Deck 30: Liability of Principals, Agents, and Independent Contractors

Question 1

Agents can compete with the principal during the course of the agency if the principal agrees.

Answer 1

True

Question 2

Undisclosed self-dealing by an agent is not regarded as violation of the duty of loyalty.

Answer 2

False

Question 3

Which of the following statements is true of an agent taking an opportunity?

A) An agent can legally take an opportunity that is entitled to the principal.
B) A third-party offer to an agent need not be conveyed to the principal.
C) An agent cannot appropriate an offer for him- or herself once the principal rejects it.
D) A principal is permitted to recover an opportunity usurped by an agent.

Answer 3

D

Question 4

Middlemen and finders are not considered dual agents.

Question 5

Dual agency is permitted if all parties to a transaction agree to it.

Question 6

If an agent competes with the principal without the principal's permission, the principal may recover profits made by the agent.

Question 7

An agent does not violate his or her duty of loyalty by serving two parties with the same interest.

Question 8

A third-party offer to an agent must be conveyed to the principal.

Question 9

Which of the following is true of dual agency?

A) An undisclosed dual agent is allowed to retain compensation of the transaction provided he or she discontinues the dual agency.
B) Examples of dual agents are finders and middlemen.
C) Dual agency is permitted if all parties in the transaction agree to it.
D) Dual agency is permitted as long as the interests of both principals are similar.

Question 10

Which of the following is an instance of misuse of confidential information?

A) An agent gives the seller the principal's name and phone number in a fully disclosed transaction.
B) A principal gives the contact details of an agent to a third-party without the agent's knowledge.
C) An agent withholds critical information from the principal about the agency.
D) An agent divulges private details of his past employer to his principal.

Question 11

If an agent reveals confidential information of a principal to a third party, one of principal's courses of action may be to obtain an injunction against the third party.

Question 12

Dual agency occurs when an agent acts for two or more different principals in the same transaction.

Question 13

If a casting agent works for two Hollywood actors, the agent is liable for ________.

A) dual agency
B) competing with the principal
C) usurping an opportunity
D) self-dealing

Question 14

Which of the following is true of an agent's undisclosed self-dealing?

A) It does not violate the duty of loyalty.
B) The principal cannot rescind purchases made.
C) The principal can ratify the purchase.
D) The principal must accept liability.

Question 15

A principal has no course of action if an agent discloses his or her confidential information to a third party.

Question 16

Which of the following is a fiduciary duty owed by an agent not to act adversely to the interests of the principal?

A) duty of loyalty
B) duty of undertaking
C) duty of discharge
D) duty of resolution

Question 17

Harrison hires an agent to look for a three-bedroom house in Atlanta. Elaine, the agent, finds a three-bedroom house in Harrison's budget but buys it herself without informing Harrison. This is an instance of an agent ________.

A) self-dealing
B) misusing information
C) competing with the principal
D) usurping an opportunity

Question 18

Why can an agent generally not take an opportunity meant for the principal? Is an agent ever permitted to take such an opportunity? Give an example of an agent's violation of the duty of loyalty.

Question 19

Which of the following is a course of action for a principal if an agent is found competing with him or her?

A) The principal can recover damages from the agent if the competition continues after the agency has ended.
B) The principal can recover profits made by the agent.
C) The principal is given an option of buying the agent's competing venture.
D) The principal is not allowed to recover for lost sales due to the agent's competing venture.

Question 20

An agent owes a fiduciary duty not to act adversely to the interests of the principal.

Question 21

Minksine Corporation employs Sandy as its marketing manager. Sandy is driving her sedan to attend a meeting with a client on behalf of her employer. On her way to the meeting, Sandy is involved in an automobile accident that is caused by her negligence. Several people are seriously injured in the accident. Which of the following is true of this case?

A) Sandy is solely liable for damages caused by the accident.
B) The injured people cannot recover damages from Sandy.
C) Minksine Corporation is liable for the injuries caused by Sandy.
D) The injured people can only claim medical reimbursement from Minksine Corporation.

Question 22

Under the ________ test, the principal is liable for any intentional torts committed by an agent during working hours on the principal's premises.

A) work-related
B) motivation
C) promotional
D) self-dealing

Question 23

Which of the following is intentional misrepresentation?

A) negligence
B) innocent misrepresentation
C) fraud
D) dual-purpose mission

Question 24

Gem's principal asked her to pick up his dry-cleaning on her way to work. After she had picked up the dry-cleaning and was driving to work, Gem knocked over an old man crossing the street because she did not apply the brakes in time. Under the theory of ________, Gem's principal is liable to the injured man.

A) intentional tort
B) negligence
C) liability with fault
D) vicarious liability

Question 25

According to the coming and going rule, what is the liability of the principal for injuries caused by its agents and employees while they are on their way to or from work?

A) complete liability
B) vicarious liability
C) limited liability
D) no liability

Question 26

A ________ occurs when an agent makes an untrue statement that he or she knows is not true.

A) partially disclosed agency
B) misrepresentation
C) respondeat superior
D) dual-purpose mission

Question 27

An actor asks an agent to place an order for a couch on the agent's way back to work. This is an instance of ________.

A) a dual-purpose mission
B) frolic and detour
C) coming and going
D) self-dealing

Question 28

A dual-purpose mission is a situation that occurs when ________.

A) an agent works for two or more principals with conflicting interests
B) a principal requests an agent to run an errand when the agent is on his or her own personal business
C) an agent works for more than two principals and has similar agency relationships with both
D) an agent competes with the principal in a business with interests similar to the principal's business, after their agency has ended

Question 29

What is vicarious liability?

A) nonliability
B) liability for multiple torts
C) liability without knowledge
D) liability without fault

Question 30

An employee finds out that one of his colleagues dated his girlfriend. The employee acts on this information by assaulting his colleague at work during work hours. Based on the ________ test, the principal is liable.

A) motivational
B) premise-based
C) work-related
D) promotional

Question 31

Does an agent competing with the principal breach his or her duty of loyalty? What is the proper course of action for the principal in such a case?

Question 32

Most jurisdictions hold the ________ liable for injuries caused on a dual-purpose mission.

A) principal
B) agent
C) principal and the agent
D) injured party

Question 33

In which of the following cases is a motivation test used to establish the employee's motive?

A) An employee commits a tort to promote the principal's business outside work premises.
B) An employee commits an intentional tort against another employee at work premises.
C) An employee commits an unintentional tort that helps promote the principal's business.
D) An employee assaults another employee due to personal reasons.

Question 34

________ is a rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer's authority.

A) Ad infinitum
B) Respondeat superior
C) Vicarious liability
D) Fiduciary duty

Question 35

Dan asks his agent Jude to drop off some medicines at his mother's house. On his way back, Jude decides to have lunch at a diner two blocks from his workplace. While walking back to work, he jaywalks at a green signal on the road causing a motorcyclist to hit the curb and injure himself while attempting to avoid hitting Jude. Under the concept of ________, Dan is liable for the injuries caused to the motorcyclist.

A) coming and going
B) intentional tort
C) frolic and detour
D) dual-purpose mission

Question 36

________ is a situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's.

A) Coming and going
B) Frolic and detour
C) Self-dealing
D) Dual-purpose mission

Question 37

________ occurs where a principal is liable for an agent's tortious conduct because of the employment contract between the principal and agent, not because the principal was personally at fault.

A) Vicarious liability
B) Negligence
C) Liability with fault
D) Misrepresentation

Question 38

Which of the following is true of tort liability for principals and agents?

A) A principal is responsible for the tortious conduct of an agent irrespective of the scope of his or her authority.
B) An agent is fully liable for his or her tortious conduct while on duty for the principal.
C) An agent is liable for the principal's tortious conduct if he or she participates in it.
D) An agent and a principal cannot be held responsible for the same tort.

Question 39

Under the ________ test, if the agent committed an intentional tort to promote the principal's business, the principal is liable for any injury caused by the tort.

A) work-related
B) motivation
C) promotional
D) dual agency

Question 40

Fiona works for Open Heart Hospital and lives 10 miles away from her place of work. The hospital has provided her with a car to commute and also pays for its upkeep. If she accidentally injures a person while driving to work in the morning, which of the following would be true?

A) Open Heart Hospital is completely liable for the injury caused.
B) The injured person can sue Open Heart Hospital but can only recover reimbursement for his or her medical expenses due to the injury.
C) Both Fiona and Open Heart Hospital are liable to the injured person.
D) Only Fiona is liable for her negligence.

Question 41

A fully disclosed agency results if a third party entering into a contract knows the actual identity of the principal.

Question 42

In a fully disclosed agency, the contract is between ________.

A) a principal and an agent
B) a principal and a third party
C) an agent and a third party
D) a principal, an agent, and a third party

Question 43

Which of the following best describes a partially disclosed agency?

A) an agent with multiple principals who do not know each other's identities
B) a transaction in which the third party does not know the identity of the agent
C) a transaction in which the third party knows the agent, but not the principal
D) an agent who discloses only the name of his or her principal in a transaction

Question 44

The agent is liable for any intentional or innocent misrepresentation made by the principal in a transaction.

Question 45

Battery committed by an agent in the principal's premises and during the scope of employment is considered an unintentional tort.

Question 46

The agent is not liable on the contract in a fully disclosed agency.

Question 47

Which of the following is true of a fully disclosed agency?

A) The third party does not know the identity of the principal.
B) The third party knows the name of the principal, but all transactions are done with the agent.
C) The contract is between the principal, agent, and the third party.
D) The principal is liable on the contract with a third party.

Question 48

Based on the doctrine of respondeat superior, principals are liable for the negligent conduct of agents acting within the scope of their employment.

Question 49

Principals are liable for negligence caused by an agent during a substantial frolic and detour.

Question 50

Which of the following is true of misrepresentation?

A) An intentional misrepresentation by an agent is not considered fraud or deceit.
B) The principal is not liable for an agent's intentional misrepresentation.
C) A third party cannot recover damages from the principal due to an agent's intentional misrepresentation.
D) The principal is liable for an agent's innocent misrepresentation.

Question 51

The principal is not liable for an agent's negligence if the agent is on a dual-purpose mission.

Question 52

An agent is liable for the tortious conduct of the principal if he or she has knowledge of the principal's conduct.

Question 53

The principal is liable for the tortious conduct of an agent who is acting within the scope of his or her authority.

Question 54

The principal is liable for an innocent misrepresentation made by an agent acting within the scope of employment.

Question 55

Lucas, a car salesperson, has to sell John's car. John informs Lucas that the car was repaired after it was involved in a major accident. If Lucas intentionally tells the buyer of the car that the car was never involved in an accident, he has committed the tort of ________.

A) substantial frolic and detour
B) intentional misrepresentation
C) self-dealing
D) competing with the principal

Question 56

Vicarious liability is liability with fault.

Question 57

The work-related test puts liability on the employee if the intentional tort is committed within work-related time and space.

Question 58

Which of the following is true of an undisclosed agency?

A) The third party has no knowledge of the agency.
B) The third party knows the agent, but not the principal.
C) All transactions with the third party are made by the principal without involving the agent.
D) Transactions under such an agency are considered unlawful.

Question 59

The coming and going rule says that a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work.

Question 60

Which of the following torts committed by an agent is the liability of the principal?

A) substantial frolic and detour
B) accidents caused by an agent on the way to work
C) accidents caused by an agent on the way from work
D) negligence

Question 61

Which of the following is true of an independent contractor's liability?

A) The agent is liable for torts committed by an independent contractor.
B) The contractor is personally liable for all his or her torts.
C) The principal is liable for the independent contractor's torts.
D) Both the principal and the independent contractor are liable for the contractor's torts.

Question 62

In a fully disclosed agency, an agent is not liable on the contract if he or she guarantees that the principal will perform the contract.

Question 63

A partially disclosed agency can be created by mistake.

Question 64

Labeling someone an independent contractor is only one factor in determining whether independent contractor status exists.

Question 65

The crucial factor in determining whether someone is an independent contractor or an employee is the ________.

A) number of people with whom that party is willing to work with at a time
B) degree of control that the principal has over that party
C) nationality of that party
D) measure of the party's extraversion

Question 66

Ratification of a contract is a situation in which a principal accepts an agent's unauthorized contract.

Question 67

Jamie is a lawyer who runs her own law firm practicing in the area of real estate law. Raymond, a real estate developer, hires Jamie to represent him in the purchase of land. Jamie is a(n) ________.

A) principal
B) agent
C) third-party
D) independent contractor

Question 68

Gerard wants to get some land cleared in Texas. With the help of a consulting agency, he hires Carlos, an independent contractor. Carlos procures dynamite from a legitimate dealer to be used in clearing the land. However, the explosion of dynamite causes cracks to appear in the outer walls of a nearby house. Who is liable to the owner of the damaged house?

A) Gerard
B) Carlos
C) both Gerard and Carlos
D) the consulting agency

Question 69

Undisclosed agencies are not lawful in the United States.

Question 70

Independent contractors usually work for a number of clients, have their own offices, hire employees, and control the performance of their work.

Question 71

Describe the operation of a fully disclosed agency.

Question 72

The amount of time that an agent works for a principal is not one of the factors in determining independent contractor status.

Question 73

On the advice of her colleague, Stacey hires Harold, a lawyer and an independent contractor, to represent her in a court case. While driving to the courthouse to represent Stacey at trial, Harold negligently causes an automobile accident in which Mildred, a bystander, is severely injured. Who is liable to Mildred?

A) Stacey
B) Harold
C) Stacey's colleague
D) the firm that represents Harold

Question 74

Briefly explain an undisclosed agency. What are the liabilities involved in such an agency?

Question 75

Susanna hires Shane, a lawyer, as an independent contractor to represent her in a civil lawsuit against a defendant to recover monetary damages. If Susanna authorizes Shane to settle the case within a certain dollar amount and Shane does so, which of the following would be true?

A) The agreement is invalid after Shane's contract with Susanna terminates.
B) The agreement is void because independent contractors cannot enter into contracts.
C) The agreement is binding only when there is no financial settlement involved.
D) The settlement agreement is binding for Susanna.

Question 76

In a partially disclosed agency, the contracting third party transacts directly with the principal and does not know the identity of the agent.

Question 77

In an undisclosed agency, the principal is solely liable on the contract with the third party.

Question 78

If an agent exceeds his or her scope of authority, a principal is bound on the contract only if he or she ratifies the contract.

Question 79

Which of the following is a true statement about independent contractors?

A) The principal asserts substantial control over the independent contractor.
B) The principal-independent contractor relationship doesn't involve exchange of money.
C) The principal asserts little control over the independent contractor.
D) The principal is liable for the torts of his or her independent contractors.

Question 80

The party that employs an independent contractor is called an agent.