Question 1

Generally,notice to the agent does not imply notice to the principal even if it relates to the business of the agency.

Accepted Answer

A) True 
 B)False

Question 2

The principal is bound by representations:

Accepted Answer

A)  that are necessary for the agent to make in order to accomplish the purpose of the agency since they would be apparently authorized. 
B)  that the agent is expressly authorized to make. 
C)  that the agent makes even if the third person is aware that the agent has exceeded his actual authority. 
D)  that may not be customary in the kind of business being transacted by the agent. 
A)  that are necessary for the agent to make in order to accomplish the purpose of the agency since they would be apparently authorized. 
B)  that the agent is expressly authorized to make. 
C)  that the agent makes even if the third person is aware that the agent has exceeded his actual authority. 
D)  that may not be customary in the kind of business being transacted by the agent.

Question 3

After Bart and Veronica were involved in an automobile accident,Bart retained Rhonda as an attorney to negotiate an out-of-court settlement.After a lengthy discussion with Veronica's insurance company,Rhonda settled the case for $5,000.However,Bart personally rejected the $5,000 offer.Veronica filed suit to enforce the settlement,claiming that Rhonda was authorized to accept the settlement on behalf of Bart.Discuss Rhonda's express,implied,and apparent authority.

Accepted Answer

Express authority usually is created by

Question 4

Ratification may be inferred by a court:

Accepted Answer

A)  from the principal's acceptance of benefits of an unauthorized contract. 
B)  from the agent's failure to repudiate an unauthorized contract after becoming aware of it. 
C)  from the third party's extent of knowledge about the contract. 
D)  from the principal's failure to give express authority to the agent. 
A)  from the principal's acceptance of benefits of an unauthorized contract. 
B)  from the agent's failure to repudiate an unauthorized contract after becoming aware of it. 
C)  from the third party's extent of knowledge about the contract. 
D)  from the principal's failure to give express authority to the agent.

Question 5

Ratification must be explicitly expressed and may not be implied from the actions of the agent or the principal.

Accepted Answer

A) True 
 B)False

Question 6

Direct liability occurs when:

Accepted Answer

A)  the agent is not acting at the direction of the principal. 
B)  the principal is negligent in the hiring and/or the supervision of the agent. 
C)  the agent's criminal behavior occurs outside the scope of employment. 
D)  the principal has liability insurance and the agent commits a tort. 
A)  the agent is not acting at the direction of the principal. 
B)  the principal is negligent in the hiring and/or the supervision of the agent. 
C)  the agent's criminal behavior occurs outside the scope of employment. 
D)  the principal has liability insurance and the agent commits a tort.

Question 7

When an agent takes an unauthorized action:

Accepted Answer

A)  the action cannot be ratified by the principal. 
B)  the principal can transfer liability to the agent while enjoying the benefits of the action. 
C)  the principal may not ratify only a portion of the action. 
D)  the action may be ratified provided that the principal is a corporation. 
A)  the action cannot be ratified by the principal. 
B)  the principal can transfer liability to the agent while enjoying the benefits of the action. 
C)  the principal may not ratify only a portion of the action. 
D)  the action may be ratified provided that the principal is a corporation.

Question 8

Which of the following is true about ratification?

Accepted Answer

A)  It releases the principal from liability to the third person. 
B)  It gives the agent the same right to compensation that he or she would have had if there had been prior authorization. 
C)  It requires the principal to have full understanding of the legal significance of all material facts. 
D)  It is inferred by a court from the fact that the agent accepted the benefits of an unauthorized contract. 
A)  It releases the principal from liability to the third person. 
B)  It gives the agent the same right to compensation that he or she would have had if there had been prior authorization. 
C)  It requires the principal to have full understanding of the legal significance of all material facts. 
D)  It is inferred by a court from the fact that the agent accepted the benefits of an unauthorized contract.

Question 9

An agent possesses the implied authority to do whatever is reasonably necessary to accomplish the objectives of the agency.

Accepted Answer

A) True 
 B)False

Question 10

A person may have apparent authority even though he or she has never been appointed as an agent by the principal.

Accepted Answer

A) True 
 B)False

Question 11

An agent acting at the direction of the principal may render the principal liable if the agent:

Accepted Answer

A)  delegates ministerial activities to other employees of the principal. 
B)  commits a tort or crime. 
C)  is acting on behalf of a nonexistent or incompetent principal. 
D)  does not disclose the principal's name for the duration of the performance under the contract. 
A)  delegates ministerial activities to other employees of the principal. 
B)  commits a tort or crime. 
C)  is acting on behalf of a nonexistent or incompetent principal. 
D)  does not disclose the principal's name for the duration of the performance under the contract.

Question 12

Briefly describe the doctrine of respondeat superior.

Accepted Answer

Principals may be liable to third person

Question 13

Which of the following statements is true for the principle of respondeat superior?

Accepted Answer

A)  When an agent commits a tort or crime while working for the principal, the agent is always personally liable for the consequences of his actions. 
B)  A principal's liability under respondeat superior is called direct liability. 
C)  If the agent was acting within the scope of the agency when the tort occurred, he is liable for his own actions. 
D)  This theory of liability makes the principal responsible without regard to whether the principal was actually at fault. 
A)  When an agent commits a tort or crime while working for the principal, the agent is always personally liable for the consequences of his actions. 
B)  A principal's liability under respondeat superior is called direct liability. 
C)  If the agent was acting within the scope of the agency when the tort occurred, he is liable for his own actions. 
D)  This theory of liability makes the principal responsible without regard to whether the principal was actually at fault.

Question 14

An agent can limit the liability for the acts of a subagent to the principal by _____.

Accepted Answer

A)  issuing express authority 
B)  using a ministerial clause 
C)  issuing implied authority 
D)  using an exculpatory clause 
A)  issuing express authority 
B)  using a ministerial clause 
C)  issuing implied authority 
D)  using an exculpatory clause

Question 15

Between the agent and the principal,it is the principal who is ultimately liable for the acts of the subagent.

Accepted Answer

A) True 
 B)False

Question 16

Pascal is a buyer for Kelly Benjamin department store in Kentucky.While Pascal was buying visiting California,he found a solar car on sale for $3,000.Pascal contracts to buy the car for Kelly Benjamin,who wants to buy a solar car.Kelly instructs the seller to ship the car.Under these circumstances:

Accepted Answer

A)  Kelly is considered to have ratified the contract. 
B)  Kelly is not liable since Pascal made the purchase. 
C)  Pascal and Kelly are both liable on the contract. 
D)  Pascal is considered to have ratified the contract. 
A)  Kelly is considered to have ratified the contract. 
B)  Kelly is not liable since Pascal made the purchase. 
C)  Pascal and Kelly are both liable on the contract. 
D)  Pascal is considered to have ratified the contract.

Question 17

David signs a contract to purchase Orrin's property.David informs Orrin that the property is being purchased for one of his clients but refuses to tell Orrin who the client is.The principal here is _____.

Accepted Answer

A)  disclosed 
B)  undisclosed 
C)  partially disclosed 
D)  illegal 
A)  disclosed 
B)  undisclosed 
C)  partially disclosed 
D)  illegal

Question 18

Which of the following statements is true of a principal's liability for notice and payments to the agent?

Accepted Answer

A)  The agent is not legally bound to inform the principal of knowledge gained in the course of his or her responsibilities. 
B)  Payment to the agent of a debt owed to the principal discharges the debt if the agent has authority to receive such payments. 
C)  An agent who makes over-the-counter sales is viewed as having express authority to collect for the goods. 
D)  The principal is not bound by the information that is passed on by the agent if it does not relate to the scope of the agent's responsibilities and authority. 
A)  The agent is not legally bound to inform the principal of knowledge gained in the course of his or her responsibilities. 
B)  Payment to the agent of a debt owed to the principal discharges the debt if the agent has authority to receive such payments. 
C)  An agent who makes over-the-counter sales is viewed as having express authority to collect for the goods. 
D)  The principal is not bound by the information that is passed on by the agent if it does not relate to the scope of the agent's responsibilities and authority.

Question 19

When an agent commits a tort or crime while working for the principal,the agent is not liable for the consequences of his actions if he is acting at the direction of the principal.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is true of the liability of an agent who is acting for a nonexistent or incompetent principal?

Accepted Answer

A)  If the third person is unaware of the lack of capacity of a nonexistent or incompetent principal, the agent is not personally liable on the contract. 
B)  A minor is considered an incompetent principal, and an agent acting on behalf of such principals is personally liable on the contract. 
C)  If the principal is judged insane, the law imposes an apparent warranty by the agent that the principal has the capacity to be bound. 
D)  A person judged insane is considered to be nonexistent or incompetent and is personally liable for acts undertaken by an agent. 
A)  If the third person is unaware of the lack of capacity of a nonexistent or incompetent principal, the agent is not personally liable on the contract. 
B)  A minor is considered an incompetent principal, and an agent acting on behalf of such principals is personally liable on the contract. 
C)  If the principal is judged insane, the law imposes an apparent warranty by the agent that the principal has the capacity to be bound. 
D)  A person judged insane is considered to be nonexistent or incompetent and is personally liable for acts undertaken by an agent.

Exam 24: Liability of Principals and Agents to Third Parties

Generally,notice to the agent does not imply notice to the principal even if it relates to the business of the agency.

The principal is bound by representations:

Ratification may be inferred by a court:

Ratification must be explicitly expressed and may not be implied from the actions of the agent or the principal.

Direct liability occurs when:

When an agent takes an unauthorized action:

Which of the following is true about ratification?

An agent possesses the implied authority to do whatever is reasonably necessary to accomplish the objectives of the agency.

A person may have apparent authority even though he or she has never been appointed as an agent by the principal.

An agent acting at the direction of the principal may render the principal liable if the agent:

Briefly describe the doctrine of respondeat superior.

Which of the following statements is true for the principle of respondeat superior?

An agent can limit the liability for the acts of a subagent to the principal by _____.

Between the agent and the principal,it is the principal who is ultimately liable for the acts of the subagent.

Pascal is a buyer for Kelly Benjamin department store in Kentucky.While Pascal was buying visiting California,he found a solar car on sale for $3,000.Pascal contracts to buy the car for Kelly Benjamin,who wants to buy a solar car.Kelly instructs the seller to ship the car.Under these circumstances:

David signs a contract to purchase Orrin's property.David informs Orrin that the property is being purchased for one of his clients but refuses to tell Orrin who the client is.The principal here is _____.

Which of the following statements is true of a principal's liability for notice and payments to the agent?

When an agent commits a tort or crime while working for the principal,the agent is not liable for the consequences of his actions if he is acting at the direction of the principal.

Which of the following statements is true of the liability of an agent who is acting for a nonexistent or incompetent principal?

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

Filters