Deck 32: Liability to Third Parties and Termination

Question 1

An agent's authority to act on behalf of a principal derives exclusively from the agent's express or implied au?thor?ity.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

Apparent authority exists if a principal causes a third party to believe reasonably that an agent has authority to act.

Answer 3

True

Question 4

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

Question 5

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 6

An agent's authority must be implied for the agent's act to bind a principal.

Question 7

A power of attorney may be created orally.

Question 8

A principal's liability in a contract with a third party may arise from the authority given to the agent to enter into the contract.

Question 9

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

Question 10

An agent's authority to act on behalf of a principal derives exclusively from the agent's express au?thor?ity.

Question 11

A partially disclosed principal is one whose first, but not last, name is known by a third party with whom an agent contracts on the principal's behalf.

Question 12

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 13

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

Question 14

An agent's implied authority may be conferred by contradiction.

Question 15

An agent's authority must be express for the agent's act to bind a principal.

Question 16

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

Question 17

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

Question 18

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

Question 19

A power of attorney is a written document.

Question 20

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

Question 21

Wrongful termination of an agency relationship can subject the cancel?ing party to a suit for damages.

Question 22

Under the doctrine of respondeat superior, a principal has a superior duty of caring for the agent.

Question 23

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 24

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

Question 25

Even after an agency relationship has terminated, there are circum?stances under which a principal may be bound by his or her agent's act.

Question 26

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 27

If an agent acts within the scope of his or her authority, an undis?closed principal is liable to a third party for contracts made by the agent.

Question 28

An disclosed principal is liable to a third party for contracts made by the agent acting outside the scope of his or her authority.

Question 29

An undisclosed principal is liable to a third party for contracts made by the agent acting within the scope of his or her authority.

Question 30

An partially disclosed principal is liable to a third party for contracts made by the agent acting within the scope of his or her authority.

Question 31

A principal is not liable for an agent's crime simply because it was com?mitted while the agent was acting within the scope of employment.

Question 32

A principal whose identity is known by a third party with whom an agent contracts on the principal's behalf is an apparent principal.

Question 33

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 34

An agency is terminated if the principal demands an accounting.

Question 35

An agency can terminate once its purpose is achieved.

Question 36

A principal whose existence-but not specific identity-is known by a third party with whom an agent contracts on the principal's behalf is an implied principal.

Question 37

When an agent enters into a contract on behalf of a principal, the princi?pal must ratify the contract to be bound to it.

Question 38

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

Question 39

Both parties to an agency may have the power to terminate the relationship but they may not have the right.

Question 40

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

Question 41

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 42

Elin, an agent for First Credit Corporation (FC), enters into an unau?thorized contract with Great Expectations, Inc. (GE), purportedly on FC's behalf. This contract will be enforceable if it is ratified by

A) any third party.
B) Elin.
C) FC.
D) GE.

Question 43

Neighborly Insurance Company and Ollie put their agency agreement into a written document that describes the rights and duties of both parties. Ollie, as the agent, has

A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Question 44

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 45

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 46

Supplies Company requires its customers to pay by check. Tylo, a Supplies driver, tells customers on her route that they can pay her with cash. When Supplies learns of Tylo's collections, it takes no action to stop it. Tylo steals some of the cash. Supplies may suffer the loss under the doc?trine of

A) apparent authority.
B) equal authority.
C) express authority.
D) implied authority.

Question 47

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 48

Nehru serves in a representative capacity for Olin. With respect to binding Olin to contracts, Nehru's authority

A) may be express, implied, or apparent.
B) may be express or implied, but not apparent.
C) must be express, oral or written, but not implied or apparent.
D) must be express, written, and not oral, implied, or apparent.

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

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 51

Fact Pattern 32-1A
Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana.
Refer to Fact Pattern 32-1A. The unidentified client is

A) a disclosed principal.
B) a non-existent principal.
C) an undisclosed principal.
D) a partially disclosed principal.

Question 52

Jen, an agent for Kip, enters into a contract on Kip's behalf with Leon that must be in writing to be enforceable under the Statute of Frauds. Under the equal dignity rule, Jen's authority to enter into this contract

A) may be express, implied, or apparent.
B) may be express or implied, but not apparent.
C) must be express, oral or written, but not implied or apparent.
D) must be express, written, and not oral, implied, or apparent.

Question 53

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 54

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 55

Marky holds a power of attorney for Nuncio. Marky is

A) an attorney-in-fact.
B) an attorney-in-law.
C) a durable attorney.
D) a notary public.

Question 56

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 57

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 58

Hu is an officer of International Corporation. With respect to binding International to contracts, Hu's authority

A) may be actual or apparent.
B) must be actual and express, not implied or apparent.
C) must be actual and may be express or implied, but not apparent.
D) need not be actual or apparent.

Question 59

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 60

Jock hires Kym to act as his agent to purchase Little Gym & Fitness, Inc. Jock tells Kym to reveal that she is buying the firm on behalf of a third party and to tell Little'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 61

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 62

Fab Auto Sales, Inc., employs GR8 Collection Company as a collection agent. While repossessing a car from Hadji, one of Fab's customers, GR8 causes an accident in which Hadji is injured. Hadji can recover from

A) Fab only.
B) Fab or GR8.
C) GR8 only.
D) Hadji's insurance company only.

Question 63

BizOnline.com uses an electronic agent, or e-agent, to perform certain tasks in e-commerce. With respect to the e-agent's actions, BizOnline.com is bound by

A) all of the actions.
B) only those actions of which BizOnline.com is aware.
C) only those actions that BizOnline.com does not refute within ten days.
D) only those actions that BizOnine.com ratifies.

Question 64

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 65

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 66

Omar hires Petra, 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) still in force if Omar gives Petra additional consideration.
B) still in force if Petra does not tell prospective customers.
C) terminated by mutual consent of the parties.
D) terminated by operation of law.

Question 67

Maia hires Nero, a real estate broker, to sell her warehouse. The ware?house burns down be?fore being sold. Nero is

A) Maia's agent until Maia's insurer pays Nero's commission.
B) Maia's agent until the burnt warehouse is sold.
C) Maia's agent until the warehouse is rebuilt and sold.
D) no longer Maia's agent.

Question 68

Fact Pattern 32-1B
Eppie hires Franz to do some remodeling work in her office.
Refer to Fact Pattern 32-1B. The relationship be?tween Eppie and Franz is

A) client and independent contractor.
B) employer and employee.
C) master and servant.
D) principal and agent.

Question 69

Security Armored Car Corporation employs Theo as an agent. Without Security's knowledge but otherwise acting within the scope of em?ployment, Theo commits a crime. The state can successfully prosecute

A) neither Security nor Theo.
B) Security only.
C) Security or Theo.
D) Theo only.

Question 70

Flo, an agent for Great Seafood, Inc., has often done business with Hakim on Great Seafood's behalf. When Flo and Great Seafood terminate their agency, to avoid liability for later deals, Hakim must be no?tified by

A) Flo and Great Seafood.
B) Flo only.
C) Great Seafood only.
D) neither Flo nor Great Seafood.

Question 71

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 72

Fact Pattern 32-1B
Eppie hires Franz to do some remodeling work in her office.
Refer to Fact Pattern 32-1B. While working, Franz drops a tool on Gibby, Eppie's customer, causing an injury. Eppie is

A) liable to Gibby because he was injured on Eppie's property.
B) liable to Gibby unless Franz's act is intentional.
C) not liable because Franz is an independent contractor.
D) not liable to Gibby because Franz is Eppie's employee.

Question 73

Fact Pattern 32-1A
Ruby indicates that she is acting as an agent on behalf of an unidentified client when she enters into a contract with Saldana.
Refer to Fact Pattern 32-1A. Liability to Saldana for nonper?formance of the con?tract may be imposed on

A) neither Ruby nor the unidentified client.
B) Ruby and the unidentified client.
C) Ruby only.
D) the unidentified client only.

Question 74

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 75

Oberon is a salesperson for Precision Instruments, Inc. He tells Quad, a customer, that a device has a certain ca?pability when, as Oberon knows, it does not. In reliance, Quad buys the device. Liable for this misrepresen?ta?tion is

A) neither Oberon nor Precision.
B) Oberon and Precision.
C) Oberon only.
D) Precision only.

Question 76

Ezra is an agent for Fresh Food Corporation. Ezra makes an innocent mis?representation when entering into a contract on be?half of Fresh with Gala Grocery Stores, Inc. Gala

A) is estopped from performing the contract.
B) may rescind the contract.
C) must perform the contract.
D) must ratify the contract.

Question 77

On May 1, Craig retains Dora to act as his authorized agent. On June 1, a court declares Craig mentally incompetent. On June 2, before Dora knows of the court's declaration, she enters into a contract on Craig's be?half. The con?tract is

A) binding on Craig.
B) binding on Dora.
C) void.
D) voidable.

Question 78

Clive is a purchasing agent for Double D Ranch with the authority to buy cat?tle at a certain auction. After the cattle are bought, the agency rela?tionship terminates

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

Question 79

Rupert, an agent for Star Productions, Inc., enters into an unauthorized contract with Trucking Corporation purportedly on behalf of Star, which refuses to perform. Rupert is liable

A) for breach of contract to Star and Trucking.
B) for misrepresentation to Star only.
C) for misrepresentation to Trucking only.
D) to no one.

Question 80

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.