Question 1

The court in Connes v. Molalla Transport System, Inc. found:

Accepted Answer

A)  the tort of negligent hiring imposes a duty on employers to ensure its employees will not engage in violent acts. 
B)  the scope of an employer's duty to exercise reasonable care in hiring bears no relationship to the anticipated degree of contact the employee will have with others. 
C)  employers have a duty to investigate all potential employees to make sure they will not create an undue risk of harm to others. 
D)  the employer had no duty to independently investigate this potential employee's criminal background because the employer had no reason to foresee that hiring the person would create an unreasonable risk of harm to others. 
A)  the tort of negligent hiring imposes a duty on employers to ensure its employees will not engage in violent acts. 
B)  the scope of an employer's duty to exercise reasonable care in hiring bears no relationship to the anticipated degree of contact the employee will have with others. 
C)  employers have a duty to investigate all potential employees to make sure they will not create an undue risk of harm to others. 
D)  the employer had no duty to independently investigate this potential employee's criminal background because the employer had no reason to foresee that hiring the person would create an unreasonable risk of harm to others.

Question 2

An example of successful land purchases made by agents for an undisclosed principal took place in Florida for Walt Disney Productions.

Accepted Answer

A) True 
 B)False

Question 3

An agent acts for a(n) __________ principal when the agent appears to be acting on her own behalf and the third person with whom she is dealing has no knowledge that she is an agent.

Accepted Answer

A)  unidentified 
B)  undisclosed 
C)  unauthorized 
D)  disclosed 
A)  unidentified 
B)  undisclosed 
C)  unauthorized 
D)  disclosed

Question 4

Southern Furniture Co. hired Chuck to drive a company truck and deliver furniture. Chuck had a spotless driving record and did well on his driving test. Belinda ordered a chair from Southern Furniture Co. and arranged for its delivery on her lunch hour. Belinda was at home when Chuck delivered the chair. After delivering the chair, Chuck brutally raped Belinda, causing severe physical and psychological injuries. Chuck was convicted in the criminal courts. During the trial it was revealed that Chuck had been in a mental institution for the criminally insane for two years because he had brutally assaulted his mother and other women. He also had a lengthy criminal rap sheet involving theft crimes. Belinda sought compensation for her physical and psychological injuries from both Chuck and Southern Furniture Co. in civil court. Discuss what the probable outcome of this case would be with regard to the issues of:
(a) respondeat superior and
(b) general tort liability of principals for the unauthorized acts of their agents.

Accepted Answer

(a) Respondeat superior -An employer may

Question 5

Compare and contrast ratification and adoption of unauthorized contracts.

Accepted Answer

Both ratification and adoption are means

Question 6

No apparent authority exists where the third party knows that the agent has no actual authority.

Accepted Answer

A) True 
 B)False

Question 7

A subagent owes a fiduciary duty to both the agent and to the principal.

Accepted Answer

A) True 
 B)False

Question 8

An agent, at his principal's direction, fixes prices with the principal's competitors. The result is:

Accepted Answer

A)  only the agent is criminally liable. 
B)  only the principal is criminally liable. 
C)  both the principal and agent are criminally liable. 
D)  any liability would be civil only. 
A)  only the agent is criminally liable. 
B)  only the principal is criminally liable. 
C)  both the principal and agent are criminally liable. 
D)  any liability would be civil only.

Question 9

Which of the following is correct with regard to a contract entered into with a third person by an agent of an undisclosed principal?

Accepted Answer

A)  The agent has no liability to the third person if the agent has acted within the scope of her authority. 
B)  The agent is personally liable upon the contract. 
C)  The undisclosed principal has no liability on the contract, even if her existence and identity are discovered by the third person. 
D)  If the third party obtains a judgment against the principal and the judgment is satisfied, the agent may still have liability to that third party. 
A)  The agent has no liability to the third person if the agent has acted within the scope of her authority. 
B)  The agent is personally liable upon the contract. 
C)  The undisclosed principal has no liability on the contract, even if her existence and identity are discovered by the third person. 
D)  If the third party obtains a judgment against the principal and the judgment is satisfied, the agent may still have liability to that third party.

Question 10

Regarding the effect of termination of agency on authority, the general rule of the Third Restatement is that:

Accepted Answer

A)  it is reasonable for third parties to assume that an agent's actual authority continues unless and until the third party has notice of circumstances that make it unreasonable to continue that assumption. 
B)  the termination of actual authority automatically terminates any apparent authority held by the agent. 
C)  apparent authority ends only upon actual notice, either oral or written, to the third party. 
D)  apparent authority continues until the third party with whom the agent has previously dealt on credit receives constructive notice of termination. 
A)  it is reasonable for third parties to assume that an agent's actual authority continues unless and until the third party has notice of circumstances that make it unreasonable to continue that assumption. 
B)  the termination of actual authority automatically terminates any apparent authority held by the agent. 
C)  apparent authority ends only upon actual notice, either oral or written, to the third party. 
D)  apparent authority continues until the third party with whom the agent has previously dealt on credit receives constructive notice of termination.

Question 11

Gerald, an agent, who makes a contract with Adele on behalf of Leon, an unidentified principal, may maintain in Gerald's own name a breach of contract action against Adele.

Accepted Answer

A) True 
 B)False

Question 12

The doctrine of __________ is the basis for an employer's liability for an unauthorized tort committed by an employee within the scope of employment.

Accepted Answer

A)  indemnification 
B)  respondeat superior 
C)  apparent authority 
D)  direct liability 
A)  indemnification 
B)  respondeat superior 
C)  apparent authority 
D)  direct liability

Question 13

Discuss whether the principal is liable in each of the following situations. 
a. Patricia hires Andrew, an attorney, to negotiate a contract to purchase some property. She agrees to pay him $75 an hour for his services, and he agrees to use his own office and secretarial staff to negotiate and draft the agreement. One day, Andrew is driving his own automobile to a meeting with Edward to discuss the purchase of the land that he owns. Andrew drives too fast for conditions and has a minor traffic accident that results in $600 damage to the other vehicle. 
b. Mel owns a retail store. He hires Sarah to work for him as a clerk in the home furnishings department. Mel instructs Sarah to make certain representations to customers regarding a microwave oven. Mel knows these misrepresentations are false, but Sarah does not. Henrietta buys a microwave from Sarah in reliance on the misrepresentations. 
c. ABC Inc. hires Keith as an outside salesman and instructs him to call on customers in a specified territory and to solicit orders for its products. One day Keith is driving the company car a little too fast for conditions on his way to call on a client. He accidentally drives the wrong way on a one-way street and has an accident with another vehicle that results in $6,000 in property damage and $30,000 in medical expenses. 
d. The A & B Machine Company (ABMC) hires John as an outside salesman for its computers. It sets high sales quotas for him and instructs him to beat up salesmen from competing firms in order to keep them away from ABMC customers. In order to meet his monthly sales quota, John roughs up Ralph, who is a salesman for a competing firm and then tells Ralph to find his own customers and to stay away from John's territory.

Accepted Answer

a. Patricia is the principal and Andrew

Question 14

The principal may ratify either the entire contract or the part that is advantageous to the principal.

Accepted Answer

A) True 
 B)False

Question 15

Edward is hired to manage Fred's business. Which of the following is untrue regarding Edward's authority?

Accepted Answer

A)  Edward has authority to sell a used cash register when he buys a new computerized checkout system for the store. 
B)  Edward has authority to send bills to customers and to accept payments on behalf of Fred. 
C)  Edward can hire employees, but he cannot fire them without Fred's consent. 
D)  Edward can enter into contract with wholesalers for merchandise in the store. 
A)  Edward has authority to sell a used cash register when he buys a new computerized checkout system for the store. 
B)  Edward has authority to send bills to customers and to accept payments on behalf of Fred. 
C)  Edward can hire employees, but he cannot fire them without Fred's consent. 
D)  Edward can enter into contract with wholesalers for merchandise in the store.

Question 16

Gary hires Doug to burn off his fields to kill the weeds. If the fire gets out of control because of Doug's negligence and the fire damages Philip's wood fence:

Accepted Answer

A)  Gary has no liability because Doug was an independent contractor. 
B)  Doug bears sole responsibility for damage to the fence because it was his negligence that caused the fire to escape the intended boundaries. 
C)  Gary is vicariously liable because he authorized an abnormally dangerous activity. 
D)  Philip cannot hold Gary liable unless Gary was personally involved in the act of burning the fields. 
A)  Gary has no liability because Doug was an independent contractor. 
B)  Doug bears sole responsibility for damage to the fence because it was his negligence that caused the fire to escape the intended boundaries. 
C)  Gary is vicariously liable because he authorized an abnormally dangerous activity. 
D)  Philip cannot hold Gary liable unless Gary was personally involved in the act of burning the fields.

Question 17

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.

Accepted Answer

A) True 
 B)False

Question 18

Dan, an agent for Ramona, sees what he thinks is a good deal for Ramona. Without asking whether he has authority to negotiate the deal, Dan enters into a contract on Ramona's behalf. Ramona says later that she isn't interested. Is Ramona liable on the contract? Is Dan liable on the contract? Explain.

Accepted Answer

If Dan has express, implied, or apparent

Question 19

Apparent authority arises out of words or conduct of a disclosed or unidentified (partially disclosed) principal manifested to third persons.

Accepted Answer

A) True 
 B)False

Question 20

Ridley is setting up a new architectural lighting company and is acting as the promoter of the  as yet unincorporated business.  She needs to order some specialized equipment in order to get started.  She orders the equipment, which is financed in the name of the business.  The corporation will be liable for paying for this equipment because Ridley is its agent.

Accepted Answer

A) True 
 B)False

Exam 29: Relationship With Third Parties

The court in Connes v. Molalla Transport System, Inc. found:

An example of successful land purchases made by agents for an undisclosed principal took place in Florida for Walt Disney Productions.

An agent acts for a(n) __________ principal when the agent appears to be acting on her own behalf and the third person with whom she is dealing has no knowledge that she is an agent.

Compare and contrast ratification and adoption of unauthorized contracts.

No apparent authority exists where the third party knows that the agent has no actual authority.

A subagent owes a fiduciary duty to both the agent and to the principal.

An agent, at his principal's direction, fixes prices with the principal's competitors. The result is:

Which of the following is correct with regard to a contract entered into with a third person by an agent of an undisclosed principal?

Regarding the effect of termination of agency on authority, the general rule of the Third Restatement is that:

Gerald, an agent, who makes a contract with Adele on behalf of Leon, an unidentified principal, may maintain in Gerald's own name a breach of contract action against Adele.

The doctrine of __________ is the basis for an employer's liability for an unauthorized tort committed by an employee within the scope of employment.

The principal may ratify either the entire contract or the part that is advantageous to the principal.

Edward is hired to manage Fred's business. Which of the following is untrue regarding Edward's authority?

Gary hires Doug to burn off his fields to kill the weeds. If the fire gets out of control because of Doug's negligence and the fire damages Philip's wood fence:

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.

Apparent authority arises out of words or conduct of a disclosed or unidentified (partially disclosed) principal manifested to third persons.

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 of Principal and Agent

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

Filters