Question 1

Which of the following is a duty of a principal to an agent?

Accepted Answer

A) duty of loyalty 
B) duty to indemnify for reasonable expenses 
C) duty to provide information 
D) All of these are correct. 
A) duty of loyalty 
B) duty to indemnify for reasonable expenses 
C) duty to provide information 
D) All of these are correct. B

Question 2

Generally,either party to an agency relationship has the power to terminate it at any time.

Accepted Answer

A) True 
 B)False  True

Question 3

How is consent established in an agency relationship?

Accepted Answer

A) The principal must ask the agent to do something and the agent must agree. 
B) The principal gives consideration to the agent. 
C) The principal and agent must have a written,notarized agreement. 
D) All of these are correct. 
A) The principal must ask the agent to do something and the agent must agree. 
B) The principal gives consideration to the agent. 
C) The principal and agent must have a written,notarized agreement. 
D) All of these are correct. A

Question 4

Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.

Accepted Answer

A) True 
 B)False

Question 5

Cameron,editor of the local newspaper,assigned to Jim the writing of a story about pollution of a nearby stream.Although Jim used reasonable care in gathering and checking his information,unknown to Jim,the story contained a defamatory statement about Maureen.Maureen reads the story and sues Jim for libel.Cameron,who read and published the story

Accepted Answer

A) must indemnify Jim for Maureen's claim. 
B) need not indemnify Jim for Maureen's claim because Jim should have checked his facts more carefully. 
C) need not indemnify Jim for Maureen's claim because Jim breached his duty to obey instructions. 
D) can recover damages from Jim for any injury to the newspaper resulting from Jim's story. 
A) must indemnify Jim for Maureen's claim. 
B) need not indemnify Jim for Maureen's claim because Jim should have checked his facts more carefully. 
C) need not indemnify Jim for Maureen's claim because Jim breached his duty to obey instructions. 
D) can recover damages from Jim for any injury to the newspaper resulting from Jim's story.

Question 6

The bankruptcy of an agent automatically terminates an agency relationship.

Accepted Answer

A) True 
 B)False

Question 7

An agent must obey all instructions of the principal.

Accepted Answer

A) True 
 B)False

Question 8

An agency will be terminated in all but which one of the following situations?

Accepted Answer

A) The principal and agent agree on an agency relationship to sell a boat,and the boat is sold. 
B) A travel agent files for individual bankruptcy under Chapter 13. 
C) The agent violates his duty of loyalty. 
D) An electrician,an agent of a contractor,has her license revoked. 
A) The principal and agent agree on an agency relationship to sell a boat,and the boat is sold. 
B) A travel agent files for individual bankruptcy under Chapter 13. 
C) The agent violates his duty of loyalty. 
D) An electrician,an agent of a contractor,has her license revoked.

Question 9

Chance is a traveling marketing representative for a publishing company.He is an independent contractor and was hired without negligence.One afternoon while driving to a meeting,Chance negligently runs a stop sign and causes an accident.Judy is injured.Judy can

Accepted Answer

A) hold both Chance and his company liable for her injury. 
B) hold the company but not Chance liable. 
C) hold Chance but not the company liable. 
D) not hold Chance or his company liable for her injury. 
A) hold both Chance and his company liable for her injury. 
B) hold the company but not Chance liable. 
C) hold Chance but not the company liable. 
D) not hold Chance or his company liable for her injury.

Question 10

Becky asks her friend Maggie to walk her dog for her,and Maggie agrees.While out walking,the dog gets away from Maggie and runs into Mr.Edwards' garden,digging up some expensive plants.Which statement best characterizes this situation?

Accepted Answer

A) Becky is liable for the damages to Mr.Edwards' garden,because she exercised control over her agent,Maggie. 
B) Maggie is liable for the damages to Mr.Edwards' garden,because she was walking the dog at the time of the damage. 
C) Neither Becky nor Maggie is liable for the damages to Mr.Edwards' garden because no agency relationship existed between Becky and Maggie. 
D) Both Becky and Maggie are equally liable for the damages to Mr.Edwards' garden--the dog belongs to Becky,but Maggie was walking him at the time of the damage. 
A) Becky is liable for the damages to Mr.Edwards' garden,because she exercised control over her agent,Maggie. 
B) Maggie is liable for the damages to Mr.Edwards' garden,because she was walking the dog at the time of the damage. 
C) Neither Becky nor Maggie is liable for the damages to Mr.Edwards' garden because no agency relationship existed between Becky and Maggie. 
D) Both Becky and Maggie are equally liable for the damages to Mr.Edwards' garden--the dog belongs to Becky,but Maggie was walking him at the time of the damage.

Question 11

HBR Accounting hired Denise,a CPA,to prepare tax returns.Which statement is correct?

Accepted Answer

A) Denise is a gratuitous agent and has a duty not to commit gross negligence. 
B) Denise is a gratuitous agent and has a duty not to commit ordinary negligence. 
C) Denise,as a CPA,is an agent with special skills.She is held to a higher standard than ordinary negligence. 
D) Denise,as a CPA,is an agent with special skills.She is held to a lower standard than ordinary negligence. 
A) Denise is a gratuitous agent and has a duty not to commit gross negligence. 
B) Denise is a gratuitous agent and has a duty not to commit ordinary negligence. 
C) Denise,as a CPA,is an agent with special skills.She is held to a higher standard than ordinary negligence. 
D) Denise,as a CPA,is an agent with special skills.She is held to a lower standard than ordinary negligence.

Question 12

An agent may not engage in inappropriate behavior that reflects badly on the principal.This rule applies to conduct

Accepted Answer

A) during working hours. 
B) during off-duty time. 
C) during both working hours and off-duty time. 
D) only by public officials. 
A) during working hours. 
B) during off-duty time. 
C) during both working hours and off-duty time. 
D) only by public officials.

Question 13

What is the best definition of a fiduciary relationship?

Accepted Answer

A) The principal pays the agent to act on his or her behalf. 
B) The principal grants an agent permission to act,either by words or conduct. 
C) A principal is liable for certain torts committed by an agent. 
D) The trustee must act in the best interests of the beneficiary. 
A) The principal pays the agent to act on his or her behalf. 
B) The principal grants an agent permission to act,either by words or conduct. 
C) A principal is liable for certain torts committed by an agent. 
D) The trustee must act in the best interests of the beneficiary.

Question 14

Kaiya is a sales representative of TriColor.Kaiya owes a fiduciary duty to TriColor.

Accepted Answer

A) True 
 B)False

Question 15

If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following states that if an agent is empowered to enter into a contract that must be in writing,then the appointment of the agent must also be written?

Accepted Answer

A) duty to obey instructions 
B) balanced contract rule 
C) fiduciary duty 
D) equal dignities rule 
A) duty to obey instructions 
B) balanced contract rule 
C) fiduciary duty 
D) equal dignities rule

Question 17

If a person accepts the benefits of an unauthorized transaction,or fails to repudiate it,then he is bound by the act as if he had originally authorized it.

Accepted Answer

A) True 
 B)False

Question 18

Mohammad was an employee in the new product development department of Estay Inc.Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months.Estay took great care to keep information concerning the new product a secret.Ceries,Inc. ,a competitor of Estay,persuaded Mohammad to leave Estay to direct Ceries' marketing department.Which statement is correct?

Accepted Answer

A) Mohammad can share with Ceries the confidential information he knows about Estay's new product because he was directly involved in its development. 
B) Mohammad can share with Ceries the confidential information he knows about Estay's new product because his agency relationship with Estay is terminated. 
C) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because of the equal dignities rule. 
D) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency. 
A) Mohammad can share with Ceries the confidential information he knows about Estay's new product because he was directly involved in its development. 
B) Mohammad can share with Ceries the confidential information he knows about Estay's new product because his agency relationship with Estay is terminated. 
C) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because of the equal dignities rule. 
D) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency.

Question 19

Circus Pizza contracted with Art to run its birthday parties.Art's responsibilities included supervising the children and organizing the games.Circus did not investigate Art's background,which included a history of assaulting children.Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party.Circus Pizza

Accepted Answer

A) cannot be liable for the damages because Art committed an unforeseeable intentional tort. 
B) cannot be held liable for the damages because Art's conduct was not in the scope of employment. 
C) may be held liable on the basis of negligent hiring. 
D) may be held liable only if Circus actually knew of Art's background. 
A) cannot be liable for the damages because Art committed an unforeseeable intentional tort. 
B) cannot be held liable for the damages because Art's conduct was not in the scope of employment. 
C) may be held liable on the basis of negligent hiring. 
D) may be held liable only if Circus actually knew of Art's background.

Question 20

Erica's supervisor told her to arrange for a conference room at the Kelly Inn.Erica has express authority to contract for the room.

Accepted Answer

A) True 
 B)False

Exam 28: Agency Law

Which of the following is a duty of a principal to an agent?

Generally,either party to an agency relationship has the power to terminate it at any time.

How is consent established in an agency relationship?

Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.

The bankruptcy of an agent automatically terminates an agency relationship.

An agent must obey all instructions of the principal.

An agency will be terminated in all but which one of the following situations?

Chance is a traveling marketing representative for a publishing company.He is an independent contractor and was hired without negligence.One afternoon while driving to a meeting,Chance negligently runs a stop sign and causes an accident.Judy is injured.Judy can

Becky asks her friend Maggie to walk her dog for her,and Maggie agrees.While out walking,the dog gets away from Maggie and runs into Mr.Edwards' garden,digging up some expensive plants.Which statement best characterizes this situation?

HBR Accounting hired Denise,a CPA,to prepare tax returns.Which statement is correct?

An agent may not engage in inappropriate behavior that reflects badly on the principal.This rule applies to conduct

What is the best definition of a fiduciary relationship?

Kaiya is a sales representative of TriColor.Kaiya owes a fiduciary duty to TriColor.

If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.

Which of the following states that if an agent is empowered to enter into a contract that must be in writing,then the appointment of the agent must also be written?

If a person accepts the benefits of an unauthorized transaction,or fails to repudiate it,then he is bound by the act as if he had originally authorized it.

Erica's supervisor told her to arrange for a conference room at the Kelly Inn.Erica has express authority to contract for the room.

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Employment and Labor Law

Employment Discrimination

Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Shareholder Rights

Bankruptcy

Securities Regulation

Antitrust

Consumer Protection

Environmental Law

Intellectual Property

Real Property and Landlord Tenant Law

Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

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