Question 1

Whenever an employer hires an employee to perform some sort of physical service,the parties have created a(n)________.

Accepted Answer

A) employer-agent relationship 
B) employer-employee relationship 
C) employer-independent contractor relationship 
D) agency by estoppel 
E) agency by ratification 
A) employer-agent relationship 
B) employer-employee relationship 
C) employer-independent contractor relationship 
D) agency by estoppel 
E) agency by ratification

Question 2

Which of the following is true regarding the rights of an employer who is held liable and pays a third party not because of the employer's negligence,but under the doctrine of respondeat superior for the negligence of an employee?

Accepted Answer

A) The employer has no right to receive any reimbursement from the negligent employee. 
B) The employer has the right to recover from the negligent employee one-half of any amount paid to the third party. 
C) The employer has a right of indemnification from the negligent employee. 
D) The employer can recover from the negligent employee any amount paid to the third party,but only if it can be shown that the employee's negligence was related to the violation of a statute. 
E) The employer can recover from the negligent employee one-half of any amount paid to the third party,but only if it can be shown that the employee's negligence was related to the violation of a statute. 
A) The employer has no right to receive any reimbursement from the negligent employee. 
B) The employer has the right to recover from the negligent employee one-half of any amount paid to the third party. 
C) The employer has a right of indemnification from the negligent employee. 
D) The employer can recover from the negligent employee any amount paid to the third party,but only if it can be shown that the employee's negligence was related to the violation of a statute. 
E) The employer can recover from the negligent employee one-half of any amount paid to the third party,but only if it can be shown that the employee's negligence was related to the violation of a statute.

Question 3

Which of the following is true if a principal and an agent have no agreement regarding the amount for which the principal will compensate the agent?

Accepted Answer

A) A court will assume that the agent agreed to work on a gratuitous basis. 
B) The agent will be allowed to set the price that a court will enforce unless it is unconscionable. 
C) The principal will be allowed to set the price that a court will enforce unless it is unconscionable. 
D) A court will appoint a magistrate to set the price. 
E) A court will calculate compensation according to the customary fee in the situation. 
A) A court will assume that the agent agreed to work on a gratuitous basis. 
B) The agent will be allowed to set the price that a court will enforce unless it is unconscionable. 
C) The principal will be allowed to set the price that a court will enforce unless it is unconscionable. 
D) A court will appoint a magistrate to set the price. 
E) A court will calculate compensation according to the customary fee in the situation.

Question 4

An agent is authorized to act for and on behalf of the ________.

Accepted Answer

A) fiduciary 
B) principal 
C) independent contractor 
D) third-party beneficiary 
E) incidental beneficiary 
A) fiduciary 
B) principal 
C) independent contractor 
D) third-party beneficiary 
E) incidental beneficiary

Question 5

An agent's implied authority is derived from an agent's express authority and consists of what is reasonably necessary for carrying out the agent's grant of express authority.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is false regarding revocation of an agent's authority and renunciation by an agent?

Accepted Answer

A) At any time,a principal can revoke an agent's authority. 
B) A principal's revocation of an agent's authority might be a breach of contract entitling the agent to damages. 
C) An agent can terminate the agency relationship by renouncing the authority given to the agent. 
D) An agent's renunciation of a contract might be a breach of contract entitling the principal to damages. 
E) If an agent has breached a fiduciary duty to the principal,the principal can revoke the agent's authority,but the agent may be entitled to damages. 
A) At any time,a principal can revoke an agent's authority. 
B) A principal's revocation of an agent's authority might be a breach of contract entitling the agent to damages. 
C) An agent can terminate the agency relationship by renouncing the authority given to the agent. 
D) An agent's renunciation of a contract might be a breach of contract entitling the principal to damages. 
E) If an agent has breached a fiduciary duty to the principal,the principal can revoke the agent's authority,but the agent may be entitled to damages.

Question 7

Cheap Principal.Jason,who is very knowledgeable regarding computers,agrees to purchase computers for Nick's business.Jason is retained for that purpose only,he is paid a set rate for the job,and Nick exercised no control over the manner in which Jason did his work.Jason purchased computers on credit from ABC Computers without any mention of Nick.The computers worked well and were not defective in any way.Unfortunately,Nick did not pay ABC Computers on a timely basis.Jason,therefore,paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and because his name was on the invoice.Jason asked Nick for reimbursement,but Nick refused.Nick claimed that if Jason had only waited,ABC Computers might have agreed to take less.Which of the following is true regarding any reimbursement Jason is due from Nick?

Accepted Answer

A) Jason is not due any reimbursement,because he did not obtain permission from Jason before paying ABC Computers. 
B) Jason is only due one-half of whatever he paid,because he did not get permission from Jason before paying ABC Computers. 
C) Jason is not due any reimbursement from Nick,unless he can establish that Nick signed a written contract authorizing him to personally pay debts incurred. 
D) Jason is not due any reimbursement from Nick,unless Jason can establish by a preponderance of the evidence that ABC Computers would not have agreed to take a lesser amount. 
E) Jason is entitled to reimbursement from Nick. 
A) Jason is not due any reimbursement,because he did not obtain permission from Jason before paying ABC Computers. 
B) Jason is only due one-half of whatever he paid,because he did not get permission from Jason before paying ABC Computers. 
C) Jason is not due any reimbursement from Nick,unless he can establish that Nick signed a written contract authorizing him to personally pay debts incurred. 
D) Jason is not due any reimbursement from Nick,unless Jason can establish by a preponderance of the evidence that ABC Computers would not have agreed to take a lesser amount. 
E) Jason is entitled to reimbursement from Nick.

Question 8

Roofing Issues.Sally agrees to roof a house for Bob.After doing his research,Bob chooses Sally based on her great reputation for being conscientious and doing good work.Bob knows little about roofing and stays away from all the noise involved.Sally provides her own tools for herself and other workers,sets her own schedule,and charges a flat rate of $10,000 to be paid when the job is completed.Sally hires Trudy,Glen,and Fred to help with the roofing.She pays them an hourly rate,supervises their work,provides them with tools and materials,and sets their schedules.Curious about what is going on there,Bob's friend Spencer walks by the house while the roofing is being done.Glen absentmindedly throws some old shingles off the roof and hits Spencer in the head,resulting in him going to the local emergency room and receiving a couple of stitches in his scalp.Spencer decides to sue all the roofers,Bob,and Sally for his hospital expenses and for pain and suffering.Assuming Glen was negligent,which of the following is the most likely result in a lawsuit against Trudy and Fred brought by Spencer?

Accepted Answer

A) Spencer will win because Trudy and Fred were coworkers with Glen. 
B) Spencer will win because Trudy and Fred were independent contractors on the same job as Glen. 
C) Spencer will win,but only if it can be established that both Sally and Bob are insolvent and unable to pay any judgment. 
D) Spencer will lose because Trudy and Fred were not negligent and were not employees of Spencer. 
E) Spencer,Trudy,and Fred must all bear one-third of any judgment because they are employees of the same rank. 
A) Spencer will win because Trudy and Fred were coworkers with Glen. 
B) Spencer will win because Trudy and Fred were independent contractors on the same job as Glen. 
C) Spencer will win,but only if it can be established that both Sally and Bob are insolvent and unable to pay any judgment. 
D) Spencer will lose because Trudy and Fred were not negligent and were not employees of Spencer. 
E) Spencer,Trudy,and Fred must all bear one-third of any judgment because they are employees of the same rank.

Question 9

Which of the following type of agency exists when a third party reasonably believes,on the basis of the principal's actions,that an agency relationship exists between the principal and another individual?

Accepted Answer

A) Express 
B) Implied 
C) Actual 
D) Statutory 
E) Apparent 
A) Express 
B) Implied 
C) Actual 
D) Statutory 
E) Apparent

Question 10

If either the principal or the agent dies,the agency relationship is ________.

Accepted Answer

A) void ab initio 
B) void at the election of the surviving party 
C) still recognized by law 
D) ex post facto 
E) automatically terminated 
A) void ab initio 
B) void at the election of the surviving party 
C) still recognized by law 
D) ex post facto 
E) automatically terminated

Question 11

Which of the following is generally defined as a relationship between a principal and an agent?

Accepted Answer

A) Agency 
B) Principality 
C) Collusion 
D) Employment 
E) Concordance 
A) Agency 
B) Principality 
C) Collusion 
D) Employment 
E) Concordance

Question 12

Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal,as opposed to authority for only a specific purpose?

Accepted Answer

A) A general power of attorney 
B) A specific power of attorney 
C) A localized power of attorney 
D) A durable power of attorney 
E) An equitable power or attorney 
A) A general power of attorney 
B) A specific power of attorney 
C) A localized power of attorney 
D) A durable power of attorney 
E) An equitable power or attorney

Question 13

In which type(s)of agency is the principal-agent relationship inferred from the conduct of the parties?

Accepted Answer

A) Expressed agency 
B) Agency by estoppel 
C) Implied agency 
D) Agency by estoppel and implied agency,but not expressed agency 
E) Expressed agency,agency by estoppel,and implied agency 
A) Expressed agency 
B) Agency by estoppel 
C) Implied agency 
D) Agency by estoppel and implied agency,but not expressed agency 
E) Expressed agency,agency by estoppel,and implied agency

Question 14

A power of attorney can be general or specific.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a person who has a duty to act primarily for another person's benefit?

Accepted Answer

A) Principal 
B) Employer 
C) Fiduciary 
D) Trustor 
E) Bailor 
A) Principal 
B) Employer 
C) Fiduciary 
D) Trustor 
E) Bailor

Question 16

A person in a position of trust and confidence is known as a(n)________.

Accepted Answer

A) third-party beneficiary 
B) principal 
C) fiduciary 
D) independent contractor 
E) employer 
A) third-party beneficiary 
B) principal 
C) fiduciary 
D) independent contractor 
E) employer

Question 17

A(n)________ trust is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess.

Accepted Answer

A) resolute 
B) Totten 
C) constructive 
D) implied-in-fact 
E) absolute 
A) resolute 
B) Totten 
C) constructive 
D) implied-in-fact 
E) absolute

Question 18

An agency relationship that arises when an individual misrepresents herself as an agent for another party and that party accepts the unauthorized act is an agency by ________

Accepted Answer

A) ratification 
B) implication 
C) estoppel 
D) default 
E) agreement 
A) ratification 
B) implication 
C) estoppel 
D) default 
E) agreement

Question 19

Cheap Principal.Jason,who is very knowledgeable regarding computers,agrees to purchase computers for Nick's business.Jason is retained for that purpose only,he is paid a set rate for the job,and Nick exercised no control over the manner in which Jason did his work.Jason purchased computers on credit from ABC Computers without any mention of Nick.The computers worked well and were not defective in any way.Unfortunately,Nick did not pay ABC Computers on a timely basis.Jason,therefore,paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and because his name was on the invoice.Jason asked Nick for reimbursement,but Nick refused.Nick claimed that if Jason had only waited,ABC Computers might have agreed to take less.Did Jason have any legal liability to ABC Computers?

Accepted Answer

A) Yes,because he purchased the computers. 
B) Yes,but only because office equipment is involved. 
C) No,because his status was as an agent regardless of whether ABC Computers was aware of that fact. 
D) No,because he was an independent contractor. 
E) No,because he was an employee. 
A) Yes,because he purchased the computers. 
B) Yes,but only because office equipment is involved. 
C) No,because his status was as an agent regardless of whether ABC Computers was aware of that fact. 
D) No,because he was an independent contractor. 
E) No,because he was an employee.

Question 20

An agent may demand ________ if the agent believes that he or she is not being properly compensated.

Accepted Answer

A) specific performance 
B) substantial performance 
C) an accounting 
D) a constructive trust 
E) a Totten trust 
A) specific performance 
B) substantial performance 
C) an accounting 
D) a constructive trust 
E) a Totten trust

Exam 20: Agency and Liability to Third Parties

Whenever an employer hires an employee to perform some sort of physical service,the parties have created a(n)________.

Which of the following is true regarding the rights of an employer who is held liable and pays a third party not because of the employer's negligence,but under the doctrine of respondeat superior for the negligence of an employee?

Which of the following is true if a principal and an agent have no agreement regarding the amount for which the principal will compensate the agent?

An agent is authorized to act for and on behalf of the ________.

An agent's implied authority is derived from an agent's express authority and consists of what is reasonably necessary for carrying out the agent's grant of express authority.

Which of the following is false regarding revocation of an agent's authority and renunciation by an agent?

Which of the following type of agency exists when a third party reasonably believes,on the basis of the principal's actions,that an agency relationship exists between the principal and another individual?

If either the principal or the agent dies,the agency relationship is ________.

Which of the following is generally defined as a relationship between a principal and an agent?

Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal,as opposed to authority for only a specific purpose?

In which type(s)of agency is the principal-agent relationship inferred from the conduct of the parties?

A power of attorney can be general or specific.

Which of the following is a person who has a duty to act primarily for another person's benefit?

A person in a position of trust and confidence is known as a(n)________.

A(n)________ trust is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess.

An agency relationship that arises when an individual misrepresents herself as an agent for another party and that party accepts the unauthorized act is an agency by ________

An agent may demand ________ if the agent believes that he or she is not being properly compensated.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Uslegal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Introduction to Contracts and Agreement

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Sales and Lease Contracts: Performance, Warranties, and Remedies

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Secured Transactions and Bankruptcy

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

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