Deck 23: Agency Relationships in Business

Question 1

Express authority is authority declared in clear,direct,definite terms.

Answer 1

True

Question 2

All employment laws apply to independent contractors.

Answer 2

False

Question 3

A fiduciary relationship involves trust and confidence.

Answer 3

True

Question 4

An agency relationship may be created for any legal purpose.

Question 5

An independent contractor's physical conduct is controlled,or subject to control,by his or her employer.

Question 6

A fiduciary relationship allows parties to avoid obligations without liability.

Question 7

Building subcontractors are not independent contractors.

Question 8

A power of attorney is a written document.

Question 9

A corporate officer is not an agent for the corporation.

Question 10

A principal owes an agent a duty of ratification.

Question 11

A principal owes an agent a duty of accounting.

Question 12

An independent contractor is an employer who controls his or her agent's performance.

Question 13

An agency relationship may not occur by operation of law in a family.

Question 14

A licensed professional can employ an unlicensed agent to perform pro?fessional actions.

Question 15

Employees who deal with third parties are agents of their employers.

Question 16

An agent is authorized to act on behalf of a principal in doing business with third parties.

Question 17

An agency relationship can be formed without consideration.

Question 18

An agency relationship cannot exist in the absence of a formal agreement.

Question 19

An agent can take advantage of an agency relationship to make a "secret" profit.

Question 20

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

Question 21

Before a principal can ratify a contract,the principal must know all of the material facts involved in the deal.

Question 22

A power of attorney can be given only to an actual attorney.

Question 23

Bubbly Soda Company hires Carlo to work on Bubbly's shipping dock,checking outgoing loads and dispatching Bubbly's drivers.With respect to Carlo,Bubbly is most likely

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

Question 24

Genetic Seed Company hires Howie to work on Genetic's shipping dock,accepting deliveries and dealing with other companies' drivers.With respect to Genetic,Howie is most likely

A) an agent.
B) an independent contractor.
C) a principal.
D) a work for hire.

Question 25

Ozzy is an officer of Prudent Financial Corporation.Ozzy serves in a representative capacity for Prudent Financial's owners.With respect to binding Prudent Financial to contracts,Ozzy is

A) an agent and has the authority.
B) an agent but does not have the authority.
C) not an agent and does not have the authority.
D) not an agent but does have the authority.

Question 26

If a principal does not ratify an authorized contract,the prin?cipal is not bound.

Question 27

A principal is not liable for an agent's fraud unless the agent has the apparent authority to commit torts.

Question 28

Oscar is Precise Service Company's chief executive officer.On Precise's behalf,Oscar solicits business,hires and fires workers,and handles the finances.Precise pays Oscar varying amounts,depending on his "needs." Oscar is most likely

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

Question 29

A principal is not liable to a third party for any contract made by the agent acting outside the scope of his or her authority.

Question 30

If a principal does not ratify an unauthorized contract,the principal is not bound.

Question 31

An agency can terminate once its purpose is achieved.

Question 32

A principal is liable for harm caused to a third party by an agent who commits a tort while act?ing in the scope of his or her employment.

Question 33

Under the doctrine of respondeat superior,an agent is liable for the principal's negligence.

Question 34

Before a principal can ratify a contract,the agent must withdraw from the deal.

Question 35

A principal is responsible for all intentional torts committed by an agent.

Question 36

KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands.KupaJava agrees to pay Lola a salary,plus commission.KupaJava stipulates the standards that should be observed,the goals that should be attained,and the methods that should be used.Lola is most likely KupaJava's

A) employee.
B) independent contractor.
C) principal.
D) work for hire.

Question 37

A disclosed principal is not liable to a third party for contracts made by the agent acting outside the scope of his or her authority.

Question 38

For an agent's implied authority to be effective,a principal must confirm it in writing.

Question 39

The equal dignity rule does not apply to a corporate officer who,in an or?dinary busi?ness situation,acts on behalf of his or her firm.

Question 40

In considering the scope of an agent's implied authority,the test is whether the agent reasonably believed that he or she had the authority.

Question 41

Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany.Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party,without telling Kup-a-Koffee's seller who that third party is.Iggy is

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

Question 42

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

A) a business and its competitors.
B) a government and its governed.
C) a parent and a child.
D) a principal and an agent.

Question 43

Rita is appointed as an agent for Superior Sales,Inc.The agency agree?ment is silent as to the level of sales that Rita is expected to achieve.She must

A) achieve nothing because the agreement says nothing on the issue.
B) attain the level that Rita achieved with her previous employer.
C) maintain the level Superior attained before Rita became an agent.
D) use reasonable diligence and skill in selling.

Question 44

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

A) by contradiction.
B) by custom.
C) by lack of reason.
D) under no circumstances.

Question 45

Sela agrees to act on Thom's behalf,subject to Thom's control,and Thom trusts Sela to so act.They set out the terms in a written document,which they both sign.This is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 46

Lather Up Soap Products Company grants its agent Kathy an exclusive terri?tory in which to sell Lather Up products.The firm cannot compete with Kathy in that territory under the principal's duty of

A) avoidance.
B) cooperation.
C) indemnification.
D) reimbursement.

Question 47

Lenore is the sole proprietor of Mall Kiosks.With respect to contracting for her own business interests,Lenore is

A) an agent and has the authority.
B) an agent but does not have the authority.
C) not an agent and does not have the authority.
D) not an agent but does have the authority.

Question 48

Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob in?stalls for half the store's price.Bob keeps the money.Bob has breached

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

Question 49

Based on Bluto's conduct,Cass reasonably believes that Dee has the authority to act on Bluto's behalf even though Dee does not have the actual authority to do so.Cass makes a payment to Dee for Bluto.Dee keeps the money and disappears.Bluto

A) can demand that Cass make a repayment directly to Bluto.
B) can obtain damages from Cass for Dee's misconduct.
C) may be estopped from denying that Dee had authority.
D) must repudiate Dee's misconduct to avoid liability.

Question 50

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

A) the amount of Elton's salary.
B) the control Delite has over the details of the work.
C) the length of the trial period.
D) the title that designates Elton's position.

Question 51

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 52

Kady,an agent for Lebron,enters into a contract on Lebron's behalf with Madge that must be in writing to be enforceable under the Statute of Frauds.Kady's authority to enter into this contract is not in writing.Under the equal dignity rule,this contract is

A) enforceable.
B) void.
C) voidable at Lebron's option.
D) voidable at Madge's option.

Question 53

Louis,a certified public accountant and an investor,and Maria,an in?surance salesperson and a realtor,may create an agency relationship for

A) a business purpose only.
B) a legal purpose only.
C) any purpose.
D) no purpose.

Question 54

Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf.Edwina later contacts Frida to approve the contract.This is

A) an agency by agreement.
B) an agency by estoppel.
C) an agency by ratification.
D) not the creation of an agency relationship.

Question 55

Sonia manages a Tasty Pastry store for United Food Company.To manage the business,Sonia's authority can be implied by

A) an inference from the position Sonia occupies.
B) any inference a reasonable customer or supplier would make.
C) any inference Sonia chooses to make.
D) no inference.

Question 56

Miklos grants an ordinary power of attorney to 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 57

Elle is an agent for Fine Cosmetics,Inc.Elle owes Fine Cosmetics the duty of

A) avoidance.
B) compensation.
C) indemnification.
D) performance.

Question 58

Jody is an agent for Insta Cross Country Trucking Inc.In the course of Jody's performance for the firm,Jody pays Heck for certain vehicle maintenance and repair services.Jody's right to obtain the amount of those payments from Insta arises under the principal's duty of

A) avoidance.
B) cooperation.
C) indemnification.
D) reimbursement.

Question 59

Home Development Company employs llya to buy property for a future residential development.Ilya secretly buys some of the property and sells it to Home Development at a profit.Ilya has breached

A) no duty.
B) the duty of accounting.
C) the duty of loyalty.
D) the duty of notification.

Question 60

Cory employs Daily Delivery Agency as an agent under a writ?ten 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 61

Brad is an employee of Custodial Service,Inc.In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi,a court will not con?sider whether

A) Brad indicated that he was acting on behalf of Custodial.
B) Custodial authorized the act.
C) Custodial furnished the means by which the injury was inflicted.
D) the act is one commonly performed by employees for their employers.

Question 62

Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building.Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials.Meanwhile,Principal hires Skye,a certified public accountant,to work in its cost-accounting division as an employee,with no authority to hire or supervise others.Skye asks Theo,an outside experienced accountant,to advise her on certain accounting procedures but fails to pay Theo for the service.Principal also contracts with Uma,a salesperson,to solicit orders for its products in a designated territory.Uma obtains an order from Verity Industries,Inc.,which is assured the order will be filled soon.But Uma does not follow through with the paperwork and fails to submit the order to Principal.Verity suffers a loss.Rite Supply,Theo,and Verity Industries claim Principal is liable under agency law.Discuss fully whether an agency relationship was created by Principal with Quality Construction,Skye,or Uma.

Question 63

Clu serves in a representative capacity for Digger.Elmo is injured through Clu's negligence.Digger may be liable to Elmo if Clu's conduct occurred

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

Question 64

Tire Manufacturing Company employs Uri as an agent.To terminate Uri's authority,Tire Manufacturing must notify

A) only third parties who are aware of the agency relationship.
B) the public generally.
C) Uri and any third parties who are aware of the agency relationship.
D) Uri only.

Question 65

Jock hires Kym to act as his agent to purchase Lifetime Gym & Fitness,Inc.Jock tells Kym to reveal that she is buying the firm on behalf of a third party and to tell Lifetime's seller who that third party is.Jock is

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

Question 66

Commercial Development Corporation (CDC)hires Delta Construction Company to work at a site as an independent contractor.Whether CDC will be liable for torts committed at the site by Delta depends on

A) what Delta bid for the job.
B) whether exceptionally hazardous activities are involved.
C) which party obtained insurance to cover tort liability.
D) who is paying Delta.

Question 67

Trey,an agent for Uno Music Corporation,executes an unau?thor?ized contract with Variety Recording,Inc.,that is highly ad?vanta?geous to Uno.Variety withdraws from the deal before Uno ratifies the con?tract.The contract is

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

Question 68

Bud approves on behalf of Cody-but without authorization-a contract with Dik to build a new silo.Cody does not ratify the contract.Later,Dik tries to enforce the deal.This attempt will be

A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Question 69

Without authorization,Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house.Sari ratifies the contract.Later,Sari tries to rescind the part of the contract re?lat?ing to the exterior.This attempt will be

A) partly successful.
B) partly unsuccessful.
C) totally successful.
D) totally unsuccessful.

Question 70

Frida hires Gert,a real estate broker,to act as her agent to sell her house.The house burns down before being sold.The agency agreement is likely

A) still in force if Frida gives Gert additional consideration.
B) still in force if Gert does not tell prospective customers.
C) terminated by mutual consent of the parties.
D) terminated by operation of law.

Question 71

Picabo drives a truck as an employee for Quik Delivery,Inc.Picabo would most likely be considered acting outside the scope of her employment if she

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) smashed into a store-front while intoxicated on-duty.

Question 72

Brenda is a purchasing agent for Commodities Exchange Corporation.Dennis,a Commodities corporate officer,gives Brenda written authority to buy for the firm as many computers and peripheral devices as necessary.The next day,Dennis calls Brenda and tells her to buy only fifty note?book computers and nothing else.Brenda shows the written authority to E-Products,Inc.,and enters into a contract with E-Products to buy sixty note?book computers and a selection of printers,scanners,and extra storage media.E-Products ships the order to Commodities.Is Commodities li?able to E-Products under the contract? Is Brenda liable? In each case,if so,why? If not,why not?