Exam 19: Agency and Other Methods of Carrying on Business

Petropolis Co, a manufacturer of auto parts, has distributors in most provinces.It wants a distributor in New Brunswick as well.Jacob is negotiating to become the distributor for New Brunswick.Unlike the distributors in the other provinces, Jacob does not want to take responsibility for buying the parts and then reselling them.Instead, he wants to sell the parts as an agent for Petropolis.Which of the following factors would be relevant to Petropolis in deciding how to respond to Jacob's proposal?

Wayne is an agent for Sarah, a professional hockey player.For two seasons, he has helped Sarah negotiate her contract with the Saskatoon Hilltops Hockey Team.He has never signed her contract.Sarah always signed her contract herself and she usually participates in the negotiations.This year, after a hard negotiating session that Sarah did not attend, he signed a contract on her behalf.The contract is binding because as an agent, Wayne has the absolute unconditional power to act on behalf of Sarah, his principal.

Sherwood entered into a contract to buy some real estate from Idris Real Property Inc.on behalf of Mento Corp, a major developer.Sherwood told Idris that he was the vice-president of acquisitions at Mento.In fact, Sherwood is not affiliated with Mento in any way and has no authority to act on behalf of Mento.Sherwood is not liable to Idris under the contract, but would be liable to Idris for breach of warranty of authority.

Agents have a fiduciary duty to their principals.Which of the following is FALSE with respect to the fiduciary duty?

Tony is a sophisticated business person.Tony's stock broker advises him to buy 1000 shares of Q-Tel at the current market price of $10 per share.The broker's advice is based on a careful assessment of the market and Tony's advice to the broker about his risk tolerance.Tony takes the advice and directs his broker to buy the shares.The shares turn out to be a very bad investment and, after six months, are worthless.Tony has no claim against his broker.

Sharona entered into a contract with Deepak.Under the terms of that agreement, Deepak was obliged to sell his car for $25 000 to Myrna.Sharona subsequently asked Myrna to ratify the transaction and to actually pay the price to Deepak in exchange for the vehicle.Which of the following statements is TRUE?

Berta has entered into an agreement with Boys R'Us Inc to operate a men's clothing store as a franchisee in Scarborough, Ontario.Boys R'Us operates franchise stores in all provinces and has a great reputation as a place where men can get good quality clothes for a good price.One of the advantages to Berta of operating a men's clothing store as a Boys R'Us franchise is that she will likely obtain a licence of the Boys R'Us trademark and the assistance of Boys R'Us in the operation of the business.

Knowing that Michele is looking for a house, Fatima negotiated a contract for her to buy a house from Owen.Fatima and Owen have agreed on the price, the deposit, the closing date, and all other relevant terms of the deal.Michele, however, has not authorized Fatima to negotiate this transaction on her behalf and had no knowledge of what Fatima was doing.When Fatima tells her, however, Michele is delighted by the house and all the terms of the contract except for the deposit of $20 000 that Fatima and Owen have agreed to.Is it possible for Michele to accept this contract with Owen, such that it becomes a binding obligation between them, but not accept the deposit requirement to which she did not consent?

The concept of "apparent authority" is also sometimes known as

Sureet has a small gardening business.He recently won the lottery and had $50 000 to invest.He went to James, a stock broker, and told him that he would like to invest his money in shares that would give him a high return because he would be relying on this money to fund his retirement.He told James that he had few other assets and needed to grow this investment into a substantial sum if he was to live on it when he retired in 20 years.He said that he was relying on James because he had no investment experience.James recommended investing in options, a strategy which, if successful, would yield high returns.James did not explain to Sureet that there was a substantial risk that he could lose all his money.Sureet, attracted by the prospect of the high returns agreed to give all of the $50 000 to James to invest in options.Within six months all the money was gone.James was not negligent in how he pursued his options trading strategy, it simply was not successful.However, James did not keep Sureet informed on a regular basis about the losses.Sureet is now very angry and frustrated.Does Sureet have any claim against James?

Alma contracts with Comvey Corp to act as its agent in purchasing fork lift trucks.Alma told Comvey that she did not know anything about fork lift trucks or Comvey's business, but was willing to learn and happy to have the opportunity.Comvey said that it would train her but the training never occurred.Comvey needed five forklift trucks to operate a freight terminal.Alma bought five forklift trucks for Comvey.It turned out that the trucks were too large for use in the terminal.Comvey cannot get its money back.It has an action for breach of duty of care against Alma for damages to compensate for its losses.

You contract with Sal, a stock broker, to act as your agent to buy stocks for you.You specifically instruct Sal that you only want him to buy stocks for you that have a good dividends payment history.Sal carelessly buys you some shares that have never paid dividends.Which of the following describes a legal basis upon which you could claim relief?

Ruby is a junior sales clerk employed in the sporting goods department of Lear's, a large department store.Because of her work she gets to know Basinger, the supplier of tennis racquets to Lear's.After talking to Basinger for some time, she asks Basinger if it would agree to sell 100 tennis racquets to Lear's for 10 percent less than the price Lear's usually pays if Lear's would agree to send all its racquet stringing and repair business to Basinger.Basinger agrees to this proposal.That afternoon, Ruby advises the president of Lear's about the deal she has worked out with Basinger.The president says that while she likes the price reduction, Lear's cannot accept the commitment regarding the stringing and repair business.Lear's has an existing commitment to send all such business to someone else.Is Lear's bound by the contract negotiated by Ruby? Can Lear's accept the contract excluding the commitment to send Basinger all the stringing and repair business? Can Ruby have the contract ratified by Beaton's, a competing department store? Is Ruby bound personally?

Agency relationships arise in which of the following circumstances?

Digital Technologies Inc entered into an agreement with Gray under which Gray agreed to act as Digital's agent for the purpose of finding new offices for Digital.Gray had never done this kind of work before and Digital knew this.He found offices that he believed would be satisfactory to Digital, and Digital entered into a five-year lease.Unfortunately, it turned out that the offices did not have air-conditioning and so could not be used in the summer, making them completely unsuitable for Digital.Gray had forgotten to ask about air-conditioning.Anyone with experience as a real estate agent would have found out about this problem.Which of the following best describes Gray's legal position?

Alice entered into an agreement with a real estate agent to help her find a house in Windsor, Ontario.Alice found a house that she wanted and asked the agent to present an offer on Monday.The agent got busy with some other work and did not present the offer until Wednesday.Unfortunately for Alice, the owner of the house accepted another offer presented on Tuesday.Describe the bases upon which Alice could seek relief from the actions of the agent.

Nathan and Oliver are fishermen.They agreed that Oliver would take Nathan's fish to the market in Vancouver and sell them on Nathan's behalf along with Oliver's own fish.Oliver took Nathan's fish and his own fish to the market and set up a stall.As it happened, Oliver sold all of his fish and only half of Nathan's fish.Oliver did nothing to try to promote the sale of his fish over Nathan's.He simply put all the fish on a table in two piles and let the customers choose.Which of the following is TRUE?

Minnie and Maximum Realty Inc have entered into a real estate agency agreement.In this situation, it is almost certain that

Purporting to act on behalf of Otton Mining Inc, Gaetan signed a contract to purchase some mining claims from Boucher.Boucher believes it is contracting with Otton.In fact, Gaetan had no authority from Otton to contract on its behalf.He had never discussed buying the claims with Otton, but he thought that Otton would be interested in the claims and would pay him a commission for arranging for Otton to buy them.Which of the following is TRUE?

Janus entered into an agreement with Ashley under which he made Ashley his agent for the purpose of selling his car.He agreed to pay Ashley a commission of 5 percent of whatever price she could get for the car.A week later, he cancelled the agency arrangement.At the end of the following week, Ashley showed up at his house with Simon.In front of Simon, she told Janus that Simon was interested in buying the car and asked for the keys so she could show it to him.Janus gave her the keys.An hour late she came back with Simon and told Janus that she had agreed to sell the car to Simon for $10 000.How would you describe Simon's legal rights?