Deck 19: Agency Relationships

Question 1

Under the principles of agency law, any sale of goods by a salesperson in a store to a customer can be binding on the owner of the store.

Answer 1

True

Question 2

It is not illegal for a licensed professional to employ an unlicensed agent to perform professional acts.

Answer 2

False

Question 3

By using agents, a principal can conduct multiple business operations simultaneously in various locations.

Answer 3

True

Question 4

When an agent's acts create the appearance of an agency that does not in fact exist, the principal is estopped to deny the agency relationship.

Question 5

An agency relationship is based on the attributes of power, control, and financial self-interest-not the trust and confidence of a fiduciary relationship.

Question 6

Agency relationships come about by voluntary consent and agreement of the parties-consideration is required, and the agreement must be in writing.

Question 7

The greater the employer's control over the work, the more likely it is that the worker is an employee.

Question 8

In some situations, the courts find an agency relationship where there is no formal agreement.

Question 9

Agency relationships cannot exist outside an employment, so agency law has a narrower reach than employment law.

Question 10

A property owner who hires a realtor to sell the property thereby enters into an agency relationship with an employee for a limited time.

Question 11

A truck driver who drives a company truck on a regular basis is most likely an employee.

Question 12

Any person can be an agent, regardless of whether he or she has the capacity to contract.

Question 13

An agency relationship can arise by ratification, which involves a determination of intent expressed by words or conduct.

Question 14

A person who cannot legally enter into a certain contract directly can do so indirectly through an agent.

Question 15

If an agent has represented himself or herself as possessing special skills, the agent is expected to use them.

Question 16

An agent can represent two principals in the same transaction, so long as neither is aware of the dual capacity.

Question 17

In an agency relationship, one party called the principal agrees to represent or act for another called the agent.

Question 18

A gratuitous agent can be liable to a principal for breach of contract, even in the absence of a contract, but not liable for the negligent performance of the deal.

Question 19

An independent contractor is, by definition, an employee because the person's physical conduct is controlled, or subject to control, by the employer.

Question 20

The duties that an agent owes a principal must be set forth in the agency agreement because they do not arise by operation of law.

Question 21

The doctrine of respondeat superior imposes liability for an agent's tort on a principal without regard to the personal fault of the agent.

Question 22

A principal may be liable for an agent's or an employee's tort, with the exception of negligence, which is an unintentional tort for which the agent or employee is vicariously liable.

Question 23

An undisclosed principal is one whose identity is totally unknown by an agent and a third party at the time a contract is made.

Question 24

Rene is a delivery driver for Sicilian Pasta Company. Rene does exactly what the company tells her. Rene is

A) an employee.
B) an employer.
C) an independent contractor.
D) a principal.

Question 25

Nora works at Oil & Gas Inc. She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps, and dictates their schedules. With respect to third parties, Nora is

A) an independent contractor.
B) an employee only.
C) an employee and agent.
D) a principal.

Question 26

A principal has a duty to pay an agent in a timely manner the customary compensation for services rendered.

Question 27

The agent must maintain separate accounts for the principal's funds and for the agent's personal funds, but may intermingle these accounts.

Question 28

Ota works at Pumps Inc. She works in the company's engineering department, interacting with third parties only to discuss technical issues. With respect to third parties, Ota is

A) an independent contractor.
B) an employee only.
C) an employee and agent.
D) a principal.

Question 29

Both parties to an agency relationship have the power and the right to terminate the relationship at any time.

Question 30

When an agent, acting within the scope of his or her authority, contracts with a third party, in no circumstance is the agent liable to the third party.

Question 31

Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely

A) an agent.
B) an agent and a principal.
C) a principal.
D) none of the choices.

Question 32

Apparent authority in an agency relationship arises when the principal causes the agent to reasonably believe that he or she has the authority to act.

Question 33

Actual authority in an agency relationship arises from what a principal makes clear to a third party.

Question 34

A principal who creates an exclusive agency and then competes with the agent can be held liable for the agent's lost profits or sales.

Question 35

An agent must keep confidential any information acquired through an agency during the term of the relationship, but can disclose it after the agency ends.

Question 36

The equal dignity rule requires that a principal and an agent act in good faith and with mutual respect in their dealings with each other.

Question 37

Diamonds & Gold Inc. hires Esmé to buy gems and precious metals from various sources on its behalf. In this relationship, Diamonds is

A) an employee.
B) an independent contractor.
C) a principal.
D) an agent.

Question 38

When an agent, acting within the scope of his or her authority, contracts with a third party, a disclosed principal is liable to the third party.

Question 39

The principal is bound by the agent's unauthorized act, unless the principal negates it.

Question 40

Once the agency relationship between a principal and an agent has ended, the agent loses the right to bind the principal.

Question 41

Darla serves in a representative capacity for Ellen's Botanicals. To accomplish the objectives of this relationship, Darla's authority can be implied by

A) by contradiction.
B) by custom.
C) by any subjective measure.
D) none of the choices.

Question 42

Suva is an agent for Tax Accountants, Inc. On the firm's behalf and at its request, Suva pays Uzo for specially coded software. Suva's right to obtain the amount of the payment from Tax Accountants arises under the duty of

A) none of the choices.
B) compensation.
C) indemnification.
D) reimbursement.

Question 43

Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for

A) a business purpose only.
B) any legal purpose.
C) any purpose.
D) no purpose.

Question 44

Country Club officers ask Devi to contract with Ewan to maintain the club's golf course. Devi orally agrees to do so. The relationship between the club and Devi is an agency by

A) agreement.
B) estoppel.
C) operation of law.
D) none of the choices.

Question 45

Byron, a salesperson at a Carpet & Tile store, tells Dan, a customer, "Buy your flooring here, and I'll install it for less than the store would charge." Dan buys carpeting, which Byron installs for half the store's price. Byron keeps the money. With respect to the store, Byron has breached

A) no duty.
B) the duty of loyalty.
C) the duty of performance.
D) the duty of obedience.

Question 46

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

A) apparent authority.
B) express authority.
C) implied authority.
D) no authority.

Question 47

Lucia is married to Marco. Lucia buys food for their children's lunches and charges the cost to Marco's account. This is an agency by

A) agreement.
B) estoppel.
C) operation of law.
D) none of the choices.

Question 48

Lorene, an attorney, contracts with Milos to incorporate the client's business. Their contract stipulates the amount of the fee. On completion of the work, the attorney's right to be paid this amount arises from the client's duty of

A) none of the choices.
B) compensation.
C) indemnification.
D) reimbursement.

Question 49

Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of

A) none of the choices.
B) cooperation.
C) indemnification.
D) reimbursement.

Question 50

Ben manages a warehouse and its inventory for Coffee Roaster Inc. To operate this part of the business, Ben's authority can be inferred

A) from the position Ben occupies.
B) by a reasonable party with whom Coffee Roaster does business.
C) to contradict Ben's express authority.
D) under no circumstances.

Question 51

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

A) an agent.
B) an employee.
C) an independent contractor.
D) a principal.

Question 52

Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached

A) the duty of performance.
B) the duty of loyalty.
C) no duty.
D) the duty of notification.

Question 53

Jon contracts with Kino to buy a certain number of sheep for Kino's Animal Farm. Jon makes a deal with Lila for the sheep, but neither Jon nor Kino pays the price. Lila sues Jon for breach. Jon's right to hold Kino liable for any damages is the right to

A) none of the choices.
B) compensation.
C) indemnification.
D) reimbursement.

Question 54

Levon, an agent for Milled Grains LLC, executes an unauthorized contract with National Grocers Inc. The deal is highly advantageous to Milled Grains, and the company ratifies the contract. The contract is

A) valid.
B) vicarious.
C) void.
D) voidable.

Question 55

Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached

A) no duty.
B) the duty of loyalty.
C) the duty of performance.
D) the duty of obedience.

Question 56

Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand

A) a constructive trust.
B) an accounting.
C) nothing.
D) specific performance.

Question 57

Aiden hires Buck to manage Aiden's Cattle Ranch. Buck agrees to act on Aiden's behalf, subject to Aiden's control, and Aiden trusts Buck to so act. Their relationship is

A) an employee and an agent.
B) none of the choices.
C) an employer and an independent contractor.
D) a principal and an agent.

Question 58

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

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

Question 59

Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by operation of law.
D) not an agency relationship.

Question 60

Bakery LLC hires Cora to sell the company's products in a certain area. The company agrees to pay Cora a salary, plus commission, for a trial period. They also agree that she can sell using any methods and during any hours that seem appropriate. The key factor in whether Cora is an employee is

A) the amount of the salary.
B) the degree of the employer's control over the details of the work.
C) the length of the trial period.
D) the size of the sales area.

Question 61

Bey indicates that he is acting as an agent on behalf of an unidentified client-Cuisine LLC-when he enters into a contract with Diners Bistro. Cuisine is

A) a disclosed principal.
B) an apparent agent.
C) an undisclosed principal.
D) a partially disclosed principal.

Question 62

Clark hires Dell, a real estate broker, to sell his beach house. The house is destroyed in a storm before it can be sold. Dell is Clark's agent

A) until Clark's insurer pays Dell's commission.
B) until the destroyed house is sold.
C) until the destroyed house is rebuilt and sold.
D) no more.

Question 63

Luis hires Mieko to act as his agent to buy Ngoc's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Ngoc's seller who that third party is. Luis is

A) a disclosed principal.
B) not a principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Question 64

Beryl is a purchasing agent for Cable & Wire Corporation. Doyle, a Cable & Wire corporate officer, gives Beryl written authority to buy for the firm as much copper as necessary. The next day, Doyle calls Beryl and tells her to buy only a certain quantity of copper and no more. Beryl shows the written authority to Earth Resources Inc., and enters into a contract to buy more than the quantity specified by Doyle. Earth Resources ships the order to Cable & Wire. Is Cable & Wire liable to Earth Resources under the contract? Is Beryl liable? In each case, if so, why? If not, why not?

Question 65

Cropland Farms, LLC, hires Desiree to act as its agent to buy a certain tract of land from Ethan for $1,000 per acre. Cropland Farms does not want Ethan to know that it is the principal or that Desiree is its agent. Cropland Farms wants the land to test genetically modified seed products, and believes that Ethan may not sell the land for that purpose, or may demand a premium price if he knows that Cropland Farms is the buyer. Desiree makes the purchase, signing only her name to the contract as the buyer and not disclosing to Ethan the agency relationship. The transfer of the deed is to occur on June 1. Ethan learns of Cropland Farms' identity on May 15. Can Ethan legally refuse to deed the property on June 1? Explain.

Question 66

Vera is a purchasing agent for Wild-Caught Fish Inc., with the authority to buy a sea fisher's catch up to a certain quantity. After the fish is bought, the agency relationship terminates

A) automatically.
B) following notice to all fishers within a reasonable geographic area.
C) following notice to all fishers with whom Vera did business.
D) following published notice.

Question 67

Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on

A) any transaction causing a loss to Miklos.
B) Miklos's death or incapacity.
C) Miklos's sixty-fifth birthday.
D) Nathalie's handling of one of each stipulated transaction.

Question 68

Gary drives a truck as an employee for Hauling Inc. Gary would most likely be considered acting outside the scope of her employment if he

A) crashed into a car at the airport while off duty.
B) hit a pedestrian in a parking lot during a "working" lunch.
C) ran over an attendant at a gas station while refueling the truck.
D) smashed into a store-front while intoxicated on-duty.

Question 69

Erin indicates that she is acting as an agent on behalf of an unidentified client-Flight Services Inc.-when she enters into a contract with Go Airlines. Liability to Go for nonperformance of the contract may be imposed on

A) none of the choices.
B) Erin and Flight Services.
C) Erin only.
D) Flight Services only.

Question 70

Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred

A) due to a propensity Jett was not and could not have been aware of.
B) during normal working hours.
C) in the course and scope of Ira's employment.
D) outside the parties' employment relationship.

Question 71

Farah hires Gil, a real estate broker, to act as her agent to sell her land for $150,000. Before the land is sold at the stated price, oil is discovered beneath it, causing its market value to increase considerably. The agreement between Farah and Gil is likely

A) continued with a proportionate increase in Gil's sales commission.
B) continued until Gil tells prospective buyers of the discovery.
C) terminated by act of the parties.
D) terminated by operation of law.

Question 72

Without authorization, Lars contracts on behalf of Mina to have Nemo paint Mina's Boutique. If Mina decides to ratify the contract, she must affirm

A) all of the contract.
B) any part of the contract, with Lars liable to Nemo for the difference.
C) any part of the contract before performance begins.
D) any part of the contract at any time.