Question 1

A gratuitous agent is not subject to the same duty of loyalty that is imposed upon a paid agent.

Accepted Answer

A) True 
 B)False

Question 2

Linton, as a sales agent for Nancy, may keep the money for the sales in his personal bank account until due to her as long as he keeps accurate records of the amounts he must separate out to pay to her.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Anna employs Mark to purchase for her a suitable site for a roller rink. Mark owns a huge site himself and sells it to Anna at fair market value without disclosing to her that he is the owner of the land. Mark has not breached his fiduciary duty to his principal.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

An agent is not required to keep which of the following information confidential?

Accepted Answer

A)  Unique business methods. 
B)  Customer lists. 
C)  Information that his or her principal is engaged in criminal activity. 
D)  Business plans. 
A)  Unique business methods. 
B)  Customer lists. 
C)  Information that his or her principal is engaged in criminal activity. 
D)  Business plans.

Question 8

The appointment of an agent by a minor or an incompetent not under guardianship and any resulting contracts are voidable.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

The principal has the duty to provide the employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risks involved in the employment.

Accepted Answer

A) True 
 B)False

Question 12

Agency relationships are governed primarily by federal statute.

Accepted Answer

A) True 
 B)False

Question 13

a. Explain how an agency relationship comes to an end. 
b. Is an agency relationship ever irrevocable? Explain.

Accepted Answer

a. Agency is terminated by: 
(1) acts of

Question 14

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 15

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 16

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

Question 17

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.

Accepted Answer

A)  Steven must account to Incell for the gift he has received. 
B)  The big-screen television belongs to Incell rather than to Steven. 
C)  If he keeps the TV without telling Incell, he will have breached his fiduciary duty. 
D)  All of these are correct. 
A)  Steven must account to Incell for the gift he has received. 
B)  The big-screen television belongs to Incell rather than to Steven. 
C)  If he keeps the TV without telling Incell, he will have breached his fiduciary duty. 
D)  All of these are correct.

Question 18

a. What is a fiduciary? 
b. What are the implications of an agent's fiduciary obligation? What is an agent prohibited from doing as a result of this obligation? Explain.

Accepted Answer

a. A fiduciary is someone who acts for s

Question 19

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 20

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.

Exam 28: Relationship of Principal and Agent

A gratuitous agent is not subject to the same duty of loyalty that is imposed upon a paid agent.

Linton, as a sales agent for Nancy, may keep the money for the sales in his personal bank account until due to her as long as he keeps accurate records of the amounts he must separate out to pay to her.

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

Anna employs Mark to purchase for her a suitable site for a roller rink. Mark owns a huge site himself and sells it to Anna at fair market value without disclosing to her that he is the owner of the land. Mark has not breached his fiduciary duty to his principal.

When is an agency relationship irrevocable?

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

An agent is not required to keep which of the following information confidential?

The appointment of an agent by a minor or an incompetent not under guardianship and any resulting contracts are voidable.

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

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

The principal has the duty to provide the employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risks involved in the employment.

Agency relationships are governed primarily by federal statute.

a. Explain how an agency relationship comes to an end. b. Is an agency relationship ever irrevocable? Explain.

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.

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

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

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.

a. What is a fiduciary? b. What are the implications of an agent's fiduciary obligation? What is an agent prohibited from doing as a result of this obligation? Explain.

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?

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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