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. C

Question 2

If an agency is gratuitous, the principal ordinarily may revoke it without liability to the agent.

Accepted Answer

A) True 
 B)False  True

Question 3

A gratuitous agency is not a true agency because it is not formed by contract.

Accepted Answer

A) True 
 B)False  False

Question 4

Carson, who is an agent for Peter, breaches his fiduciary duty to Peter. Carson:

Accepted Answer

A)  is liable to Peter for breach of contract. 
B)  is liable to Peter in tort for any losses caused by the breach. 
C)  must make restitution for any profits or property received in breach of this duty. 
D)  All of these are correct. 
A)  is liable to Peter for breach of contract. 
B)  is liable to Peter in tort for any losses caused by the breach. 
C)  must make restitution for any profits or property received in breach of this duty. 
D)  All of these are correct.

Question 5

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.

Question 6

A power given as security creates a relationship of agency and actual authority.

Accepted Answer

A) True 
 B)False

Question 7

Identify the following parties and relationships. 
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. 
b. Mel owns a retail store. He hires Sarah to work for him as a clerk in the home furnishings department. 
c. Carl is the general contractor for the construction of a large office complex. Carl hires Ed's Electric Company to do all of the wiring for the building. 
d. Incellmed Corporation hires Bob as an outside salesman and instructs him to call on customers in a specified territory and to solicit orders for their products. 
e. Marlin, who is the owner of Marlin's Department Store, hires Melissa as the general manager of his new branch in the Hillridge Mall.

Accepted Answer

a. Patricia is a principal, and Andrew i

Question 8

The agent may be subject to liability to her principal for breach of the duty of obedience if she:

Accepted Answer

A)  entered into an authorized contract and the principal has changed her mind. 
B)  delegates her authority in any way and under any circumstances. 
C)  committed a tort for which the principal is now liable. 
D)  All of these. 
A)  entered into an authorized contract and the principal has changed her mind. 
B)  delegates her authority in any way and under any circumstances. 
C)  committed a tort for which the principal is now liable. 
D)  All of these.

Question 9

The contractual duties owed by a principal to an agent are the duties of:

Accepted Answer

A)  compensation. 
B)  reimbursement. 
C)  indemnification. 
D)  All of these. 
E)  None of these. 
A)  compensation. 
B)  reimbursement. 
C)  indemnification. 
D)  All of these. 
E)  None of these.

Question 10

Because the authority given to an agent by a principal is strictly personal, an individual agent's death terminates the agent's actual authority.

Accepted Answer

A) True 
 B)False

Question 11

In some states, the authority of an agent to sell land must be in writing and signed by the principal.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is NOT a major duty, which the agent owes to the principal?

Accepted Answer

A)  Duty to obey instructions. 
B)  Duty to act in good faith and with loyalty. 
C)  Duty to indemnify. 
D)  Duty to exercise care. 
A)  Duty to obey instructions. 
B)  Duty to act in good faith and with loyalty. 
C)  Duty to indemnify. 
D)  Duty to exercise care.

Question 13

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 14

A gratuitous agent:

Accepted Answer

A)  is a paid agent. 
B)  is subject to the same duty of loyalty as other agents. 
C)  has no duty of diligence. 
D)  need not be reimbursed for her expenses. 
A)  is a paid agent. 
B)  is subject to the same duty of loyalty as other agents. 
C)  has no duty of diligence. 
D)  need not be reimbursed for her expenses.

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

The result of an agent's functioning is exactly the same as if the principal had dealt directly with the third person.

Accepted Answer

A) True 
 B)False

Question 17

The negligence of an agent who is an employee in conducting the business of the principal exposes the principal to tort liability for injury and loss suffered by third persons.

Accepted Answer

A) True 
 B)False

Question 18

E-Sign specifically excludes:

Accepted Answer

A)  all transactions covered by the UCC. 
B)  wills and matters of family law. 
C)  transactions relating to foreign commerce. 
D)  All of these. 
A)  all transactions covered by the UCC. 
B)  wills and matters of family law. 
C)  transactions relating to foreign commerce. 
D)  All of these.

Question 19

Agency relationships are governed primarily by federal statute.

Accepted Answer

A) True 
 B)False

Question 20

A principal owes to any agent the same duties under tort law that the principal owes to all parties.

Accepted Answer

A) True 
 B)False

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:

If an agency is gratuitous, the principal ordinarily may revoke it without liability to the agent.

A gratuitous agency is not a true agency because it is not formed by contract.

Carson, who is an agent for Peter, breaches his fiduciary duty to Peter. Carson:

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?

A power given as security creates a relationship of agency and actual authority.

The agent may be subject to liability to her principal for breach of the duty of obedience if she:

The contractual duties owed by a principal to an agent are the duties of:

Because the authority given to an agent by a principal is strictly personal, an individual agent's death terminates the agent's actual authority.

In some states, the authority of an agent to sell land must be in writing and signed by the principal.

Which of the following is NOT a major duty, which the agent owes to the principal?

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

A gratuitous agent:

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

The result of an agent's functioning is exactly the same as if the principal had dealt directly with the third person.

The negligence of an agent who is an employee in conducting the business of the principal exposes the principal to tort liability for injury and loss suffered by third persons.

E-Sign specifically excludes:

Agency relationships are governed primarily by federal statute.

A principal owes to any agent the same duties under tort law that the principal owes to all parties.

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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