Deck 30: Liability of Principals, Agents, and Independent Contractors

Question 1

An agent may not be liable for the tortious conduct of his or her principal if he or she merely indirectly participated in the principal's conduct.

Answer 1

False

Question 2

The basic rule for whether the principal is liable for negligence of an agent is whether the agent intended to commit the tort.

Answer 2

False

Question 3

An agent generally is not liable on contracts made in connection with a fully disclosed agency.

Answer 3

True

Question 4

Generally,a principal is liable for the acts of her agents while on the way to and from work if the principal supplies a car to the agent.

Question 5

The frolic and detour rule states that an agent is liable to the principal for damages resulting from the agent going on a frolic and detour.

Question 6

If an agent's motivation in committing an intentional tort is to promote the principal's business,the principal is relieved of liability for any injury caused by the tort.

Question 7

An undisclosed agency exists where the third party is aware that the party he is dealing with is an agent,but does not know the identity of the principal.

Question 8

When an agent is acting partly for himself or herself and partly for the principal,the agent will be held totally liable if the agent injures someone while on such a mission.

Question 9

A third party can assume that if he tells something to an agent,the information is forwarded to the principal.

Question 10

In an undisclosed agency,both the principal and the agent are liable on the contract with the third party.

Question 11

An agent can be held liable on any contract negotiated by the agent on behalf of the principal.

Question 12

A principal's liability for his/her agent's conduct within the scope of their employment is based on the legal theory of vicarious liability.

Question 13

Under the coming and going rule,the principal is not liable for the negligence of the agent when commuting to or from the place of work.

Question 14

In an undisclosed agency,both the principal and the agent are liable on the contract with the third party.

Question 15

If an agent commits an intentional tort within a work-related time or space,the principal is liable for any injuries caused by the agent's intentional torts.

Question 16

An agent has a duty to notify the principal of information he or she learns from a third party if that information is important to the principal.

Question 17

Misuse of confidential information is not considered to be a breach of the duty of loyalty as long as it benefits the agency.

Question 18

A principal's liability for the tort of an agent depends on the degree of disclosure of the agency relationship.

Question 19

An agent acting as a dual agent is not always in breach of the duty of loyalty.

Question 20

An agent can usurp an opportunity available to the principal.

Question 21

If an agent negligently injures a third party while acting within the scope of employment,which of the following is true?

A) The agent will be liable to the third party.
B) The principal will be liable to the third party.
C) The agent will be liable to the principal.
D) All of the above are true.

Question 22

An agent's competing with the principal is generally a breach of the duty of:

A) performance
B) loyalty
C) accounting
D) indemnification
E) obedience

Question 23

Under which circumstance will a principal not be responsible for the tort of the agent?

A) if the agent was violating the instructions of the principal in committing the tort
B) if the agency agreement between the agent and principal says that the principal will not be responsible for the agent's torts
C) if the tort was committed outside the scope of the agency arrangement
D) if the tort is an unintentional tort

Question 24

The coming and going rule provides which of the following?

A) Agents are not liable for torts that they commit when going to or from work.
B) Principals are not liable for torts committed by their agents while going to or from work.
C) Commuting to or from work is considered within the scope of an agency.
D) Commuting to or from work is considered to be a dual purpose mission.
E) A principal is liable for any tort of an agent that occurs between the time the agent comes to work and the time the agent goes home.

Question 25

The degree to which an agent disclosed the agency relationship affects:

A) the agent's liability on a contract that the agent negotiates
B) the agent's liability for a tort committed by the agent
C) the principal's liability for a tort committed by the agent
D) the principal's liability on a contract that the agent negotiates
E) All of these are correct.

Question 26

Where an agent has disclosed that she is an agent,but has not disclosed the identity of the principal,who can be held liable on an authorized contract entered into by the agent on the principal's behalf?

A) the agent only
B) the principal only
C) both the principal and agent
D) neither the principal nor the agent
E) only the agent prior to disclosure of the principal's identity,and only the principal thereafter

Question 27

When is an agent liable for a tort committed by the principal?

A) when the agency is undisclosed
B) when the tort was committed with the scope of the agency
C) when the agent ratifies the action
D) when the agent has aided or abetted the principal's tortious conduct
E) both A and D

Question 28

The degree of skill necessary to complete a task has little to do with whether someone is an independent contractor or not.

Question 29

The duty of loyalty is generally a duty of:

A) the principal only
B) the agent only
C) both the principal and agent
D) neither the principal nor the agent

Question 30

A principal is not liable for injuries caused by independent contractors.

Question 31

An agent who wishes to avoid liability on contracts he enters into on behalf of the principal should make sure that the principal is:

A) undisclosed
B) partially disclosed
C) either partially disclosed or fully disclosed
D) fully disclosed
E) the degree of disclosure is irrelevant

Question 32

Which of the following is not one of the common ways in which the duty of loyalty can be breached?

A) self-dealing
B) dual agency
C) usurping an opportunity
D) failing to follow the principal's instructions
E) competing with the principal

Question 33

The significance of a "frolic and detour" is which of the following?

A) The employee can be liable to an employer if the frolic and detour is not authorized.
B) It determines if an employee can be liable on a contract made on the employer's behalf.
C) It can determine if someone working for a business is an employee or independent contractor.
D) It can determine if an employer is liable for the negligence tort of an employee.
E) It can determine if an employee is liable for torts he commits on the job.

Question 34

Why is the agent able to be held liable on a contract when the existence of the agency arrangement was not disclosed?

A) so that the outcome in a contract situation is the same as that for a tort
B) to discourage the use of undisclosed agency arrangements
C) to offset the fraud frequently present in this situation
D) because the third party could rely on the reputation of only the agent when entering into the contract
E) to ensure that the principal fulfills its obligations under contracts negotiated by authorized agents

Question 35

What is the effect on the tort liability of an agent when it is determined that an intentional tort was committed within the scope of the agency?

A) The agent is released from liability.
B) The agent will be 50 percent liable,and the principal will be 50 percent liable.
C) The liability of the agent to the injured party is unaffected.
D) The agent will be liable only if the principal is unable to pay.
E) The principal acquires the opportunity to use the contributory negligence defense.

Question 36

For which types of misrepresentations of an agent is the principal liable,assuming that the misrepresentation was made within the scope of the agency?

A) intentional misrepresentations only
B) innocent misrepresentations only
C) both intentional and innocent misrepresentations
D) neither intentional nor innocent misrepresentations

Question 37

The degree to which an agent disclosed the agency relationship affects the contract liability of:

A) the agent only
B) the principal only
C) both the agent and the principal
D) neither the agent nor the principal

Question 38

A principal who hires an unqualified independent contractor remains free of liability if that person injures someone while on the job.

Question 39

When an agent negotiates a contract on behalf of the principal,the liability of the principal will depend on if:

A) the agent was motivated by the principal's best interests
B) the agency arrangement was fully disclosed
C) the agency arrangement was express or implied
D) the agent was authorized to enter into this particular transaction
E) the agency arrangement was agreed to in writing

Question 40

All of the following are duties of the agent to the principal except:

A) loyalty
B) notification
C) reimbursement
D) obedience
E) accountability

Question 41

Jerry and Elaine dated for a long time.She recently broke up with him.Jerry is working at the checkout counter of a local hardware store,when he looks up to see Elaine enter with her new boyfriend.Jerry becomes enraged and punches the new guy boyfriend right in the nose.Is the employer liable for the actions of Jerry?

A) The employer would not be liable under either the motivation test or the work-related test.
B) The employer would be liable under the motivation test,but would not be liable under the work-related test.
C) The employer would not be liable under the motivation test,but would be liable under the work-related test.
D) The employer would be liable under both the motivation test and the work-related test.

Question 42

An agent enters into an authorized contract on behalf of the principal.The principal breached the contract and the agent was held to be liable due to the breach of the principal.The agent can seek to recover from the principal based on the principal's duty of:

A) reimbursement
B) cooperation
C) compensation
D) indemnification
E) contribution

Question 43

Paulette appointed Angie to be her agent to purchase a building lot for a warehouse in a large city.Angie owns several suitable lots,and a week after the agency arrangement was entered into,said to Paulette,"You know,I own a couple of lots that might work and that I might be willing to sell." Angie and Paulette then agree on a price for Paulette to buy one of the lots.Angie has:

A) not violated any of an agent's duties
B) violated the duty of loyalty by usurping an opportunity
C) violated the duty of loyalty by competing with the principal
D) violated the duty of loyalty by self-dealing
E) violated the duty of loyalty by engaging in a dual agency

Question 44

A principal hires an agent to place advertising in publications to reach certain target audiences.The agent places 45 percent of the advertising in a magazine of which he is the owner.The principal could probably recover from the agent on the grounds of:

A) the agent breaching the duty of accountability
B) the agent usurping an opportunity
C) the agent competing with the principal
D) the agent breaching the duty of obedience
E) the agent engaging in self-dealing

Question 45

In which of the following circumstances can a principal be held liable for the torts of an independent contractor?

A) in no circumstances
B) in the same circumstances as the principal would be held liable for the torts of an agent
C) when the principal is negligent in selecting the independent contractor
D) when the independent contractor is hired to undertake a dangerous activity
E) both C and D

Question 46

Agent enters into a contract with Third Party on behalf of Principal.Agent told Third Party that this contract was being entered into on behalf of someone else,but did not identify Principal to Third Party.A couple of weeks later,Principal disappears and Third Party wants to hold Agent to the contract.Third Party can:

A) not recover from Agent because Agent had disclosed the existence of Principal
B) not recover from Agent because Third Party must first try to recover from Principal
C) recover from Agent because Agent had a duty to ensure that Principal performed on the contract
D) recover from Agent because Agent did not disclose the identity of Principal
E) recover from Agent because Agent acted on behalf of an undisclosed principal

Question 47

An employee of Slap-em-up Construction Company negligently drops some materials and injures a pedestrian on the sidewalk below.The liability of the employer to the injured pedestrian depends on:

A) if the employee was within the scope of employment when the materials were dropped
B) if the agency arrangement was fully disclosed
C) the motivation of the employee in dropping the materials
D) whether the employee intended to drop the materials
E) None of the above.

Question 48

Edward is an employee of Huge Corporation who works in one of the company's stores.One day Edward sees one of his ex-girlfriends,who jilted him,in the store.He is still mad at her for this,so he goes over and slugs her in the face.She sues Edward and Huge Corporation.If the state applies the motivation test,which of the following is true?

A) Huge and Edward could each be liable for the tort.
B) Huge,but not Edward,would be liable for the tort.
C) Edward,but not Huge,would be liable for the tort.
D) Neither Edward nor Huge would be liable for the tort.
E) Huge and Edward could each be liable for the tort,but the plaintiff must first seek recovery from Edward.

Question 49

John has been hired by Bubbaweiser Beer Company to purchase an airplane.He approaches Sam who has a Cessna for sale.John does not mention that he is making this purchase on behalf of someone else.He negotiates a deal.Two weeks later,Sam learns that John did not negotiate the deal for himself,but was acting as an agent.Bubbaweiser declares bankruptcy and cannot buy the plane.John:

A) can be held liable on the contract because this was an undisclosed agency
B) can be held liable on the contract because this was a partially disclosed agency
C) can be held liable on the contract simply because he is an agent
D) cannot be held liable on the contract
E) can be held liable on the contract unless he was on a frolic and detour

Question 50

Eric works for a construction company.He drives his own vehicle to a job-site that is designated by the company on a daily basis.While driving to work one morning,he is dancing to music on the radio and spills coffee on his lap.As a result,he swerves his truck into an oncoming car,which causes significant physical injuries to the occupants of the other vehicle.The injured parties sue Eric and the construction company.Will the case be successful?

A) The case will be successful against Eric for driving negligently,and the case will also be successful against the company because he was acting within his scope of employment by driving to work.
B) The case will not be successful against Eric because he was not driving negligently,but the case will be successful against the employer due to the doctrine of respondeat superior.
C) The case will be successful against Eric for driving negligently,but the case will not be successful against the company due to the coming and going rule.
D) The case will not be successful against either Eric or the company.

Question 51

As the Wyoming Tetons are playing the Missouri Ozarks in a baseball game,a fan who is sitting near the Tetons' dugout starts yelling at Micky Macho,one of the relief pitchers,that his pink minivan makes him look like a suburban family man.Macho,because he feels insulted,picks up a nearby bench and throws it at the fan,who gets injured by this action.The fan then sues the Tetons.The fan could recover from the Tetons:

A) under the work-related test but not under the motivation test
B) under the motivation test but not under the work-related test
C) under either the motivation or the work-related test
D) under neither the work-related test nor the motivation test

Question 52

Paul,who collects old cars,hires Andy to find and purchase a 1965 Ford Mustang on his behalf.Andy sees a car advertised that might be what Paul has in mind.Andy examines the car and falls in love with it.He decides to purchase it himself.Andy has:

A) usurped an opportunity
B) engaged in self-dealing
C) competed with the principal
D) not violated the duty of loyalty

Question 53

Which of the following is true about the tests used to determine whether a principal is responsible for the intentional torts of his agent?

A) The work-related test and motivation test are two names for the same test.
B) In most states the plaintiff can choose which test to use.
C) The work-related test will find that the employer is liable in more circumstances than the motivation test.
D) Under either of these tests,the plaintiff must also prove that the agency was fully disclosed in order to recover.

Question 54

Bob sells real estate in Knoxville for a real estate sales company.One afternoon,he shows a client two homes in Knoxville and the client tells Bob that there is a great cabin for sale in Gatlinburg,about 40 miles from Knoxville.Bob drops the client off in Knoxville and goes to Gatlinburg to check out this property because he wants a place for his family to go on weekends.As he is entering Gatlinburg,he accidentally hits and injures a pedestrian.In determining whether Bob's employer can be held liable,a court will:

A) apply the work-related test and find the employer liable
B) not find the employer liable under the coming and going rule
C) use the frolic and detour rule to determine the employer's liability
D) determine the outcome based on the degree of disclosure of the agency relationship

Question 55

The "motivation" test and the "work-related" test are used to determine whether:

A) an employer is responsible for the intentional tort of an employee
B) an employer is responsible for the negligence tort of an employee
C) an employee is responsible for the contract entered into on behalf of an employer
D) an employee is responsible for the tort he commits while on the job

Question 56

An agent has been hired to buy land for the principal for use as a factory site.The agent finds a good parcel for the purpose,and proposes it for purchase to the principal.The principal declines to purchase the property because it is too far from the interstate highway.The agent then buys this land for himself as an investment.What,if anything,has the agent done wrong?

A) usurped an opportunity
B) nothing
C) engaged in self-dealing
D) competed with the principal
E) misused confidential information

Question 57

Rocky Mountain Mall hired George to be a Santa Claus in the mall.After a tough day of demanding kids,George stops at a bar in the mall for a cold beer.Before he knows it,he's had six beers and heads home still wearing his Santa suit.While driving,he injures a pedestrian.The injured pedestrian sues the owner of the shopping mall.Which of the following is true?

A) Because he is still in uniform he would probably be found to be within the scope of employment and the mall owner would be liable.
B) The only way the mall could avoid liability here is to prove that he was on a frolic and detour at the time of the accident.
C) The coming and going rule would probably protect the owner of the mall from liability.
D) The pedestrian must show that George intended to get drunk in order to recover.
E) The mall owner would probably be liable because the bar was in the same mall where George worked as Santa.

Question 58

A manufacturer of computer disk drives has contracted with you for you to be its agent in finding customers for their products.You arrange (without the principal's knowledge)a sale of the disk drives to a computer assembly business that you and your sister own.You have:

A) not violated any of an agent's duties
B) violated the duty of loyalty by usurping an opportunity
C) violated the duty of loyalty by competing with the principal
D) violated the duty of loyalty by self-dealing
E) violated the duty of loyalty by engaging in a dual agency

Question 59

Jane takes her car to Joe's Garage,leaving it there for repairs.Ted,one of Joe's employees,takes the car for a joy ride,without Joe's permission.In fact,Joe has a very strict rule that his employees cannot drive customers' cars except to diagnose or test them.Ted crashes into another car,driven by Mary.Mary is injured and sues Jane,Ted,and Joe.Which of the following is true?

A) Only Ted is liable.
B) Only Jane and Ted are liable.
C) Jane,Ted,and Joe are all liable.
D) Only Ted and Joe are liable.
E) Only Joe is liable.

Question 60

Pedro hires Andrea to negotiate the purchase of a sailboat for Pedro.Andrea decides to buy from Sally a sailboat meeting Pedro's specifications.Andrea tells Sally that the purchase is really being made by Pedro,and Andrea and Sally sign a written contract,with Andrea signing on Pedro's behalf.Based on all this:

A) Pedro is not liable on this contract,but Andrea is liable
B) neither Andrea nor Pedro can be held liable on this contract
C) Andrea is not liable on this contract,but Pedro is liable
D) either Andrea or Pedro could be held liable on this contract

Question 61

Tim played first base for a minor league baseball team,the Salamanders.During a home game,a fan for the visiting team was seated near first base and heckling Tim.The fan said that Tim's mother wore army boots,and that Tim played like he was in Little League.Finally,Tim had had enough,and threw his right shoe at the fan,injuring him.An hour after the game in a nearby bar,a drunk fan was threatening the Salamanders' right fielder,also their star hitter.Although this person was too drunk to have inflicted injury,Tim punched him a couple of times in order to protect his friend and star.Discuss the liability of the Salamanders for these injuries.

Question 62

Does the frolic and detour rule make sense? Is it too subject to manipulation and subjective interpretation? Is there a more workable rule that you can think of?

Question 63

Why would an agent not disclose the existence and identity of the principal when negotiating a contract,given that doing so would avoid agent liability on the contract? What should an agent do when the principal does not want to be disclosed?

Question 64

Billy owns a bike shop in a coastal California town.His shop sells and repairs bikes.One of his employees was repairing a bike with one of those pesky intermittent problems that would never occur when the repair technician was around.The customer said that the gears periodically would not shift properly.The employee took the bike out for a test ride hoping to replicate the problem.The problem did not appear.Because it was approaching noon,the employee decided to ride the bike home to have lunch.On the way back to the shop,the employee hit a small child and injured her.Discuss the liability of the employee and Billy's bike shop for the injuries to the child.

Question 65

Abe is an associate (employee)with that famous Denver law firm,Dewey,Cheatem,& How.One Thursday Abe and another associate,Gabe,had to go to western Colorado for a client's deposition.The deposition is unexpectedly over in midmorning and they start driving back to Denver.As they approach Vail,Gabe reminds Abe that the partners are in Aspen for 2 days and how it would be nice to be a partner.Abe says,"If they're in Aspen,that means they're not in the office in Denver.I hear the slopes calling for a half-day of skiing." They pull off I-70 and are skiing by 1 p.m.By chance,Abe runs into a client from Denver and they ski together and discuss the client's latest legal matters.As Abe is skiing with this client,Abe and the client both ski through a beginner ski lesson group as the beginner students practice their snowplow technique.Abe and the client each injure one skier.Five claims are filed:
1.Abe's victim sues Abe.
2.Abe's victim sues the law firm.
3.The client's victim sues the client.
4.The client's victim sues Abe.
5.The client's victim sues the law firm.
Discuss the outcome of each claim,assuming Abe was solely negligent with respect to his victim and the client was solely negligent with respect to his victim.

Question 66

Jerry was employed as a blackjack dealer in a Las Vegas casino.One evening as he dealt,a patron became more and more abusive,insulting Jerry,using profanity,and finally making personal insults about Jerry's appearance.Jerry became very angry and hit the patron.The patron sued both Jerry and the casino.Discuss the liability of Jerry and the casino,assuming that Jerry's actions were not justified.

Question 67

Generally,if an agent negligently injures a third party within the scope of the agency,the principal can be held liable even if the agent was violating the instructions of the principal.Is this fair to the principal? What is the justification for this rule?

Question 68

Why does the law in some states hold principals liable for the intentional torts of employees under the work-related rule for torts motivated by personal concerns? Aren't these matters that an employer does not have control over? Which do you think is the better rule for employer liability for intentional torts of employees? Why?

Question 69

With the increasing incidence of workplace violence,what should the rule be for employer liability for violent acts of their employees? Should it be any different than for intentional torts generally? Why might you want a different rule in these cases?

Question 70

Philip wanted to buy a new car.Philip did not know much about cars,but his 17-year-old daughter Andrea did because she had recently started driving and had drooled over new cars since she was 12 in anticipation of the day she would start driving.Andrea said she would go out and make the purchase on Philip's behalf if he would let her have the new car once a week.Philip agreed because he figured she'd probably manage to talk him out of any car at least once a week.Philip told Andrea,"I don't want anything fancy.Something like a Ford Pinto should be sufficient."
"Oh,Dad!" Andrea said,"They quit making Pintos in 1980.You know you don't want anything that small anyway.You even complained about the Taurus being too small."
Philip responded,"That's right,I guess.But,I don't need anything with all that power equipment and fancy stereos.Just get me a good,basic,comfortable car that isn't too small."
"I can do that," responded Andrea."I'll find you the best car for your wants and needs."
"It's a deal," said Philip.
Andrea shopped around and ended up at a Pontiac dealer.Throughout the entire experience,she kept thinking that her dad needed a more sporty image.She was tempted to get him a Trans Am but thought this might be too much.Because she knew he wouldn't be comfortable in a small car,she decided on a full-size Bonneville sedan.After explaining to the salesperson that this car would be for her father,the salesperson talked Andrea into the sport model,which had a more powerful engine,special wheels,and suspension.
Philip was initially upset with this choice,but after Andrea correctly explained that the sport model was only about $1,500 extra and Philip cooled off and started driving the car.Six weeks later he returned the car to the dealer,explaining that his daughter was supposed to buy a basic model and the sport suspension on this car rode too roughly.
1.Can the dealer hold Philip to the contract? Give all reasons why or why not.
2.Can the dealer hold Andrea to the contract? Give all reasons why or why not.

Question 71

Pat is the owner of Tarantula Skiwear of Boulder,Colorado.Tarantula is a new company that makes top-of-the-line products.Angela is the salesperson whose territory is the state of Utah.In an ordinary week,Angela,a Boulder resident,goes to the company office on Monday morning,takes care of paperwork,and in the late morning takes off for Utah.She stays in Utah until sometime on Friday,the exact time changing from week to week.Sometimes,she will stay in Utah for the weekend to ski and save the drive to Boulder and back.More often,she will drive partway back to Boulder on Friday evening,stopping to ski at one of the larger Colorado resorts,and return to Boulder on Saturday or Sunday.In order to make a sale,Angela must often negotiate a discount from the standard wholesale prices.
Tarantula wants to maintain the exclusivity of its line in Vail,thus the company has a policy of selling at full wholesale list price in Vail and not negotiating.The salesperson,who covers Vail,follows the policy rigidly and,as a result,Tarantula Skiwear is available in only two Vail stores.Angela thinks she could make a large sale by only cutting the list price slightly.One Thursday she drives from Salt Lake City to Vail.Friday morning she called on a large retail outlet in Vail.The owner said he would love to have the Tarantula line,but just couldn't pay the full wholesale price.Angela takes the owner skiing,with both,of course,wearing Tarantula wear.Angela is demonstrating how good Tarantula Skiwear looks at high speed when she skis into someone just beginning to snowboard.The snowboarder sues Angela and Tarantula Skiwear.Assuming that Angela was,in fact,negligent,can the plaintiff recover from Tarantula? Discuss the likely issues to arise and their likely resolution.

Question 72

Anne was hired by Peter to sell a condominium in San Francisco.The asking price for the modest two-bedroom unit was $2,300,000.Peter told Anne he would go as low as $2,100,000,but no lower,but that she should try to get as high a price as possible.If he couldn't get that much for it,he said he would use it as rental property.A good friend of Anne's was in the market for a two-bedroom condominium in San Francisco.In fact,this friend had come to Anne to help her find a place and negotiate for it.Anne's friend said that she could absolutely not spend more than $2,000,000.When Peter hired Anne to sell his condominium,Anne told her friend about it and the asking price.Anne told her friend,"Don't even bother.He won't go below $2,100,000,that is his bottom price." Anne's friend accepted that.Anne then proposed to her friend that they go in together,with Anne fronting some money through her friend,but not having Anne's name on the contract as purchaser.Before they could work out the details,Anne's friend received a raise and decided to buy the condominium.Anne negotiated a price of $2,100,000 on Peter's behalf.Peter later found out that Anne had told her friend about his bottom price,and about the plan for Anne to help buy the house.What claims,if any,does Peter have?