Question 1

The principal's ratification of a contract can be implied from his conduct, even if the principal says nothing to ratify.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following states that the agent has authority only to make representation contained in the contract and that only those representations bind the principal?

Accepted Answer

A)  Representation clause 
B)  Exculpatory clause 
C)  Liability clause 
D)  Agent's clause 
A)  Representation clause 
B)  Exculpatory clause 
C)  Liability clause 
D)  Agent's clause B

Question 3

_____ is the authority the principal wants the agent to possess and is based on the principal's communications or manifestations to the agent.

Accepted Answer

A)  Apparent authority 
B)  Actual authority 
C)  Incidental authority 
D)  Traditional authority 
A)  Apparent authority 
B)  Actual authority 
C)  Incidental authority 
D)  Traditional authority B

Question 4

Which of the following is true regarding the requirements of ratification?

Accepted Answer

A)  An agent's illegal contract cannot be made binding by the principal's subsequent ratification. 
B)  An agent should disclose the principal's identity when entering into a contract with a third party. 
C)  A principal without legal capacity can ratify the unauthorized acts of the agent. 
D)  An agent's beneficial acts can be ratified by the principal while the detrimental ones can be rejected. 
A)  An agent's illegal contract cannot be made binding by the principal's subsequent ratification. 
B)  An agent should disclose the principal's identity when entering into a contract with a third party. 
C)  A principal without legal capacity can ratify the unauthorized acts of the agent. 
D)  An agent's beneficial acts can be ratified by the principal while the detrimental ones can be rejected.

Question 5

Susan is hired to manage a business. This means that she has the authority to make contracts that are reasonably necessary for conducting the business. This is called:

Accepted Answer

A)  express authority. 
B)  apparent authority. 
C)  implied authority. 
D)  fixed authority. 
A)  express authority. 
B)  apparent authority. 
C)  implied authority. 
D)  fixed authority.

Question 6

Sometimes, if an agent incurs tort liability the principal is required to _____.

Accepted Answer

A)  ratify the agency 
B)  dismiss the agency 
C)  transfer the agent 
D)  indemnify the agent 
A)  ratify the agency 
B)  dismiss the agency 
C)  transfer the agent 
D)  indemnify the agent

Question 7

A(n) _____ case involves harm caused by the principal's negligence regarding the agent.

Accepted Answer

A)  respondeat superior 
B)  direct liability 
C)  vicarious liability 
D)  implied warranty 
A)  respondeat superior 
B)  direct liability 
C)  vicarious liability 
D)  implied warranty

Question 8

Kin is an agent for a disclosed principal, Tracy. Kin contracts with Phil on Tracy's behalf. Kin becomes liable to Phil when:

Accepted Answer

A)  he signs the contract "Kin, by Tracy". 
B)  he signs the contract "Kin, on behalf of Tracy." 
C)  he signs the contract "Kin, agent." 
D)  he signs the contract "Kin, for Tracy." 
A)  he signs the contract "Kin, by Tracy". 
B)  he signs the contract "Kin, on behalf of Tracy." 
C)  he signs the contract "Kin, agent." 
D)  he signs the contract "Kin, for Tracy."

Question 9

Maco Corp. is a real estate development firm and regularly engages real estate brokers to act on its behalf in acquiring parcels of land. The brokers are authorized to enter into such contracts, but are instructed to do so in their own names without disclosing Maco's identity or Maco's relationship to the transaction. If a broker enters into a contract with a seller on Maco's behalf:

Accepted Answer

A)  Maco will be bound by the contract because of the broker's apparent authority. 
B)  the broker will not be personally bound by the contract because the broker has express authority to act. 
C)  Maco will not be liable for the intentional torts of the broker committed while acting on Maco's behalf. 
D)  the broker will be held liable on contracts he/she signs without disclosing Maco as the principal. 
A)  Maco will be bound by the contract because of the broker's apparent authority. 
B)  the broker will not be personally bound by the contract because the broker has express authority to act. 
C)  Maco will not be liable for the intentional torts of the broker committed while acting on Maco's behalf. 
D)  the broker will be held liable on contracts he/she signs without disclosing Maco as the principal.

Question 10

Jerry is a janitor for Marry Hotel. Jerry negligently left a mop and a bucket of water in the hallway. Gina, a guest of the Marry Hotel, exited her guest room and tripped over the bucket. She broke her leg. Who is liable? Discuss.

Accepted Answer

Marry Hotel is likely to be liable under

Question 11

As a general rule, a principal is not liable for torts committed by independent contractors while performing the principal's business.

Accepted Answer

A) True 
 B)False

Question 12

Sandra hired Jeff to work as a taxi driver for Sandra. Jeff had a long criminal record for violent assaults, including three cases of vehicular homicide. However, Sandra was not aware of this and she does not check employees' criminal records. While Jeff was driving a passenger, Ben, they got involved in a heated argument. Jeff pulled Ben out of his car and hit him. Which of the following is true of this case?

Accepted Answer

A)  Since Sandra was not aware of Jeff's criminal history, she will not be held liable for this incident. 
B)  Jeff was outside the scope of his employment, hence he is liable for this tort, and Sandra escapes liability. 
C)  Sandra is liable for the incident only under the vicarious liability doctrine. 
D)  Sandra is liable because of the direct liability doctrine. 
A)  Since Sandra was not aware of Jeff's criminal history, she will not be held liable for this incident. 
B)  Jeff was outside the scope of his employment, hence he is liable for this tort, and Sandra escapes liability. 
C)  Sandra is liable for the incident only under the vicarious liability doctrine. 
D)  Sandra is liable because of the direct liability doctrine.

Question 13

Pete tells Alice, his sales agent, that under no circumstances does she have authority to make any warranties covering goods she sells for Pete. No third party knows about Pete's limitation on Alice's authority. Alice goes out and provides warranties in a sale to Tom. The warranties that Alice makes are customary in the trade, Tom knows this, and Tom knows nothing about the limitation on Alice's authority. Did Alice have implied authority to bind Pete? Discuss Alice's apparent authority?

Accepted Answer

Alice did not have implied authority, be

Question 14

_____ means that the principal's rights and liabilities are what they would have been if the principal had known what the agent knew.

Accepted Answer

A)  Notification 
B)  Authorization 
C)  Ratification 
D)  Imputation 
A)  Notification 
B)  Authorization 
C)  Ratification 
D)  Imputation

Question 15

Nina hired Sue to work as a janitor in Nina's apartment building. Sue was negligent in that she left a crack in the marble staircase unrepaired, without putting up a warning sign. Seth slipped on the staircase and suffered severe injuries. Who is liable for this accident?

Accepted Answer

A)  Nina is liable for the accident under the doctrine of respondeat superior. 
B)  Sue is liable for the accident since she did not perform her duty with reasonable care. 
C)  Sue will be held liable for committing an intentional tort out of her scope of employment. 
D)  Nina will be directly liable for Sue's negligence. 
A)  Nina is liable for the accident under the doctrine of respondeat superior. 
B)  Sue is liable for the accident since she did not perform her duty with reasonable care. 
C)  Sue will be held liable for committing an intentional tort out of her scope of employment. 
D)  Nina will be directly liable for Sue's negligence.

Question 16

Andy works for Sparkles, a jewelry store. While selling a zircon-studded ring to a customer, Andy falsely states that the zircon is a diamond. The customer, delighted to find a diamond ring at an affordable cost, buys the ring. If the customer files a lawsuit for damages, which of the following will most likely be the court's verdict?

Accepted Answer

A)  Andy had the actual and apparent authority from Sparkles to make true statements, hence Sparkles is liable for Andy's misrepresentations. 
B)  Andy will be held liable for the misrepresentation and will have to pay damages to the customer and to Sparkles. 
C)  The customer will be held responsible since he was negligent in the purchase, but may receive a small percentage of damages from Sparkles. 
D)  Andy will be held liable for the misrepresentation to the customer, and will have to pay him damages. 
A)  Andy had the actual and apparent authority from Sparkles to make true statements, hence Sparkles is liable for Andy's misrepresentations. 
B)  Andy will be held liable for the misrepresentation and will have to pay damages to the customer and to Sparkles. 
C)  The customer will be held responsible since he was negligent in the purchase, but may receive a small percentage of damages from Sparkles. 
D)  Andy will be held liable for the misrepresentation to the customer, and will have to pay him damages.

Question 17

_____ occurs when a principal manifests assent that his legal relations be affected, such as stating orally that he wishes to be bound by a contract that has already been made.

Accepted Answer

A)  Express ratification 
B)  Unauthorized ratification 
C)  Implied ratification 
D)  Valid ratification 
A)  Express ratification 
B)  Unauthorized ratification 
C)  Implied ratification 
D)  Valid ratification

Question 18

A principal can ratify an agent's unauthorized contract even if the third party withdrew from the contract prior to ratification.

Accepted Answer

A) True 
 B)False

Question 19

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal, the principal is bound to the subagent's contract.

Accepted Answer

A) True 
 B)False

Question 20

A principal is _____ if a third party knows or has a reason to know that the agent is acting for a principal and the principal's identity.

Accepted Answer

A)  formalized 
B)  nonexistent 
C)  disclosed 
D)  undisclosed 
A)  formalized 
B)  nonexistent 
C)  disclosed 
D)  undisclosed

Exam 36: Third-Party Relations of the Principal and the Agent

The principal's ratification of a contract can be implied from his conduct, even if the principal says nothing to ratify.

Which of the following states that the agent has authority only to make representation contained in the contract and that only those representations bind the principal?

_____ is the authority the principal wants the agent to possess and is based on the principal's communications or manifestations to the agent.

Which of the following is true regarding the requirements of ratification?

Susan is hired to manage a business. This means that she has the authority to make contracts that are reasonably necessary for conducting the business. This is called:

Sometimes, if an agent incurs tort liability the principal is required to _____.

A(n) _____ case involves harm caused by the principal's negligence regarding the agent.

Kin is an agent for a disclosed principal, Tracy. Kin contracts with Phil on Tracy's behalf. Kin becomes liable to Phil when:

Jerry is a janitor for Marry Hotel. Jerry negligently left a mop and a bucket of water in the hallway. Gina, a guest of the Marry Hotel, exited her guest room and tripped over the bucket. She broke her leg. Who is liable? Discuss.

As a general rule, a principal is not liable for torts committed by independent contractors while performing the principal's business.

_____ means that the principal's rights and liabilities are what they would have been if the principal had known what the agent knew.

Nina hired Sue to work as a janitor in Nina's apartment building. Sue was negligent in that she left a crack in the marble staircase unrepaired, without putting up a warning sign. Seth slipped on the staircase and suffered severe injuries. Who is liable for this accident?

_____ occurs when a principal manifests assent that his legal relations be affected, such as stating orally that he wishes to be bound by a contract that has already been made.

A principal can ratify an agent's unauthorized contract even if the third party withdrew from the contract prior to ratification.

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal, the principal is bound to the subagent's contract.

A principal is _____ if a third party knows or has a reason to know that the agent is acting for a principal and the principal's identity.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Crimes

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Introduction to Forms of Business Andformation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Agencies

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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