defines a power of attorney?

Which of the following is true when a person wants to ratify the unauthorized acts of an assumed agent?

A contract appointing an agent must be in writing if the agency is created to transfer title to real estate.

Limitations upon an agent's authority can bind a third party who does not know of them.

Introduction to Law

Courts and Court Procedure

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Con

Warranties, Product Liability, and Cons

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties and Holders in Due Course

Defenses

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Labor Legislation

Introduction to Business Organization

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corpora

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills, Inheritances, and Trusts

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