Deck 15: Agency

Question 1

An agent may not engage in inappropriate behavior that reflects badly on the principal,but this rule applies only to conduct while the agent is on duty.

Answer 1

False

Question 2

Jolene hired Lacy to find a buyer for her house.Adam was interested in buying the house.If both Jolene and Adam agree,Lacy,a real estate agent,may represent both parties.

Answer 2

True

Question 3

Ron is the business agent for Kansas Sunshine,a rock band.He is also the agent for another popular Midwestern rock group,City Sand.Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game.The promoter was willing to pay $250,000 for both groups to play after the game;however,Ron talked her into booking just City Sand for $175,000.Given his contract with City Sand,Ron made more money under this arrangement.Has Ron violated his fiduciary duty to Kansas Sunshine?

A) Yes. It appears that Ron put his own interests ahead of his principal's interests.
B) Yes. Ron cannot, under any circumstances, act as an agent for both groups.
C) Both (a) and (b) are correct.
D) Neither (a) nor (b) is correct since it is very common for rock band agents to represent several groups at the same time.

Answer 3

A

Question 4

An agent must obey any and all instructions of the principal.

Question 5

As a good neighbor,Lou gratuitously agreed to try to sell Haley's aquarium while she was on vacation.Since there is no consideration for this agreement,there can be no agency relationship between Lou and Haley.

Question 6

Victoria is the director of marketing for B & G Corporation.Victoria needed to negotiate an out-of-town contract on behalf of B & G.B & G has a legal duty to reimburse Victoria for the hotel expenses she incurs on the trip to negotiate the contract.

Question 7

If Denise is hired to work as a cashier,she has the implied authority to do acts reasonably necessary to carry out her job.

Question 8

Mohammad was an employee in the new product development department of Estay Inc.Mohammad was directly involved in the development of a new product that Estay intended to launch in six months.Estay took great care to keep information concerning the new product a secret.Ceries,Inc.,a competitor of Estay,persuaded Mohammad to leave Estay to direct Ceries' marketing department.Which statement is correct?

A) Mohammad can share with Ceries the confidential information he knows about Estay's new product because he was directly involved in its development.
B) Mohammad can share with Ceries the confidential information he knows about Estay's new product because his agency relationship with Estay is terminated.
C) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because of the equal dignities rule.
D) Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency.

Question 9

Janet was employed as a sales representative for Esday,Inc.An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract.Can Janet keep the bracelet?

A) Yes. The bracelet was given to Janet personally and intended for her.
B) Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet.
C) No. An agent is not allowed under any circumstances to personally profit as a result of the agency relationship.
D) No. The giving of the bracelet is regarded as an unfair trade practice and violates antitrust law.

Question 10

Maylin has the authority to delegate her tasks as agent for Brian unless he has expressly restricted her from doing so.

Question 11

Morgan is so grateful to Patrick for his work preparing insurance quotes for him that Morgan gives Patrick two tickets to an upcoming NFL game.Patrick may not keep the tickets unless he lets his agency know,and the agency may take the tickets or let Patrick keep them.

Question 12

An agency relationship can be created:

A) only by mutual consent that the agent will act on behalf of the principal.
B) by an oral agreement in all circumstances.
C) only by a written agreement.
D) only by the meeting of all the standards of contract law.

Question 13

Larry decided to relocate to Germany.Larry hired Happy Homes,Inc.to find a buyer and contract for the sale of his house in the United States.The agency relationship between Larry and Happy Homes may be created by an oral agreement.

Question 14

Dwayne agrees to serve as Walker's agent in booking spots for Walker's portable basketball game.Dwayne asks Walker for pictures and size specifications of the game so he can provide potential customers information they need.If Walker does not provide the pictures and size information,he is breaching a duty to Dwayne.

Question 15

An agent is not entitled to use confidential information gained from the agency relationship even after the agency relationship terminates.

Question 16

Nikki was a tax accountant with HBR Accounting.Nikki decided to do some tax consulting in the evenings and on weekends.HBR is unaware of Nikki's consulting work.Which statement is correct?

A) Nikki has not breached a fiduciary duty to HBR since her consulting is done after her work for HBR.
B) Nikki has not breached a fiduciary duty to HBR since her behavior does not reflect badly on the accounting firm.
C) Nikki has not breached a fiduciary duty to HBR since Nikki has a contractual relationship with her clients, not her employer.
D) Nikki has breached a fiduciary duty to HBR since she is competing with HBR.

Question 17

The bankruptcy of an agent automatically terminates an agency relationship.

Question 18

One potential remedy for an agent's breach of duty is that a principal can recover from the agent any damages the breach has caused.

Question 19

An employer is generally liable for the intentional wrongful acts of his or her employees.

Question 20

Rob agrees to act as an agent for Diane in selling her car.Diane has a duty of loyalty to Rob.

Question 21

Chad,the production manager at Vikings Creations,was told by his supervisor to hire Jay,a 15-year-old,to operate an industrial machine.Hiring the 15-year-old violates the child labor laws.Chad:

A) should hire Jay. Chad has a duty to obey Viking's instructions.
B) should hire Jay. Chad has a duty of care to ensure that the government does not discover that Jay is 15 years old.
C) should not hire Jay. Chad has a duty of care, and he would not be caring for Jay by hiring him.
D) should not hire Jay. Chad has a duty to obey Viking's instructions only if they are legal and ethical.

Question 22

Jackie is an employee for Hardware Store,Inc.When attempting to open a can of bright orange paint,she accidentally spills paint on Maggie,a customer in the store.Maggie claims that her $800 business suit is ruined.The legal liability here can best be described as:

A) the store is liable to Maggie, but Jackie is not.
B) Jackie is liable to Maggie, but the store is not.
C) Both the store and Jackie are liable to Maggie.
D) Neither Jackie nor the store is liable to Maggie as the incident was just an accident.

Question 23

Circus Pizza contracted with Art to run its birthday parties.Art's responsibilities included supervising the children and organizing the games.Circus did not investigate Art's background,which included a history of assaulting children.Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party.Circus Pizza:

A) cannot be liable for the damages because Art committed an unforeseeable intentional tort.
B) cannot be held liable for the damages because Art's conduct was not in the scope of employment.
C) may be held liable on the basis of negligent hiring.
D) may be held liable only if Circus actually knew of Art's background.

Question 24

Express authority can be created by:

A) words spoken directly to the agent.
B) conduct.
C) written words given to one person to give to another person, the agent.
D) All of the above.

Question 25

Renee works for a restaurant.One Saturday morning,she and several other employees participate in a "fun run" to benefit a charitable cause.She is not paid for this activity but she and her co-workers wear clothing bearing the company's name.While running through a street,Renee accidentally trips a fellow runner.The runner claims that both Renee and her company are liable for his injuries.Most likely:

A) the court would consider whether Renee was acting within the scope of her employment during the fun run.
B) only the charitable group to benefit from the fun run would be liable.
C) the injured runner would bear full responsibility and liability for his injuries.
D) neither Renee nor her employer could be held liable since this was an accident.

Question 26

Brittany asks Tomas if she can buy his 25-acre tract of land.She does not mention that she is acting on behalf of Wheatland Cooperative.Brittany is:

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

Question 27

Jerry agreed to show Sharon's car to a potential buyer.Sharon was not able to be home since she had to attend a meeting.After showing the car,Jerry left the keys in it and the car was stolen.Since Jerry was a gratuitous agent,he:

A) will only be liable for the loss of the car if his conduct constitutes gross negligence.
B) will be liable for the loss of the car if his conduct constitutes ordinary negligence.
C) has no liability for the car.
D) is strictly liable for the loss of the car.

Question 28

Cameron,editor of the local newspaper,assigned to Jim the writing of a story about pollution of a nearby stream.Although Jim used reasonable care in gathering and checking his information,unknown to Jim,the story contained a defamatory statement about Maureen.Maureen reads the story and sues Jim for libel.Cameron,who read and published the story:

A) must indemnify Jim for Maureen's claim.
B) need not indemnify Jim for Maureen's claim because Jim should have checked his facts more carefully.
C) need not indemnify Jim for Maureen's claim because Jim breached his duty to obey instructions.
D) can recover damages from Jim for any injury to the newspaper resulting from Jim's story.

Question 29

Factors influencing whether an employee is acting "within the scope of employment" include all but which of the following?

A) The act is similar to the one the principal authorized.
B) The act is not seriously criminal.
C) The act took place during hours that the employee is generally employed.
D) All of the answer choices are factors in determining if an act is "within the scope of employment. "

Question 30

An agency will be terminated in all but which one of the following situations?

A) The principal and agent agree on an agency relationship to sell a boat, and the boat is sold.
B) A travel agent files for individual bankruptcy under Chapter 13.
C) The agent violates his duty of loyalty.
D) An electrician, an agent of a contractor, has her license revoked.

Question 31

Chance is a traveling marketing representative for a publishing company.He is an independent contractor.One afternoon while driving to a meeting,he negligently runs a stop sign and causes an accident.Judy is injured.Judy can:

A) hold both Chance and his company liable for her injury.
B) hold the company but not Chance liable.
C) hold Chance but not the company liable.
D) not hold Chance or his company liable for her injury.

Question 32

Can a person work as an agent for two different people with conflicting interests?

A) Yes, under the equal dignities rule.
B) Yes, provided the agent discloses to both principals that she is representing both persons and the principals agree to the dual relationship.
C) No, dual agency relationships are per se illegal.
D) No, this would be power coupled with an interest.

Question 33

Wanting to save the money she would have to pay for a commission,Marsha asks her friend Howard to check on the Internet and see if he can find a five-day cruise to the Bahamas for under $400 and if he does,to book it for her.He agrees,but later tells her he doesn't have time to check for her.Howard is:

A) liable to Marsha for damages if she misses an opportunity to go on such a cruise because Howard terminated the agreement when he did not have the power to do so.
B) not liable to Marsha because he was a gratuitous agent and had both the power and the right to quit any time he wanted.
C) liable to Marsha for damages because Howard terminated the agreement without the right to do so.
D) liable to Marsha for breach of the duty to cooperate.

Question 34

Mike worked for Frank's Pizza as a driver.His duties consisted of making deliveries along a designated route.One day Mike decided to see his girlfriend,Jackie,who lived 50 miles out of his pizza route.While driving to his girlfriend's,Mike injured a pedestrian,Chuck.The accident was caused because of Mike's negligent operation of the delivery truck.Chuck is now suing both Mike and Frank's for personal injuries.Under the circumstances:

A) Frank's is probably liable under the doctrine of respondeat superior.
B) Frank's is not liable for the negligent torts of its agents.
C) Chuck can probably recover damages from both Frank's and Mike.
D) Frank's is probably not liable because Mike's excursion was not within the scope of his employment.

Question 35

The doctrine of respondeat superior generally:

A) applies to both employees and independent contractors.
B) applies to employees but not independent contractors.
C) applies to independent contractors but not employees.
D) does not apply to either employees or independent contractors.

Question 36

If the agent and principal are jointly and severally liable,the injured party:

A) may choose to sue only the agent.
B) may choose to sue only the principal.
C) can sue both the agent and the principal.
D) All of the above.

Question 37

Pamela hired Lena to sell her business.Lena:

A) can buy the business as long as the price is fair.
B) can buy the business as long as she qualifies for financing.
C) can buy the business only with Pamela's permission.
D) cannot buy the business under any circumstances.

Question 38

Mrs.O'Leary hired Jenna to sell her house in Michigan.She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate,acting as a prudent person." On May 30,Jenna finalized a deal with Brandon for the purchase of the house.Brandon and Jenna signed the real estate contract that day.Jenna learned the next day that Mrs.O'Leary had died May 29.The contract is:

A) void since the agency terminated May 29.
B) valid since the agency's purpose was achieved before Jenna was notified of Mrs. O'Leary's death.
C) voidable at the option of Mrs. O'Leary's estate.
D) voidable at the option of Brandon.

Question 39

Jim,the manager of an apartment complex,rented an apartment to Cynthia.A few weeks later,Cynthia complained that the hot water did not work.Jim hired Cooper Plumbing to fix the hot water,but the job was not successful.A few days later,Cynthia moved out since she had no hot water.If she then sues the landlord and Jim for breach of contract:

A) Jim is personally liable for this breach of contract.
B) the landlord is liable, but Jim is not.
C) Jim is liable, but the landlord is not.
D) neither Jim nor the landlord is liable to Cynthia.

Question 40

An agent may not engage in inappropriate behavior that reflects badly on the principal.This rule applies to conduct:

A) during working hours.
B) during off-duty time.
C) during both working hours and off-duty time.
D) only by public officials.

Question 41

Alex worked for years for MegaCorp.During his employment with MegaCorp,he learned a great deal of confidential information and knew that if this information got into the hands of competitors or the general public,MegaCorp could suffer great business losses.Alex claims that he was wrongfully fired by MegaCorp and accordingly he believes he has no obligation to MegaCorp to keep any information he acquired with them as confidential.MegaCorp claims that Alex is under a continuing duty to keep confidential information secret,even though he is no longer with the company.Who is right? Why?

Question 42

What are the requirements for and the effect of a ratification of an agent's unauthorized act?

Question 43

John is an agent for MegaCorp.He signed a contract on behalf of MegaCorp "John Miloni,as agent for MegaCorp" to purchase $250,000 worth of equipment from Big Machine Company (BMC).Is John liable to BMC if MegaCorp refuses to pay the bill?

Question 44

Lester discussed a business opportunity with Stewart and asked Stewart to sell 1,000 shares of stock Lester owned to finance Lester's investment in the venture.The next day,the bottom dropped out of the stock price,but Stewart sold the shares before Lester talked to Stewart again.Discuss the agency relationship and the effect of the unexpected drop in stock price.

Question 45

Andrew has been hired to do some work for Rossi Enterprises.What factors would a court consider in determining if Andrew is an employee or an independent contractor? Why does the designation matter?