Question 1

Any expense incurred as a result of an agent's unlawful act must be borne by the agent. ​

Accepted Answer

A) True 
 B)False  True

Question 2

Destruction of the subject matter to be sold by the agent does not terminate the agency. ​

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following best describes an agency coupled with an interest? ​

Accepted Answer

A) It is an agency in which an agent has a financial stake in performance of the contract. 
B) It is an agency in which the agent and the principal are one and the same. 
C) It is an agency in which an agent is authorized to invest in foreign exchange. 
D) It is an agency in which an agent contracts under his or her own name. 
A) It is an agency in which an agent has a financial stake in performance of the contract. 
B) It is an agency in which the agent and the principal are one and the same. 
C) It is an agency in which an agent is authorized to invest in foreign exchange. 
D) It is an agency in which an agent contracts under his or her own name. A

Question 4

Which of the following best describes a durable power of attorney? ​

Accepted Answer

A) It is a verbal agreement designed to be effective even though the principal is dead. 
B) It is a written appointment of agency designed to be effective even though the principal is dead. 
C) It is a verbal agreement designed to be effective even though the principal is incapacitated. 
D) It is a written appointment of agency designed to be effective even though the principal is incapacitated. 
A) It is a verbal agreement designed to be effective even though the principal is dead. 
B) It is a written appointment of agency designed to be effective even though the principal is dead. 
C) It is a verbal agreement designed to be effective even though the principal is incapacitated. 
D) It is a written appointment of agency designed to be effective even though the principal is incapacitated.

Question 5

​ Agents have a duty to keep principals informed of all facts pertinent to the agency. ​

Accepted Answer

A) True 
 B)False

Question 6

When there is a contract of agency, on whom does the law impose duties not specified in the contract? ​

Accepted Answer

A) On both the agent and principal. 
B) On only the agent. 
C) On only the principal. 
D) On neither the agent nor the principal. 
A) On both the agent and principal. 
B) On only the agent. 
C) On only the principal. 
D) On neither the agent nor the principal.

Question 7

Jones acted as Blake's agent for 12 years before this contract of agency was dissolved by Blake. However, Blake failed to convey this fact to those vendors with whom Jones contracted in the past. Which of the following is likely to occur if Jones negotiates future contracts with these vendors on Blake's behalf?

Accepted Answer

A) Blake can rescind those contracts since Jones is no longer an agent. 
B) Blake can sue the vendors for contracting without authorization. 
C) Blake would be bound by those contracts and would have to pay the contracted price. 
D) Blake can claim compensation from Jones for any profits made. 
A) Blake can rescind those contracts since Jones is no longer an agent. 
B) Blake can sue the vendors for contracting without authorization. 
C) Blake would be bound by those contracts and would have to pay the contracted price. 
D) Blake can claim compensation from Jones for any profits made.

Question 8

Which of the following is the way an agent should sign a contract in order to bind the principal and not the agent?

Accepted Answer

A) When the agent is known to be an agent, he or she should sign only his or her name. 
B) The agent should sign only his or her name whether known to be an agent or not. 
C) The agent should sign only with his or her initials. 
D) The agent should sign  his or her name "as agent for principal". 
A) When the agent is known to be an agent, he or she should sign only his or her name. 
B) The agent should sign only his or her name whether known to be an agent or not. 
C) The agent should sign only with his or her initials. 
D) The agent should sign  his or her name "as agent for principal".

Question 9

When an agency agreement does not state the amount of compensation, any compensation will be set on a contingent basis. ​

Accepted Answer

A) True 
 B)False

Question 10

A principal may ratify an unauthorized contract and thus be bound on it. ​

Accepted Answer

A) True 
 B)False

Question 11

A principal ordinarily does not have liability to third parties for contracts made within the actual or the apparent scope of an agent's authority. ​

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a duty a principal has toward the agent?

Accepted Answer

A) A principal must provide the agent with a record of all monetary transactions. 
B) A principal must obey routine instructions from the agent. 
C) A principal must keep the agent informed of all financial activities. 
D) A principal must reimburse the agent for expenses incurred during the agency. 
A) A principal must provide the agent with a record of all monetary transactions. 
B) A principal must obey routine instructions from the agent. 
C) A principal must keep the agent informed of all financial activities. 
D) A principal must reimburse the agent for expenses incurred during the agency.

Question 13

An agent does not incur liability for any losses caused by disobeying a principal's instructions. ​

Accepted Answer

A) True 
 B)False

Question 14

Jack, as a disclosed agent for Mike, purchases two tons of wheat on credit from Bryan. According to the agency contract, Jack is entitled to make such purchases under Mike's name. However, Mike refuses to make payment. Which of the following is true? ​

Accepted Answer

A) Jack can make part-payment and thereby complete the sale. 
B) Bryan can sue Mike for damages. 
C) Jack can refuse payment to Bryan on the basis of an unauthorized sale. 
D) Mike can sue Jack for wrongful purchase and terminate the contract. 
A) Jack can make part-payment and thereby complete the sale. 
B) Bryan can sue Mike for damages. 
C) Jack can refuse payment to Bryan on the basis of an unauthorized sale. 
D) Mike can sue Jack for wrongful purchase and terminate the contract.

Question 15

The acts of an agent that constitute a breach of loyalty are limited and very specific. ​

Accepted Answer

A) True 
 B)False

Question 16

Kerry appointed Stacy as his agent to manage Kerry's antique shop. In addition to stocking the antiques Kerry owned, without Kerry's knowledge, Stacy brought in some items from her attic and sold them too. Since she kept only one cash drawer, she estimated the total amount of money her items had sold for and turned the rest over to Kerry. Kerry learned about that and revoked the agency. What recourse does Stacy have? ​

Accepted Answer

Stacy has no recourse. It is the duty of

Question 17

The termination of a corporation's operation except for activities needed for liquidation is known as . ​

Accepted Answer

A) renunciation 
B) dissolution 
C) destruction 
D) incapacitation 
A) renunciation 
B) dissolution 
C) destruction 
D) incapacitation

Question 18

When an agency is terminated by operation of law, notice need not be given to third parties who have dealt with the agent. ​

Accepted Answer

A) True 
 B)False

Question 19

An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience. ​

Accepted Answer

A) True 
 B)False

Question 20

The principal may terminate the agency by taking actions that are inconsistent with the continuation of the agency. ​

Accepted Answer

A) True 
 B)False

Exam 26: Operation and Termination of an Agency

Any expense incurred as a result of an agent's unlawful act must be borne by the agent. ​

Destruction of the subject matter to be sold by the agent does not terminate the agency. ​

Which of the following best describes an agency coupled with an interest? ​

Which of the following best describes a durable power of attorney? ​

​ Agents have a duty to keep principals informed of all facts pertinent to the agency. ​

When there is a contract of agency, on whom does the law impose duties not specified in the contract? ​

Which of the following is the way an agent should sign a contract in order to bind the principal and not the agent?

When an agency agreement does not state the amount of compensation, any compensation will be set on a contingent basis. ​

A principal may ratify an unauthorized contract and thus be bound on it. ​

A principal ordinarily does not have liability to third parties for contracts made within the actual or the apparent scope of an agent's authority. ​

Which of the following is a duty a principal has toward the agent?

An agent does not incur liability for any losses caused by disobeying a principal's instructions. ​

Jack, as a disclosed agent for Mike, purchases two tons of wheat on credit from Bryan. According to the agency contract, Jack is entitled to make such purchases under Mike's name. However, Mike refuses to make payment. Which of the following is true? ​

The acts of an agent that constitute a breach of loyalty are limited and very specific. ​

The termination of a corporation's operation except for activities needed for liquidation is known as . ​

When an agency is terminated by operation of law, notice need not be given to third parties who have dealt with the agent. ​

An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience. ​

The principal may terminate the agency by taking actions that are inconsistent with the continuation of the agency. ​

Introduction to Law

Courts and Court Procedures

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 Contracts

Warranties Product Liability and Consumer Protection

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties, Holders in Due Course and Defenses

Nature and Creation of an Agency

Employer and Employee Relations

Employees Rights

Introduction to Business Organizations

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corporation

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 Trust

Filters

Any expense incurred as a result of an agent's unlawful act must be borne by the agent.

Destruction of the subject matter to be sold by the agent does not terminate the agency.

Which of the following best describes an agency coupled with an interest?

Which of the following best describes a durable power of attorney?

Agents have a duty to keep principals informed of all facts pertinent to the agency.

When there is a contract of agency, on whom does the law impose duties not specified in the contract?

When an agency agreement does not state the amount of compensation, any compensation will be set on a contingent basis.

A principal may ratify an unauthorized contract and thus be bound on it.

A principal ordinarily does not have liability to third parties for contracts made within the actual or the apparent scope of an agent's authority.

An agent does not incur liability for any losses caused by disobeying a principal's instructions.

Jack, as a disclosed agent for Mike, purchases two tons of wheat on credit from Bryan. According to the agency contract, Jack is entitled to make such purchases under Mike's name. However, Mike refuses to make payment. Which of the following is true?

The acts of an agent that constitute a breach of loyalty are limited and very specific.

The termination of a corporation's operation except for activities needed for liquidation is known as .

When an agency is terminated by operation of law, notice need not be given to third parties who have dealt with the agent.

An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience.

The principal may terminate the agency by taking actions that are inconsistent with the continuation of the agency.