Question 1

Mark (age 16) appoints Joe (age 21) as his agent to purchase a digital camcorder from Electronic World. The transaction is:

Accepted Answer

A)  void because Mark is a minor. 
B)  voidable by Electronic World because Mark is a minor. 
C)  voidable by Mark because he is a minor. 
D)  not voidable because Joe is not a minor. 
A)  void because Mark is a minor. 
B)  voidable by Electronic World because Mark is a minor. 
C)  voidable by Mark because he is a minor. 
D)  not voidable because Joe is not a minor.

Question 2

Which of the following will terminate an agency coupled with an interest?

Accepted Answer

A)  The death of the principal. 
B)  The bankruptcy of the principal. 
C)  The incapacity of the principal. 
D)  None of these will terminate such an agency. 
A)  The death of the principal. 
B)  The bankruptcy of the principal. 
C)  The incapacity of the principal. 
D)  None of these will terminate such an agency.

Question 3

Discuss the nature of agency, including the scope of agency purposes.

Accepted Answer

Agency is a consensual relationship betw

Question 4

All of the following except which one is a duty of an agent?

Accepted Answer

A)  Account for money received on behalf of his principal. 
B)  Inform his principal of any information relevant to his agency. 
C)  Refrain from competing with his principal. 
D)  After the agency is terminated, refrain from using any information gained while an agent. 
A)  Account for money received on behalf of his principal. 
B)  Inform his principal of any information relevant to his agency. 
C)  Refrain from competing with his principal. 
D)  After the agency is terminated, refrain from using any information gained while an agent.

Question 5

An agency contract appointing the agent for a period of more than one year must be in writing.

Accepted Answer

A) True 
 B)False

Question 6

Lewis employs Donna under a one-year contract to sell Lewis's line of leather wallets and checkbook covers. If without Donna's knowledge, Lewis dies:

Accepted Answer

A)  under the Second Restatement, Donna's actual authority will not terminate until the end of the one-year contractual term. 
B)  under the Second Restatement, Donna's actual authority will not terminate until she has notice of Lewis's death. 
C)  under the Third Restatement, Donna's actual authority will not terminate until she receives notice of Lewis's death. 
D)  under both the Second and Third Restatements, Donna's actual authority will terminate at either the end of her one-year contractual term or when she receives notice of Lewis's death, whichever occurs first. 
A)  under the Second Restatement, Donna's actual authority will not terminate until the end of the one-year contractual term. 
B)  under the Second Restatement, Donna's actual authority will not terminate until she has notice of Lewis's death. 
C)  under the Third Restatement, Donna's actual authority will not terminate until she receives notice of Lewis's death. 
D)  under both the Second and Third Restatements, Donna's actual authority will terminate at either the end of her one-year contractual term or when she receives notice of Lewis's death, whichever occurs first.

Question 7

The capacity to act through an agent, depends on the capacity of the agent to do the act.

Accepted Answer

A) True 
 B)False

Question 8

The Third Restatement specifies that an agency is automatically terminated when the principal goes bankrupt.

Accepted Answer

A) True 
 B)False

Question 9

An agency agreement must always be in writing.

Accepted Answer

A) True 
 B)False

Question 10

Since the agency relationship is created by agreement, the agency relationship may be terminated at any time by mutual agreement of the principal and the agent.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Harold, an artist, contracts to paint a portrait of Irene from a photograph. However, he has one of his students do the actual work. This is a proper delegation of authority to an agent.

Accepted Answer

A) True 
 B)False

Question 13

An "electronic agent" is not a true agent since it is not a person.

Accepted Answer

A) True 
 B)False

Question 14

The fiduciary duty of an agent has no bearing upon his ability to act on behalf of a competitor of his principal.

Accepted Answer

A) True 
 B)False

Question 15

A durable power of attorney differs from a power of attorney in that the durable power of attorney:

Accepted Answer

A)  is a formal written instrument, whereas the power of attorney may be informal and oral. 
B)  must follow a standardized form set forth in the federal Uniform Durable Power of Attorney Act. 
C)  becomes effective upon the principal's subsequent incapacity or the agent's authority is not affected by the principal's subsequent incapacity. 
D)  is governed by Article 3 of the UCC. 
A)  is a formal written instrument, whereas the power of attorney may be informal and oral. 
B)  must follow a standardized form set forth in the federal Uniform Durable Power of Attorney Act. 
C)  becomes effective upon the principal's subsequent incapacity or the agent's authority is not affected by the principal's subsequent incapacity. 
D)  is governed by Article 3 of the UCC.

Question 16

Margie appoints Bryant as her agent to sell goods for the best price he can get. Bryant sells the goods in a market that is glutted and obtains a low price, even though he could have obtained a higher price in a nearby market, with a little more effort. Bryant is liable to Margie for breach of the duty of diligence.

Accepted Answer

A) True 
 B)False

Question 17

An agent's duty to inform:

Accepted Answer

A)  applies to material and nonmaterial facts relating to the agency. 
B)  does not apply if providing facts to the principal would violate a superior duty owed by the agent to another person. 
C)  arises because notice to an agent does not constitute notice to the principal. 
D)  All of these. 
A)  applies to material and nonmaterial facts relating to the agency. 
B)  does not apply if providing facts to the principal would violate a superior duty owed by the agent to another person. 
C)  arises because notice to an agent does not constitute notice to the principal. 
D)  All of these.

Question 18

An agent may lose the right to compensation:

Accepted Answer

A)  by breaching the agency contract willfully and deliberately. 
B)  if the specified result of the contract is not obtained. 
C)  if the duty of loyalty is breached. 
D)  In all of these situations. 
A)  by breaching the agency contract willfully and deliberately. 
B)  if the specified result of the contract is not obtained. 
C)  if the duty of loyalty is breached. 
D)  In all of these situations.

Question 19

An agent may not make a secret profit from any transaction subject to the agency.

Accepted Answer

A) True 
 B)False

Question 20

Bob owns a business delivering coffee and donuts within the downtown area of the city. Smith Co. calls him to deliver a large quantity of his products to their local office. While taking a coffee urn through the Smith Co.'s office, Bob drops it on Lester, scalding him. Who is liable?

Accepted Answer

A)  Smith Co. and Bob are liable. 
B)  Bob alone is liable. 
C)  Lester has to absorb the cost himself since he assumed the risk by working at Smith Co. 
D)  Only Smith Co. is liable. 
A)  Smith Co. and Bob are liable. 
B)  Bob alone is liable. 
C)  Lester has to absorb the cost himself since he assumed the risk by working at Smith Co. 
D)  Only Smith Co. is liable.

Exam 28: Relationship of Principal and Agent

Mark (age 16) appoints Joe (age 21) as his agent to purchase a digital camcorder from Electronic World. The transaction is:

Which of the following will terminate an agency coupled with an interest?

Discuss the nature of agency, including the scope of agency purposes.

All of the following except which one is a duty of an agent?

An agency contract appointing the agent for a period of more than one year must be in writing.

Lewis employs Donna under a one-year contract to sell Lewis's line of leather wallets and checkbook covers. If without Donna's knowledge, Lewis dies:

The capacity to act through an agent, depends on the capacity of the agent to do the act.

The Third Restatement specifies that an agency is automatically terminated when the principal goes bankrupt.

An agency agreement must always be in writing.

Since the agency relationship is created by agreement, the agency relationship may be terminated at any time by mutual agreement of the principal and the agent.

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

Harold, an artist, contracts to paint a portrait of Irene from a photograph. However, he has one of his students do the actual work. This is a proper delegation of authority to an agent.

An "electronic agent" is not a true agent since it is not a person.

The fiduciary duty of an agent has no bearing upon his ability to act on behalf of a competitor of his principal.

A durable power of attorney differs from a power of attorney in that the durable power of attorney:

An agent's duty to inform:

An agent may lose the right to compensation:

An agent may not make a secret profit from any transaction subject to the agency.

Bob owns a business delivering coffee and donuts within the downtown area of the city. Smith Co. calls him to deliver a large quantity of his products to their local office. While taking a coffee urn through the Smith Co.'s office, Bob drops it on Lester, scalding him. Who is liable?

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

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