Deck 27: Operation and Termination of an Agency

Question 1

Which of the following best describes an agency coupled with an interest?

A) It is an agency in which an agent has a financial stake in performance.
B) It is an agency in which an agent and the principal are one and the same.
C) It is an agency in which an agent is authorized to invest in foreign exchange.
D) It is an agency in which an agent contracts under his own name.

Answer 1

A

Question 2

Which of the following best describes durable power of attorney?

A) It is an unwritten rule of agency designed to be effective even though the principal is dead.
B) It is a written appointment of agency designed to be effective even though the principal is dead.
C) It is a verbal rule of agency designed to be effective even though the principal is incapacitated.
D) It is a written appointment of agency designed to be effective even though the principal is incapacitated.

Answer 2

D

Question 3

Which of the following is a duty a principal has toward his agent?

A) A principal must provide the agent with a record of all his monetary transactions.
B) A principal must compensate the agent for his services.
C) A principal must keep his agent informed of his financial activities.
D) A principal must obey routine instructions from his agent.

Answer 3

B

Question 4

Destruction of the subject matter to be sold by the agent does not terminate the agency.

Question 5

An agent does not incur personal liability for fraud or any other wrongdoing caused by disobedience.

Question 6

Jones acted as Blake's agent for 12 years before this contract of agency was dissolved by Blake. However, Blake failed to convey this fact to those vendors whom Jones has transacted with in the past. Which of the following is likely to occur if Jones negotiates future contracts with these vendors on Blake's behalf?

A) Blake can rescind those contracts as Jones is no longer his agent.
B) Blake can sue the vendors for selling without authorization.
C) Blake is bound by those contracts and must pay necessary costs.
D) Blake can claim compensation from Jones for any profits made.

Question 7

An agent is not allowed to terminate an agency without the permission of the principal.

Question 8

The principal may terminate the agency by taking actions that are inconsistent with the continuation of the agency.

Question 9

Jack, acting as an agent for Mike, purchases two tonnes of wheat on credit from Bryan. As per the agency contract, Jack is entitled to make all purchases under Mike's name. However, Mike refuses to make payment. Which of the following is legally permissible in this scenario?

A) Jack can make part-payment and conclude the sale.
B) Jack can refuse payment to Bryan stating an unauthorized sale.
C) Bryan can sue both Mike and Jack for damages.
D) Mike can sue Jack for wrongful purchase and terminate the contract.

Question 10

An agent does not incur liability for any losses caused by disobeying a principal's instructions.

Question 11

Which of the following is true of the relationship between an agent and a principal?

A) An agent can promote his own interests over the principal's.
B) An agent is not liable to the principal for any loss or damage caused by negligence.
C) An agent acting in bad faith can make profits for himself during the relationship with no legal implications.
D) An agent has a duty of loyalty and good faith toward the principal.

Question 12

Agents who contract in their own names become liable to the same extent as though they were the principals.

Question 13

A contractual payment made by an agent for a principal is an expense for the agent.

Question 14

Explain why a notice of termination must be given to third parties.

Question 15

When an agency agreement does not state the amount of compensation, the agent may obtain reasonable compensation for the services provided.

Question 16

The termination of corporation's operation except activities needed for liquidation is known as _____.

A) renunciation
B) dissolution
C) destruction
D) incapacitation

Question 17

The relationship of principal and agent is fiduciary in nature.

Question 18

A principal ordinarily does not have liability to third parties for contracts made within the actual or the apparent scope of an agent's authority.

Question 19

Agents have a duty to keep principals informed of all facts pertinent to the agency.

Question 20

Which of the following is true of an agent's liability toward a third party?

A) An agent who contracts in his own name in order to protect a principal is not liable to a third party.
B) An agent cannot make himself personally liable to third party by an express agreement.
C) An agent who presumes to act for a principal without any authority is free of liability.
D) An agent does not incur personal liability for fraud caused by negligence of the principal.