Exam 29: Relationship With Third Partiespart Vii: Business Associations

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Arthur is authorized to collect accounts for Peter.Peter dies, and there is no notice given to Theresa, who pays Arthur, as she has done in the past.Under the rules of the Third Restatement and the Uniform Durable Power of Attorney Act, if Arthur absconds with the money, Theresa will not have to pay again.

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(True/False)

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Question 1

Correct Answer:

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True

Compare and contrast ratification and adoption of unauthorized contracts.

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(Essay)

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Question 2

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Both ratification and adoption are means of affirming prior unauthorized acts.Ratification binds the principal and the third party as if the purported agent had initially acted with actual authority.Once made, ratification is irrevocable.Ratification frees the agent from liability to the principal for acting without or beyond authority.The agent is also freed from liability to the third party for inducing the third party to enter the contract without the principal's authority.Adoption is the act of a corporation to affirm a preincorporation contract made on its behalf.The corporation, in addition to the promoter, becomes bound.Adoption differs from ratification because it is not retroactive and does not release the promoter from liability.The majority of states do not allow a corporation to ratify a promoter's contracts because the corporation did not exist when the contracts were made.

Paul is a truck driver who owns his own truck and delivers loads to various companies for nine months out of the year.For the hard winter months, Paul goes to Key West to "put his feet in the sand." One evening while delivering a load for Emblem Helicopter Parts Co., Paul got into a "little scuffle" with a rowdy trucker who was giving Nell, a waitress at the DewDrop Inn Cafe, a hard time.Paul knocked out five of "Rowdy's" teeth.Rowdy is suing Paul and Emblem for his injuries.Discuss whether Rowdy will win against Emblem on the issue of: (a) respondeat superior and (b) unauthorized acts of agents.

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Question 3

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(a) Respondeat superior -No.Paul is an independent contractor because he works for many companies and directs his own working time.(b) Unauthorized act of an agent.Paul is probably not an agent; however, if he were an agent, without any negligence evident on the part of Emblem in their hiring, supervising, controlling or training, then Rowdy would not win on this issue.

Actual notice requires a written, not oral, communication to the third party.

(True/False)

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Question 4

Under the Second Restatement, all third parties that were aware of the apparent authority of the agent must have actual and not constructive notice to terminate the agent's apparent authority.

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Question 5

Sam is George's agent.George decides to fire Sam.Mel is an old customer of George's and he has dealt with Sam for over 20 years.Ellie is a prospective customer that Sam has spoken with on numerous occasions in his capacity as George's agent, and George was aware of the preliminary negotiations.Mel orders goods from Sam after Sam has been fired but Mel has no knowledge of the firing.Later, Sam takes an order from Ellie, who does not know of the firing.Using the rules of the Second Restatement, which of the following statements would apply to this scenario?

(Multiple Choice)

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Question 6

The contractual liability of the principal may depend upon whether the principal is disclosed, unidentified (partially disclosed), or undisclosed.

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Question 7

Identify three ways an agent may agree to become liable on a contract between the principal and the third party.

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Question 8

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

(True/False)

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Question 9

Which of the following is true with regard to contractual relations between the principal and a third party?

(Multiple Choice)

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Question 10

Under the rule of the Third Restatement, if a principal becomes incapacitated, the agency relationship terminates and all authority ceases.

(True/False)

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Question 11

An undisclosed principal may result in which of the following?

(Multiple Choice)

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Question 12

Vista Properties, Inc.hires Lance to manage its 144-unit apartment complex.No provision for expenses is made in the contracts.If Lance arranges for a repairperson to do ordinary maintenance, he will be personally liable for these expenses, because he has no authority to incur them.

(True/False)

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Question 13

Apparent authority may arise by an agent's showing a third party a document from the principal authorizing the agent to enter into such a transaction.

(True/False)

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Question 14

Which of the following is correct with regard to the doctrine of respondeat superior ?

(Multiple Choice)

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Question 15

Frank, acting as a promoter for Garleen Co., a corporation not yet in existence, makes a contract with Towne Supplies.When Garleen Co.is formed, it may:

(Multiple Choice)

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Question 16

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.

(True/False)

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Question 17

Unless otherwise agreed, an agent making a contract with actual or apparent authority on behalf of an unidentified principal is a party to the contract.

(True/False)

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Question 18

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.

(True/False)

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Question 19

An agent is not normally liable on a contract he makes with a third party on behalf of a(n):

(Multiple Choice)

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Question 20

Showing 1 - 20 of 84

Exam 29: Relationship With Third Partiespart Vii: Business Associations

Compare and contrast ratification and adoption of unauthorized contracts.

Actual notice requires a written, not oral, communication to the third party.

Under the Second Restatement, all third parties that were aware of the apparent authority of the agent must have actual and not constructive notice to terminate the agent's apparent authority.

The contractual liability of the principal may depend upon whether the principal is disclosed, unidentified (partially disclosed), or undisclosed.

Identify three ways an agent may agree to become liable on a contract between the principal and the third party.

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

Which of the following is true with regard to contractual relations between the principal and a third party?

Under the rule of the Third Restatement, if a principal becomes incapacitated, the agency relationship terminates and all authority ceases.

An undisclosed principal may result in which of the following?

Vista Properties, Inc.hires Lance to manage its 144-unit apartment complex.No provision for expenses is made in the contracts.If Lance arranges for a repairperson to do ordinary maintenance, he will be personally liable for these expenses, because he has no authority to incur them.

Apparent authority may arise by an agent's showing a third party a document from the principal authorizing the agent to enter into such a transaction.

Which of the following is correct with regard to the doctrine of respondeat superior ?

Frank, acting as a promoter for Garleen Co., a corporation not yet in existence, makes a contract with Towne Supplies.When Garleen Co.is formed, it may:

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.

Unless otherwise agreed, an agent making a contract with actual or apparent authority on behalf of an unidentified principal is a party to the contract.

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.

An agent is not normally liable on a contract he makes with a third party on behalf of a(n):

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

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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