Question 1

A principal may generally revoke the authority of an agent at any time.

Accepted Answer

A) True 
 B)False

Question 2

A gratuitous agent has a duty of loyalty but is not liable for any harm caused by his careless performance.

Accepted Answer

A) True 
 B)False

Question 3

Prentice and Mercedes are partners in a catering business. The law of agency:

Accepted Answer

A)  has no significance for their business. 
B)  is important to their business because both Prentice and Mercedes are agents of the partnership and as such have the authority to represent and bind the business in all usual transactions of that partnership. 
C)  will only affect their business if they hire employees. 
D)  will only affect their business if they hire independent contractors. 
A)  has no significance for their business. 
B)  is important to their business because both Prentice and Mercedes are agents of the partnership and as such have the authority to represent and bind the business in all usual transactions of that partnership. 
C)  will only affect their business if they hire employees. 
D)  will only affect their business if they hire independent contractors.

Question 4

Whether an agency relationship has been created is determined by using a subjective test.

Accepted Answer

A) True 
 B)False

Question 5

An agent must act solely in the interest of his principal in all acts that would affect the principal's business.

Accepted Answer

A) True 
 B)False

Question 6

Agents and principals have mutual fiduciary duties to one another.

Accepted Answer

A) True 
 B)False

Question 7

The Restatement's definition of a power given as security includes, but is more extensive than, the rule regarding an agency coupled with an interest.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A(n) __________ is a person in a position of trust and confidence who has a duty of utmost loyalty and good faith.

Accepted Answer

A)  fiduciary 
B)  servant 
C)  independent contractor 
D)  principal 
A)  fiduciary 
B)  servant 
C)  independent contractor 
D)  principal

Question 10

The duty of obedience owed by an agent to a principal is not breached and will not result in liability to the principal by an agent's refusal to do an illegal or tortious act for the principal.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

Agency is a consensual relationship betw

Question 12

After an agency terminates, the agent is free to disclose to third persons any information acquired during the agency relationship.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

An agent has breached his fiduciary duty in which of the following situations?

Accepted Answer

A)  All of the following choices are correct answers. 
B)  Where the agent makes a secret profit. 
C)  Where the agent uses information obtained in the course of the agency for his own benefit. 
D)  Where the agent competes with the principal. 
A)  All of the following choices are correct answers. 
B)  Where the agent makes a secret profit. 
C)  Where the agent uses information obtained in the course of the agency for his own benefit. 
D)  Where the agent competes with the principal.

Question 15

What is an independent contractor? Can an independent contractor also be an agent? Explain.

Accepted Answer

An independent contractor is someone who

Question 16

When is an agency relationship irrevocable?

Accepted Answer

A)  It is never irrevocable. 
B)  When the agency is coupled with an interest of the agent in the subject matter. 
C)  When the principal violates his duties to the agent. 
D)  When the agent is a fiduciary. 
A)  It is never irrevocable. 
B)  When the agency is coupled with an interest of the agent in the subject matter. 
C)  When the principal violates his duties to the agent. 
D)  When the agent is a fiduciary.

Question 17

A minor cannot act as an agent.

Accepted Answer

A) True 
 B)False

Question 18

If Elizabeth, agent for Wade, finds out one of Wade's customers has become insolvent, she has the duty to communicate this information to Wade.

Accepted Answer

A) True 
 B)False

Question 19

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. 
E)  under both the Second and Third Restatements, Donna's actual authority will terminate upon Lewis's death, whether she has notice or not. 
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. 
E)  under both the Second and Third Restatements, Donna's actual authority will terminate upon Lewis's death, whether she has notice or not.

Question 20

A __________ is a written, formal appointment of an agent.

Accepted Answer

A)  fiduciary 
B)  revocation 
C)  power of attorney 
D)  rescission 
A)  fiduciary 
B)  revocation 
C)  power of attorney 
D)  rescission

Exam 28: Relationship of Principal and Agent

A principal may generally revoke the authority of an agent at any time.

A gratuitous agent has a duty of loyalty but is not liable for any harm caused by his careless performance.

Prentice and Mercedes are partners in a catering business. The law of agency:

Whether an agency relationship has been created is determined by using a subjective test.

An agent must act solely in the interest of his principal in all acts that would affect the principal's business.

Agents and principals have mutual fiduciary duties to one another.

The Restatement's definition of a power given as security includes, but is more extensive than, the rule regarding an agency coupled with an interest.

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

A(n) __________ is a person in a position of trust and confidence who has a duty of utmost loyalty and good faith.

The duty of obedience owed by an agent to a principal is not breached and will not result in liability to the principal by an agent's refusal to do an illegal or tortious act for the principal.

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

After an agency terminates, the agent is free to disclose to third persons any information acquired during the agency relationship.

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

An agent has breached his fiduciary duty in which of the following situations?

What is an independent contractor? Can an independent contractor also be an agent? Explain.

When is an agency relationship irrevocable?

A minor cannot act as an agent.

If Elizabeth, agent for Wade, finds out one of Wade's customers has become insolvent, she has the duty to communicate this information to Wade.

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:

A __________ is a written, formal appointment of an agent.

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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