Deck 26: Nature and Creation of an Agency

Question 1

Which of the following is true when a person wants to ratify the unauthorized acts of an assumed agent?

A) The one attempting to ratify must have been capable of authorizing the act at the time the act was done.
B) The one attempting to ratify need not be capable of authorizing the act at the time approval of the act is given.
C) It is permissible for the one attempting to ratify to approve part of the act and reject the rest.
D) The ratification cannot be made before the third party has withdrawn from the transaction.

Answer 1

A

Question 2

Limitations upon an agent's authority can bind a third party who does not know of them.

Answer 2

False

Question 3

Brokers are also known as commission merchants.

Answer 3

False

Question 4

Which of the following statements best defines a power of attorney?

A) It is a written instrument indicating how a person's property is to be divided in the event of his/ her death.
B) It is an official document that confers the rights of ownership of certain property to another person.
C) It is the power conferred by a court to enable a party to manage the financial affairs of another party.
D) It is a written instrument indicating the appointment of an agent for the performance of certain tasks.

Question 5

A contract appointing an agent must be in writing if the agency is created to transfer title to real estate.

Question 6

Agency by estoppel arises when:

A) a person, by words or conduct, leads another to believe that a third party is an agent.
B) necessity and unforeseen circumstances force a person to act as an agency.
C) a person approves another party's unauthorized act committed in the former's name.
D) an agency acquires the authority to do things not specifically enumerated in the agreement.

Question 7

A special agent is one who is authorized to carry out all of the principal's business of a particular kind.

Question 8

Which of the following statements is true of contracts of agency?

A) The legal requirements to be an agent are always the same in all states.
B) Corporations cannot act as agents in contracts of agency.
C) Every agent must possess a valid license that authorizes him to act as one.
D) All people legally competent to act for themselves may act through an agent.

Question 9

The appointment of an agent to execute a formal contract requires a formal contract of appointment.

Question 10

Which of the following statements best defines customary authority?

A) It is the authority specifically delegated to an agent by the agreement creating the agency.
B) It is the authority to do things not specifically listed in a contract so that the purpose of the agency can be fulfilled.
C) It is the authority to act on behalf of another that arises when such agents ordinarily possess such powers.
D) It is the authority that an agent is believed to have because of the principal's behavior.

Question 11

Which of the following is true in the event of a person hiring an independent contractor to perform some tasks?

A) The contract creates a principal-agent relationship.
B) The contractor is responsible for the proper performance of the contract.
C) The contract controls the contractor as to the manner in which the tasks are to be performed.
D) The contractor may be held liable for any injuries that he causes to third parties.

Question 12

A general agent may transact business that is outside the scope of his express authority.

Question 13

The principal in a contract of agency is always a corporation.

Question 14

Which of the following tasks can be delegated to an agent?

A) Voting in a public election
B) Executing a will
C) Signing a business merger
D) Publishing a libelous statement in a magazine

Question 15

A contract of agency usually involves at least three parties.

Question 16

The creation of an agency may be executed through an informal contract.

Question 17

An attorney in fact is a special agent.

Question 18

Can anyone become an agent? Explain the requirements that one needs to become an agent.

Question 19

A(n) _____ is one who receives possession of another's property for the purpose of sale on commission.

A) factor
B) factor del credere
C) broker
D) attorney in fact

Question 20

The laws that an employer must comply with relative to his employees also apply to his contracts with independent contractors.