Exam 20: Agency and Other Methods of Carrying on Business

Petropolis Co is a manufacturer of auto parts and is looking for distributors in New Brunswick.They already have distributors in the other provinces.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 usually she 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.

Selma Corp and Kor Industries Inc are steel producers that have entered into a joint venture to recycle their waste.They have set up a corporation,Re-Steel Co,to carry on the joint venture business.Selma and Kor are shareholders and each has a nominee on the board of directors.The employees of Selma and Kor must be agents of the joint venture.

Upper Cuff is a men's clothing store.Upper Cuff contracts with Janis to be their buyer.The contract states that Janis will be "employed to be an independent agent representing Upper Cuff,able to make any contracts related to the buying or selling of inventory." Janis,on her first week on the job,contracts to sell Upper Cuff's entire inventory to their competitor,Lower Lapel.Which of the following statements is most likely true?

Bruner and Santos have entered into a joint venture for the purpose of building a housing development.They call the joint venture Brantwood Housing.Santos will provide the financing,and Bruner will build and sell the houses.Under the terms of the joint venture agreement,the profits from selling the houses will be split evenly between Santos and Bruner,and Santos agrees that expenses incurred by Bruner for the purpose of building the housing development "will be the responsibility of Bruner and Santos,to be shared equally." Bruner enters into a contract on behalf of Brantwood Housing with an Internet service provider,ISP Inc,to host a website for advertising the houses built by Brantwood Housing for $100 per month.Bruner defaults on the payments required under the contract.ISP Inc was not aware of Santos involvement in Brantwood Housing until it began investigating the joint venture after Bruner defaulted on the contract.Is Santos liable to ISP Inc?

What are the purposes of the rules of agency?

Which of the following statements regarding a principal's liability for the torts of its agents is TRUE?

Oxford Management Inc is a management consulting firm.It has hired Jerome as its agent to buy new computers for its offices across the country.Jerome owns 10 computers,which are ideal for Oxford's needs.Oxford is a valued client,and he decides to sell the computers to Oxford for a price which is $10 000 less than their market value.As agent for Oxford,he decides to buy the computers for this price from himself.Which of the following is TRUE?

Shari entered into an agreement with Taiga Developments Inc under which she would act as an agent to find real estate for Taiga to buy in a suburb of Regina,Saskatechewan.Taiga had told her that it wanted to buy up all the land and buildings in a three block area to build a mall.No one but Taiga and Shari knew about Taiga's plans.Shari found a piece of property for sale across the street from the area Taiga was interested in for a great price.She knew that once the mall went in the property would be worth much more than it was today.Shari bought the property and then sold it after Taiga had built the mall for twice what she paid.Did Shari breach her fiduciary duty?

Anton has entered into a contract with Donut Country Inc to supply Donut Country with coffee.Anton never intended to be responsible under the contract personally.He intended to find a commercial coffee supplier to undertake the obligations and pay him a fee for giving the supplier the contract with Donut Country.He did not disclose any of this to Donut Country,which thinks that they have contract with Anton.Which of the following best describes the situation with respect to the contract?

Silvio began work as an agent for Midnight Skateboards Inc.He is responsible for selling Midnight's skateboards to retail sporting goods stores.In his first month,he worked very hard,visiting dozens of stores,but did not sell any skateboards.Which of the following is TRUE?

Lane is an employee working for Prairie Grains,a producer of genetically modified grain based in Alberta.Acting as an agent,Lane makes a trip to Saskatchewan to make a call to a new customer.While he's away,Prairie Grains goes bankrupt.He makes a deal on behalf of Prairie Grains to sell $35 000 worth of grain to the customer.Which of the following is true?

Toby is buying a new car from a dealership.She is trying to negotiate the price with the salesperson,but the salesperson says he doesn't have authority to change the price.He offers to get a manager,who will be able to give Toby a discount if it is possible.The salesperson,wanting not to lose commission,asks another salesperson to come over just to tell Toby there's nothing that can be done to the price.However,the second salesperson ends up giving Toby 20% off the sticker price.Which of the following is most likely true?

Serena was selling her house and she entered into a contract with Jatinder under which he would act as her agent.Armin was interested in buying the house which had a vacant lot next door.Jatinder told Armin that the lot was too small to build on.Armin relied on this representation and bought the house for $200 000.Later the owner of the lot did build a house on it.Jatinder knew that the lot was big enough for a house but had lied to Armin to get him to buy Serena's house.Serena knew nothing about what Jatinder had told Armin.The true value of the house was $175 000.Which of the following are TRUE?

A strategic alliance includes

MC Electric Inc sold circuit boards.Dortmund was the director of sales for MC Electric.His employment contract said he was responsible for managing the sales force of five employees,including promoting sales.Pricing decisions and overall sales strategy were the responsibility of the president.In October,Dortmund was approached by GB Circuits Co,another supplier of circuit boards which had been asked to quote on a large order from a manufacturer of telephones,A-Tel.GB could not fill all the A-Tel order itself and proposed that MC should submit a quote for what GB could not supply and,if MC were successful,it would pay over 50 percent of its profits on the order to GB as compensation for giving the MC the opportunity to bid and the introduction to A-Tel.Dortmund agreed to this deal on behalf of MC.Subsequently,MC supplied 2500 circuit boards to A-Tel which were paid for.MC refused to pay the 50 percent commission to GB.Is there any legal basis upon which it could be argued that MC is NOT OBLIGED to pay the commission? Do you think that MC will be successful in avoiding payment?

Which of the following business arrangements might not involve an agency relationship?

Gordon has created a new app that allows people to track their dog's location via GPS on their smartphone.Gordon wants to allow people to use the app for free.Fred,his brother and a lawyer,is talking to one of his clients about the app and the client offers a sizeable amount to purchase the license and for ongoing technical support.Fred agrees on behalf of Gordon.When he tells his brother the news,Gordon says he's okay with selling them the license,but that they would have to find someone else to give support.Which of the following statements is true?

Puporting 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?

On January 1,2001,Daniel negotiated a contract on behalf of Compu/sys Inc for the supply of a computer system to Leader Co.The contract called for the supply by Compu/sys Inc of hardware and maintenance services for two years in return for $1 million.Daniel had no authority to negotiate this contract on behalf of Compu/sys.After 18 months of negotiations,Compu/sys agreed to perform the contract in part.The corporation agreed to provide the hardware but not the maintenance services.At the time it made this commitment it had gone bankrupt.Which of the following is TRUE?