Exam 29: Relationship of Principal and Agent

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

The capacity to be a principal, and thus to act through an agent, depends on the capacity of the principal to do the act.

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

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

A gratuitous agent:

If Carson, who is an agent for Peter, breaches his fiduciary duty to Peter, Carson:

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.

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.

Identify the following relationships and parties. 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.

The result of an agent's functioning is exactly the same as if the principal had dealt directly with the third person.

An "electronic agent" is a true agent but is in electronic form.

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.

By the operation of law, the occurrence of certain events will automatically terminate an agency relationship.

Even when the outbreak of war places the principal and agent in the position of alien enemies, the authority of the agency is not terminated.

Which of the following is NOT a major duty, which the agent owes to the principal?

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?

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:

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.

Carl loans Dan $1,500 for Dan's honeymoon.Dan gives Carl his ruby ring as security for the loan and after a year, tells Carl he may as well sell it to recoup the $1,500.When Dan's wife hears of this, she persuades Dan to call Carl and get back the ring.Can Carl sell it anyway?

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