Deck 25: Agency Relationships

Question 1

An agency relationship exists between spouses even where there is no formal agreement.

Answer 1

True

Question 2

Independent contractors are not considered employees.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

Ratification is the affirmation of a previously authorized contract or act.

Question 6

Normally, employees who deal with third parties are deemed to be agents.

Question 7

Agency relationships do not commonly exist between employers and employees.

Question 8

A n agency agreement cannot be implied from conduct.

Question 9

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

Question 10

An agent is empowered to perform legal acts that are binding on the principal.

Question 11

The duties that an agent owes a principal must be set forth in the express agency agreement.

Question 12

An agent is not empowered to bind the principal in a contract with a third person.

Question 13

Because independent contractors control the details of their work, independent contractors are never agents.

Question 14

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

Question 15

An agent must act to maximize the benefits of the principal and the agent but not the benefits of a third party.

Question 16

All agency agreements must be in writing.

Question 17

An independent contractor is one whose performance is controlled, or subject to control, by the employer.

Question 18

Agency relationships normally come about by agreement of the parties.

Question 19

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

Question 20

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

Question 21

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

Question 22

The doctrine of respondeat superior imposes vicarious liability on a principal without regard to the personal fault of the agent.

Question 23

High Plains Sales Inc. hires Inez to work Monday through Friday from 8 am - 5 pm on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to High Plains, Inez is most likely

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

Question 24

A principal may be liable for an agent's or an employee's torts.

Question 25

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 26

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 27

The principal has a duty to pay the agent for services rendered.

Question 28

Ray is a delivery driver for Sicilian Pasta Company. The company tells Ray when to work, how to address customers, what he can wear when at work, and what routes to take (via an app on his phone). Ray is

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

Question 29

A n agent has the implied authority to accomplish the objectives of the agency relationship.

Question 30

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 31

Fact Pattern 25-1 Nina and Orin work at Pumps & Pipes Inc. (P&P). Nina is a sales representative who works with P&P's customers. The company closely supervises all of its sales reps, and dictates their schedules. Orin works in P&P's engineering department, but does not deal with third parties.
Refer to Fact Pattern 25-1. With respect to third parties, Orin is P&P's

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

Question 32

Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf. In this relationship, Jewelry & Coin is

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

Question 33

Once the agency relationship has been terminated, an agent does not retain the power to bind the principal to a new contract.

Question 34

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 35

I f a principal makes statements that would cause a reasonable person to believe that an agency relationship exists, then the supposed agent receives actual authority to act as the agent.

Question 36

Fact Pattern 25-1 Nina and Orin work at Pumps & Pipes Inc. (P&P). Nina is a sales representative who works with P&P's customers. The company closely supervises all of its sales reps, and dictates their schedules. Orin works in P&P's engineering department, but does not deal with third parties.
Refer to Fact Pattern 25-1. With respect to third parties, Nina is P&P's

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

Question 37

An agency coupled with an interest is an agency where the principal agrees to pay interest on any payments due to the agent.

Question 38

Giving an agent a power of attorney confers express authority.

Question 39

Once the principal hires the agent, the principal has a duty to ignore the agent and let the agent deal with problems alone.

Question 40

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 41

Bern, a salesperson at a Cabinets store, tells Dan, a customer, "Buy your cabinets here, and I'll install them for less than the store would charge." Dan buys the cabinets, which Bern installs for half the store's price. Bern keeps the money. With respect to the store, Bern has breached

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

Question 42

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 43

Lucy is married to Marco. Lucy 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 44

Kelly hires John to buy a certain number of cattle for Kelly's ranch. John makes a deal with Lawson, the owner of a local herd, and makes a down payment on Kelly ' s behalf. Kelly fails to pay the rest of the price. Lawson sues John for breach of contract. John's right to hold Kelly liable for any damages that he has to pay is the right to

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

Question 45

Roberta introduces Steve to her friends as "my associate." Steve purports to act as Roberta's agent in several business transactions with those friends. If Roberta is liable for Steve'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 46

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 47

Rosario is a chef and caterer who works for different event planners, party hosts, and some private companies and families where he goes to their location to prepare meals. In this capacity, Rosario likely is

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

Question 48

Kevin is an agent for Lookout Accountants, Inc. On Lookout's behalf and at its request, Kevin pays Nathan for software designed for the management of Lookout's services. Kevin's right to obtain the amount of the payment from Lookout arises under the duty of

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

Question 49

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

A) the amount of Craig ' s salary and commissions.
B) the control Bread has over the details of the work.
C) the length of the trial period.
D) the size of Craig's sales area.

Question 50

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. Watercraft, Inc. may demand

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

Question 51

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 52

Len, an agent for Mind Games LLC, executes an unauthorized contract with NOW Marketing, Inc. The deal is highly advantageous to Mind, and the company ratifies the contract. The contract is

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

Question 53

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 legal or illegal purpose.
D) no purpose.

Question 54

Hot Dog Vendors Inc. grants its agent Iona an exclusive territory in which to sell Hot Dog products. The company cannot compete with Iona in that territory under the duty of

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

Question 55

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 56

Ben manages a warehouse and its inventory for Coffee Shops, 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 Shops does business.
C) to contradict Ben's express authority.
D) under no circumstances.

Question 57

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

A) by contradiction.
B) by custom.
C) by any subjective measure.
D) under no circumstances.

Question 58

Emmett, an agent for Fridley, signs an agreement with Grover on Fridley's behalf but neglects to tell Fridley that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. Fridley is

A) liable, because notice to Emmett is notice to Fridley.
B) liable, because notice to Glover is notice to Fridley.
C) not liable, because Emmett did not notify Fridley of the tax.
D) not liable, because Glover did not tell Fridley about the tax.

Question 59

Jill agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jill to so act. This describes a relationship between

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

Question 60

Ingmar asks Jess to contract with Kay's Lawn Service on Ingmar ' s behalf to maintain Ingmar's lawn. Jess orally agrees to do so. This is an agency by

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

Question 61

W ithout authorization, Lars contracts on behalf of Mina to have Nemo paint the interior and exterior of Mina's house. 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.

Question 62

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 63

Fact Pattern 25-2 Berry indicates that she is acting as an agent on behalf of an unidentified client-Cuisine Catering, LLC-when she enters into a contract with Dean.
Refer to Fact Pattern 25-2. In most states, liability to Dean for nonperformance of the contract may be imposed on

A) none of the choices.
B) Berry and Cuisine Catering.
C) Berry only.
D) Cuisine Catering only.

Question 64

Fact Pattern 25-2 Berry indicates that she is acting as an agent on behalf of an unidentified client-Cuisine Catering, LLC-when she enters into a contract with Dean.
Refer to Fact Pattern 25-2. Cuisine Catering is

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

Question 65

Roman is the chief executive officer of Salty Snax Corporation.  Roman's responsibilities include decisions on product development, marketing, and other significant business directions. Roman is subject to the approval and oversight of Salty Snax's board of directors.  Teri is a Salty Snax manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling.  Umberto is a Salty Snax salesperson, whose daily activities are controlled by Teri.  Velma writes sales manuals and instructions for Salty Snax's products ac-cording to Roman's instructions and subject to Salty Snax's control, but has no dealings with the company's customers or suppliers.  Warren writes advertising and promotional materials on a contract-per-project basis and is not otherwise subject to Salty Snax's control.  Who is a principal?  Who is an agent?  Who is an employee?  Who is an independent contractor? Explain.

Question 66

Chuck hires Danielle, a real estate broker, to act as his agent to sell his land for $150,000. Oil is discovered beneath the land, causing its market value to in-crease considerably. The agency agreement is likely

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

Question 67

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity for a one-time project. After the grain is bought, the agency relationship terminates

A) automatically.
B) following notice to all actual grain sellers.
C) following notice to all potential grain sellers.
D) following published notice in a local newspaper.

Question 68

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent

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

Question 69

Yoshi hires Zach to buy certain equipment for Yoshi's restaurant. Yoshi asks Zach not to reveal her identity or even that she is the purchaser. Zach makes a deal with Burcet, the owner of the equipment, and makes a down payment. Yoshi fails to pay the rest of the price, and does not pay Zach for his services. Does Burcet have any recourse against Zach or Yoshi? Does Zach have any recourse against Yoshi? If so, on what basis and to what extent?

Question 70

Luis hires Mieko to act as his agent to purchase 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 71

Mira serves in a representative capacity for Netanya. Orly is injured through Mira's negligence. Netanya may be liable to Orly if Mira's conduct occurred

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

Question 72

Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of his 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) accidentally smashed into a store-front while on-duty.