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

Anna hired Juan to act as her sales agent in her auto dealership. However, Anna has instructed Juan not to enter into any sales contracts before she has had a chance to review the transaction. However, one day Juan entered into a sales contract with William, without informing Anna first. Has Juan created a contract with William that is binding on Anna in this situation?

Respondeat superior makes a principal liable for an employee's negligence but not for her intentional torts.

Briefly discuss the four tests courts use to determine if an employee's conduct was within his or her scope of employment.

Lee, a landlord, hires Shomo, a repairman, to fix a broken staircase in the house occupied by his tenants, the Grants. However, Mrs. Grant has an accident while climbing down the stairs and injures herself severely. It was found that Shomo had not fixed the staircase properly, which caused this accident. Which of the following is true of this situation?

If an agent has, within the scope of the agency relationship, committed both negligent and intentional acts resulting in injury to third parties, the principal:

Which of the following is true of implied authority?

Able was employed as a security guard for Seep Corporation. Able's job was to guard a fenced-in area and to use force to keep intruders from climbing the fence to enter the plant. His working hours were from 8:00 A) Seep's is directly liable because Able was an employee of the corporation at the time of the incident.

In which of the following cases is the agent, but not the principal, liable?

Borg is the vice-president of purchasing for Crater Corp. He has authority to enter into purchase contracts on behalf of Crater provided that the price under a contract does not exceed $2 million. Dent, who is the president of Crater, is required to approve any contract that exceeds $2 million. Borg entered into a $2.5 million purchase contract with Shady Corp. without Dent's approval. Shady was unaware that Borg exceeded his authority. Neither party substantially changed its position in reliance on the contract. What is the most likely result of this transaction?

Stan hired Mason to work as a janitor in Stan's apartment building. Mason was negligent. He left the floor in the building lobby wet and slippery, without putting up a warning sign. Martha slipped and fell on the wet floor. If Stan is liable for this accident, what is the source of his liability?

In some cases, both principal and agent sometimes are liable for an agent's torts.

Hillary tells Iris that she wants to buy Iris's house "on behalf of a party who wishes her identity not to be known." The party is Baker Associates. With Baker's consent, Hillary contracts with Iris on Baker's behalf to buy the house. What is Hillary's liability on this contract?

Why is it impossible for there to be apparent authority on behalf of an undisclosed principal?

An agent's implied authority is always considered superior in law, and thus can contradict principal's express statements.

Corine engaged Datz as her agent. It was mutually agreed that Datz would not disclose that he was acting as Corine's agent. Instead he was to deal with prospective customers as if he were a principal acting on his own behalf. In this way he made several contracts for Corine. If a third party were to file a lawsuit on one of the contracts, which of the following statements would be true?

Respondeat superior liability depends on whether the principal himself was at fault.

Express authority is created by:

Apparent authority protects third parties who reasonably rely on the principal's manifestations that the agent has authority.

An agent who purports to act for a legally nonexistent principal is personally liable when the agent knows or has reason to know the principal does not exist.

Ralph, the owner of a medium-sized business which is operated as a sole proprietorship, gives his vice-president, Wanda, authority to hire a new manager for the firm. Ralph gives Wanda detailed instructions about the salary she can contract to pay, but tells her that under no circumstances can she make commitments regarding the new manager's pension. Wanda contracts to hire Nick for the new managerial position. But to get Nick to sign up, she has to make certain specific pension commitments to him. Some years later, Nick sues Ralph for copping out on those pension commitments. Which of the following is true in this case?