Exam 28: Relationship of Principal and Agent

The Third Restatement specifies that an agency is automatically terminated when the principal goes bankrupt.

Since the agency relationship is created by agreement, the agency relationship may be terminated at any time by mutual agreement of the principal and the agent.

The power of a gratuitous agent to affect the principal's relationship with third parties is the same as that of a paid agent.

The concept of conflict of interest as it relates to the law of agency includes which of the following?

An agent may lose the right to compensation:

Steven is a manufacturer's representative for Incell Corporation. One day he receives a big-screen television as a gift from one of the clients he contacts on behalf of Incell.

The capacity to act through an agent, depends on the capacity of the agent to do the act.

Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a purchase amount. A friend needs money for a dress so Carolyn cashes a check for $50 with no purchase. The check bounces. Carolyn is:

Agency law is basic to almost every other branch of business law.

An agency agreement must always be in writing.

Jones, an agent of Rossi, is authorized to sell Rossi's ownership of wheat on the commodities market on Monday. On Monday, however, the market opens with the lowest prices for wheat in two decades. Jones must go ahead and sell Rossi's wheat on Monday.

As a general rule, a person may do through an agent whatever business activity he may accomplish personally.

An agent's duty to inform:

A fiduciary duty, arising out of a relationship of trust and confidence, is one of utmost loyalty and good faith.

A person who engages an independent contractor to do a specific job has the right to control the details of the conduct and activities of the independent contractor as it applies to the specific job.

Which of the following is not a breach of an agent's duty of obedience?

If an agent receives a gift from a third person with whom he is dealing on behalf of the principal, he can keep it without notifying the principal.

Which of the following is correct with regard to the capacity of an agent?

All employees are agents, but not all agents are employees.

The principal has a duty to indemnify the agent for losses incurred or suffered while acting as directed by the principal in a transaction which is not illegal or wrongful.