Question 1

Discuss the fundamental rules of contractual liability between a principal and the third party.

Accepted Answer

a.A disclosed principal and the third pa

Question 2

Roger is the promoter of a new corporation.On behalf of the as yet unincorporated business, he enters into a three-year lease agreement for office space and personally signs the lease in his own name.The corporation is liable on the contract, because Roger is its agent.

Accepted Answer

A) True 
 B)False

Question 3

Under the general rule of the Third Restatement, death of a principal terminates all authority of an agent, including apparent authority, even though no notice is given to third parties.

Accepted Answer

A) True 
 B)False

Question 4

A principal's intention to permit the agent to delegate granted authority may only be gathered from the express authorization of the principal.

Accepted Answer

A) True 
 B)False

Question 5

A subagent is an agent of both the principal and the agent.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

Under the Second Restatement, except in cases of death or incapacity, or where the performance of an authorized act becomes impossible, actual notice of termination of agency is required to the third party if she is one:

Accepted Answer

A)  with whom the agent has begun to deal, as the principal should know. 
B)  with whom the agent has dealt on credit. 
C)  to whom the agent has been specially accredited. 
D)  All of these. 
A)  with whom the agent has begun to deal, as the principal should know. 
B)  with whom the agent has dealt on credit. 
C)  to whom the agent has been specially accredited. 
D)  All of these.

Question 8

The doctrine of respondeat superior is most often applied in situations involving:

Accepted Answer

A)  contracts negotiated by the agent. 
B)  torts of the agent. 
C)  negligence of the principal. 
D)  crimes committed by the agent. 
A)  contracts negotiated by the agent. 
B)  torts of the agent. 
C)  negligence of the principal. 
D)  crimes committed by the agent.

Question 9

Constructive notice may occur by publication in a newspaper of general circulation.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Pat bought a cotton sweater at Ivey's Fashion Store.Sue, the salesperson, told her the sweater was guaranteed not to shrink if washed in cold water by hand.Pat washes the sweater as directed, and it shrinks.Which of the following is correct?

Accepted Answer

A)  If Sue is only a part-time employee, Ivey has no responsibility for misrepresentations she makes. 
B)  Sue has apparent authority to make warranties such as the one that she made. Therefore, the store is bound. 
C)  Salesclerks are usually independent contractors. Thus, there is no liability on the part of Ivey. 
D)  Pat has no recourse against the store, because it was only the salesclerk who misrepresented the sweater. 
A)  If Sue is only a part-time employee, Ivey has no responsibility for misrepresentations she makes. 
B)  Sue has apparent authority to make warranties such as the one that she made. Therefore, the store is bound. 
C)  Salesclerks are usually independent contractors. Thus, there is no liability on the part of Ivey. 
D)  Pat has no recourse against the store, because it was only the salesclerk who misrepresented the sweater.

Question 12

Jack was fired by Bob but decided to try to win back his job as agent by getting a big new contract.He approached Sharon, a new client, and made a pitch to sell Bob's product.Sharon agreed to buy 100.Jack tells Bob.What are the legal consequences?

Accepted Answer

A)  Jack would forfeit his commission if Bob took the contract. 
B)  Bob would have to ratify the deal to get the benefit of the contract. 
C)  Bob would have to negotiate the deal with Sharon himself. 
D)  Bob has to hire Jack again and then make the deal. 
A)  Jack would forfeit his commission if Bob took the contract. 
B)  Bob would have to ratify the deal to get the benefit of the contract. 
C)  Bob would have to negotiate the deal with Sharon himself. 
D)  Bob has to hire Jack again and then make the deal.

Question 13

An agent who makes a contract for a disclosed principal whose contracts are voidable for lack of contractual capacity:

Accepted Answer

A)  is ordinarily personally liable to the third party if the principal avoids the contract. 
B)  can be liable to the third party under certain circumstances. 
C)  is never liable to the third party. 
D)  is liable to the third party only if the agent warrants the principal has capacity. 
A)  is ordinarily personally liable to the third party if the principal avoids the contract. 
B)  can be liable to the third party under certain circumstances. 
C)  is never liable to the third party. 
D)  is liable to the third party only if the agent warrants the principal has capacity.

Question 14

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 15

To effect a ratification, the principal must manifest an intent to do so with knowledge of all material facts concerning the transaction.

Accepted Answer

A) True 
 B)False

Question 16

Ratification may relate to acts that have exceeded the authority granted to an agent.

Accepted Answer

A) True 
 B)False

Question 17

Respondeat superior :

Accepted Answer

A)  imposes vicarious liability on the principal. 
B)  makes a principal liable for the acts of independent contractors. 
C)  makes a principal liable for the unauthorized acts of employees committed within the scope of employment. 
D)  I mposes vicarious liability on the principal and also  makes a principal liable for the unauthorized acts of employees committed within the scope of employment. 
A)  imposes vicarious liability on the principal. 
B)  makes a principal liable for the acts of independent contractors. 
C)  makes a principal liable for the unauthorized acts of employees committed within the scope of employment. 
D)  I mposes vicarious liability on the principal and also  makes a principal liable for the unauthorized acts of employees committed within the scope of employment.

Question 18

An agent may agree to become liable on a contract between a principal and a third party in all but which of the following ways?

Accepted Answer

A)  Making the contract in the agent's own name. 
B)  Guaranteeing that the principal will perform the contract between the third party and the principal. 
C)  Disclosing the principal's name and the agency relationship. 
D)  Co-making the contract with the principal. 
A)  Making the contract in the agent's own name. 
B)  Guaranteeing that the principal will perform the contract between the third party and the principal. 
C)  Disclosing the principal's name and the agency relationship. 
D)  Co-making the contract with the principal.

Question 19

In the presence of Betty, Ann tells Thomas that Ann is Betty's agent.In reality, Ann has no authority.Betty hears the statement, but she says nothing.In reliance, Thomas ships goods to Betty on Ann's order.Betty is liable even though no actual authority existed.

Accepted Answer

A) True 
 B)False

Question 20

A principal who authorizes his agent to commit a tortious act with respect to the property or person of another is not liable for the injury or loss sustained by that person.

Accepted Answer

A) True 
 B)False

Exam 29: Relationship With Third Partiespart Vii: Business Associations

Discuss the fundamental rules of contractual liability between a principal and the third party.

Roger is the promoter of a new corporation.On behalf of the as yet unincorporated business, he enters into a three-year lease agreement for office space and personally signs the lease in his own name.The corporation is liable on the contract, because Roger is its agent.

Under the general rule of the Third Restatement, death of a principal terminates all authority of an agent, including apparent authority, even though no notice is given to third parties.

A principal's intention to permit the agent to delegate granted authority may only be gathered from the express authorization of the principal.

A subagent is an agent of both the principal and the agent.

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.

Under the Second Restatement, except in cases of death or incapacity, or where the performance of an authorized act becomes impossible, actual notice of termination of agency is required to the third party if she is one:

The doctrine of respondeat superior is most often applied in situations involving:

Constructive notice may occur by publication in a newspaper of general circulation.

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

Pat bought a cotton sweater at Ivey's Fashion Store.Sue, the salesperson, told her the sweater was guaranteed not to shrink if washed in cold water by hand.Pat washes the sweater as directed, and it shrinks.Which of the following is correct?

Jack was fired by Bob but decided to try to win back his job as agent by getting a big new contract.He approached Sharon, a new client, and made a pitch to sell Bob's product.Sharon agreed to buy 100.Jack tells Bob.What are the legal consequences?

An agent who makes a contract for a disclosed principal whose contracts are voidable for lack of contractual capacity:

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.

To effect a ratification, the principal must manifest an intent to do so with knowledge of all material facts concerning the transaction.

Ratification may relate to acts that have exceeded the authority granted to an agent.

Respondeat superior :

An agent may agree to become liable on a contract between a principal and a third party in all but which of the following ways?

In the presence of Betty, Ann tells Thomas that Ann is Betty's agent.In reality, Ann has no authority.Betty hears the statement, but she says nothing.In reliance, Thomas ships goods to Betty on Ann's order.Betty is liable even though no actual authority existed.

A principal who authorizes his agent to commit a tortious act with respect to the property or person of another is not liable for the injury or loss sustained by that person.

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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