Question 1

When is an agency relationship irrevocable?

Accepted Answer

A) It is never irrevocable. 
B) When the agency is coupled with an interest of the agent in the subject matter. 
C) When the principal violates his duties to the agent. 
D) When the agent is a fiduciary. 
A) It is never irrevocable. 
B) When the agency is coupled with an interest of the agent in the subject matter. 
C) When the principal violates his duties to the agent. 
D) When the agent is a fiduciary.

Question 2

The Restatement's definition of a power given as security includes,but is more extensive than,the rule regarding an agency coupled with an interest.

Accepted Answer

A) True 
 B)False

Question 3

An agent may lose the right to compensation:

Accepted Answer

A) by breaching the agency contract willfully and deliberately. 
B) if the specified result of the contract is not obtained. 
C) if the duty of loyalty is breached. 
D) All of the above 
E) None of the above. 
A) by breaching the agency contract willfully and deliberately. 
B) if the specified result of the contract is not obtained. 
C) if the duty of loyalty is breached. 
D) All of the above 
E) None of the above.

Question 4

A gratuitous agent is not subject to the same duty of loyalty that is imposed upon a paid agent.

Accepted Answer

A) True 
 B)False

Question 5

A gratuitous agent:

Accepted Answer

A) is a paid agent. 
B) is subject to the same duty of loyalty as other agents. 
C) has no duty of diligence. 
D) need not be reimbursed for her expenses. 
A) is a paid agent. 
B) is subject to the same duty of loyalty as other agents. 
C) has no duty of diligence. 
D) need not be reimbursed for her expenses.

Question 6

Lewis employs Donna under a one-year contract to sell Lewis's line of leather wallets and checkbook covers.If without Donna's knowledge,Lewis dies:

Accepted Answer

A) under the Second Restatement, Donna's actual authority will not terminate until the end of the one-year contractual term. 
B) under the Second Restatement, Donna's actual authority will not terminate until she has notice of Lewis's death. 
C) under the Third Restatement, Donna's actual authority will not terminate until she receives notice of Lewis's death. 
D) under both the Second and Third Restatements, Donna's actual authority will terminate at either the end of her one-year contractual term or when she receives notice of Lewis's death, whichever occurs first. 
E) under both the Second and Third Restatements, Donna's actual authority will terminate upon Lewis's death, whether she has notice or not. 
A) under the Second Restatement, Donna's actual authority will not terminate until the end of the one-year contractual term. 
B) under the Second Restatement, Donna's actual authority will not terminate until she has notice of Lewis's death. 
C) under the Third Restatement, Donna's actual authority will not terminate until she receives notice of Lewis's death. 
D) under both the Second and Third Restatements, Donna's actual authority will terminate at either the end of her one-year contractual term or when she receives notice of Lewis's death, whichever occurs first. 
E) under both the Second and Third Restatements, Donna's actual authority will terminate upon Lewis's death, whether she has notice or not.

Question 7

Diane appoints Edward as her agent to sell goods in markets where the highest price can be obtained.Edward sells the goods in a market that is glutted and obtains a low price,even though he could have obtained a higher price in a nearby market by using more care in obtaining the available market information.Edward is liable to Diane for breach of the duty of diligence.

Accepted Answer

A) True 
 B)False

Question 8

The power of a gratuitous agent to affect the principal's relationship with third parties is the same as that of a paid agent.

Accepted Answer

A) True 
 B)False

Question 9

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.

Accepted Answer

A) True 
 B)False

Question 10

Agents and principals have mutual fiduciary duties to one another.

Accepted Answer

A) True 
 B)False

Question 11

A principal has no duty to compensate his or her agent if:

Accepted Answer

A) the agent breached the duty of obedience. 
B) the agent breached the duty of loyalty. 
C) it is a gratuitous agency. 
D) All the above are correct. 
A) the agent breached the duty of obedience. 
B) the agent breached the duty of loyalty. 
C) it is a gratuitous agency. 
D) All the above are correct.

Question 12

All independent contractors are agents,but not all agents are independent contractors.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) compensation. 
B) reimbursement. 
C) indemnification. 
D) All of the above. 
E) None of the above. 
A) compensation. 
B) reimbursement. 
C) indemnification. 
D) All of the above. 
E) None of the above.

Question 14

If an agency is gratuitous,the principal ordinarily may revoke it without liability to the agent.

Accepted Answer

A) True 
 B)False

Question 15

A __________ is a written,formal appointment of an agent.

Accepted Answer

A) fiduciary 
B) revocation 
C) power of attorney 
D) rescission 
A) fiduciary 
B) revocation 
C) power of attorney 
D) rescission

Question 16

An agent has breached his fiduciary duty in which of the following situations?

Accepted Answer

A) All of the following choices are correct answers. 
B) Where the agent makes a secret profit. 
C) Where the agent uses information obtained in the course of the agency for his own benefit. 
D) Where the agent competes with the principal. 
A) All of the following choices are correct answers. 
B) Where the agent makes a secret profit. 
C) Where the agent uses information obtained in the course of the agency for his own benefit. 
D) Where the agent competes with the principal.

Question 17

Mark (age 16)appoints Joe (age 21)as his agent to purchase a digital camcorder from Electronic World.The transaction is:

Accepted Answer

A) void because Mark is a minor. 
B) voidable by Electronic World because Mark is a minor. 
C) voidable by Mark because he is a minor. 
D) not voidable because Joe is not a minor. 
A) void because Mark is a minor. 
B) voidable by Electronic World because Mark is a minor. 
C) voidable by Mark because he is a minor. 
D) not voidable because Joe is not a minor.

Question 18

An agent may not make a secret profit from any transaction subject to the agency.

Accepted Answer

A) True 
 B)False

Question 19

Mark hires Joe's real estate agency to sell his property,telling Joe he has lost too much money playing the stock market to afford to keep it up.Then Mark wins the three million-dollar lottery! Joe reads this in the newspaper and that afternoon makes a contract with Sharon to sell the property.Is the contract valid?

Accepted Answer

A) No, the agency terminated because of the change in conditions. 
B) No, the agent has no right to sell without consent. 
C) Yes, Mark would have to notify Joe if he wanted to stop the sale. 
D) Yes, Joe had apparent authority to sell. 
A) No, the agency terminated because of the change in conditions. 
B) No, the agent has no right to sell without consent. 
C) Yes, Mark would have to notify Joe if he wanted to stop the sale. 
D) Yes, Joe had apparent authority to sell.

Question 20

A gratuitous agency is not a true agency because it is not formed by contract.

Accepted Answer

A) True 
 B)False

Exam 28: Relationship of Principal and Agent

When is an agency relationship irrevocable?

The Restatement's definition of a power given as security includes,but is more extensive than,the rule regarding an agency coupled with an interest.

An agent may lose the right to compensation:

A gratuitous agent is not subject to the same duty of loyalty that is imposed upon a paid agent.

A gratuitous agent:

Lewis employs Donna under a one-year contract to sell Lewis's line of leather wallets and checkbook covers.If without Donna's knowledge,Lewis dies:

The power of a gratuitous agent to affect the principal's relationship with third parties is the same as that of a paid agent.

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.

Agents and principals have mutual fiduciary duties to one another.

A principal has no duty to compensate his or her agent if:

All independent contractors are agents,but not all agents are independent contractors.

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

If an agency is gratuitous,the principal ordinarily may revoke it without liability to the agent.

A __________ is a written,formal appointment of an agent.

An agent has breached his fiduciary duty in which of the following situations?

Mark (age 16)appoints Joe (age 21)as his agent to purchase a digital camcorder from Electronic World.The transaction is:

An agent may not make a secret profit from any transaction subject to the agency.

A gratuitous agency is not a true agency because it is not formed by contract.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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