Question 1

_____ occurs when a principal manifests assent that his legal relations be affected,such as stating orally that he wishes to be bound by a contract that has already been made.

Accepted Answer

A)  Express ratification 
B)  Unauthorized ratification 
C)  Implied ratification 
D)  Valid ratification

Question 2

Anna hired Juan to act as her sales agent in her auto dealership.However,Anna has instructed Juan not to enter into any sales contracts before she has had a chance to review the transaction.However,one day Juan entered into a sales contract with William,without informing Anna first.Has Juan created a contract with William that is binding on Anna in this situation?

Accepted Answer

A)  Yes,Juan did have actual authority to act. 
B)  Yes,Juan did have express authority to act. 
C)  Yes,Juan did have implied authority to act. 
D)  Yes,Juan did have apparent authority to act.

Question 3

Dart Corp.dismissed Ritz as its general sales agent.Dart notified all of Ritz's known customers by letter.Bing Corp. ,a retail outlet located outside of Ritz's previously assigned sales territory,had never dealt with Ritz.However,Bing knew of Ritz as a result of various business contacts.After his dismissal,Ritz sold Bing goods,to be delivered by Dart,and received from Bing a cash deposit for 20 percent of the purchase price.It was not unusual for an agent in Ritz's previous position to receive cash deposits.In an action by Bing against Dart on the sales contract,which of the following is true?

Accepted Answer

A)  Bing will win the lawsuit because Dart's notice was inadequate to terminate Ritz's apparent authority. 
B)  Bing will win the lawsuit because Dart,the principal,is an insurer of Ritz's,the agent's acts. 
C)  Bing will lose the lawsuit,because Ritz lacked any express or implied authority to make the contract. 
D)  Bing will lose the lawsuit because Bing was negligent while making a contract with Ritz.

Question 4

Borg is the vice-president of purchasing for Crater Corp.He has authority to enter into purchase contracts on behalf of Crater provided that the price under a contract does not exceed $2 million.Dent,who is the president of Crater,is required to approve any contract that exceeds $2 million.Borg entered into a $2.5 million purchase contract with Shady Corp.without Dent's approval.Shady was unaware that Borg exceeded his authority.Neither party substantially changed its position in reliance on the contract.What is the most likely result of this transaction?

Accepted Answer

A)  Crater will be bound because of Borg's apparent authority. 
B)  Crater will not be bound because Borg exceeded his authority. 
C)  Crater will only be bound up to $2 million,the amount of Borg's authority. 
D)  Crater will be bound because of Borg's actual authority.

Question 5

Phillips hires Addis,who had sixteen prior convictions for the use of hallucinogenic drugs,as an air traffic controller for his private airport.Phillips could easily have discovered the convictions had he bothered to make a routine criminal record check,but this was just too much trouble.Phillips knew nothing whatsoever about the job of an air traffic controller,and,when he hired Addis,merely told him to "get the planes in safely the best way you know how;the details are up to you." One day,Phillips held a private birthday party for a celebrity and invited 20 of his rich and famous friends,all of whom were to arrive by a private jet.As it turned out,Addis was under the influence of drugs on this day and,as a result,all 20 of Phillips's friends were killed.After this national tragedy,Phillips and Addis were sued for negligence by the estates of these people.In this case:

Accepted Answer

A)  Phillips is directly liable for negligent hiring. 
B)  Phillips is liable only under the doctrine of respondeat superior. 
C)  Phillips is not liable because Addis is an independent contractor. 
D)  Phillips is not liable because he could never have foreseen Addis' negligence.

Question 6

Principals may try to escape liability for an agent's misrepresentations by including _____.

Accepted Answer

A)  defensive conditions 
B)  exculpatory clauses 
C)  torts 
D)  ratification clauses

Question 7

_____ arises when the principal's manifestations cause a third party to form a reasonable belief that the agent is authorized to act in a certain way.

Accepted Answer

A)  Contractual authority 
B)  Incidental authority 
C)  Apparent authority 
D)  Actual authority

Question 8

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal,the principal is bound to the subagent's contract.

Accepted Answer

A) True 
 B)False

Question 9

Adam hired Kim as his agent to drive a cab.On his first day on the job,Kim hit a pedestrian who suffered serious injuries.The pedestrian wants to file a suit against both

Accepted Answer

The answer of Adam hired Kim as his agent to...

Question 10

Why is it impossible for there to be apparent authority on behalf of an undisclosed principal?

Accepted Answer

The answer of Why is it impossible for there to...

Question 11

A principal is liable on a contract made by his agent if the agent had actual authority to make the contract.

Accepted Answer

A) True 
 B)False

Question 12

Implied ratification arises when:

Accepted Answer

A)  the principal's conduct justifies a reasonable assumption that he consents to the agent's act. 
B)  the principal manifests assent that his legal relations be affected. 
C)  the third party withdraws from the contract before the principal manifests assent. 
D)  the principal binds himself to an unauthorized or illegal act done by an agent.

Question 13

Sandra hired Jeff to work as a taxi driver for Sandra.Jeff had a long criminal record for violent assaults,including three cases of vehicular homicide.However,Sandra was not aware of this and she does not check employees' criminal records.While Jeff was driving a passenger,Ben,they got involved in a heated argument.Jeff pulled Ben out of his car and hit him.Which of the following is true of this case?

Accepted Answer

A)  Since Sandra was not aware of Jeff's criminal history,she will not be held liable for this incident. 
B)  Jeff was outside the scope of his employment,hence he is liable for this tort,and Sandra escapes liability. 
C)  Sandra is liable for the incident only under the vicarious liability doctrine. 
D)  Sandra is liable because of the direct liability doctrine.

Question 14

A principal is liable for the misrepresentations made by an agent during a transaction with a third party.

Accepted Answer

A) True 
 B)False

Question 15

Corine engaged Datz as her agent.It was mutually agreed that Datz would not disclose that he was acting as Corine's agent.Instead he was to deal with prospective customers as if he were a principal acting on his own behalf.In this way he made several contracts for Corine.If a third party were to file a lawsuit on one of the contracts,which of the following statements would be true?

Accepted Answer

A)  Corine is disallowed from ratifying Datz's contracts in order to transfer liability. 
B)  Datz has no liability once he discloses that Corine is the real principal. 
C)  The third party can hold only Datz liable since the third party believed that Datz was the principal. 
D)  The third party may choose to hold either Datz or Corine liable.

Question 16

A(n)_____ case involves harm caused by the principal's negligence regarding the agent.

Accepted Answer

A)  respondeat superior 
B)  direct liability 
C)  vicarious liability 
D)  implied warranty

Question 17

As a general rule,a principal is not liable for torts committed by independent contractors while performing the principal's business.

Accepted Answer

A) True 
 B)False

Question 18

The principal's ratification of a contract can be implied from his conduct,even if the principal says nothing to ratify.

Accepted Answer

A) True 
 B)False

Question 19

A principal is _____ if a third party knows or has a reason to know that the agent is acting for a principal and the principal's identity.

Accepted Answer

A)  formalized 
B)  nonexistent 
C)  disclosed 
D)  undisclosed

Question 20

If an agent has,within the scope of the agency relationship,committed both negligent and intentional acts resulting in injury to third parties,the principal:

Accepted Answer

A)  may be liable even if the agent's acts were unauthorized. 
B)  may effectively limit his or her liability to those third parties if the agent has signed a disclaimer absolving the principal from liability. 
C)  will be liable under the doctrine of respondeat superior only for the intentional acts of the agent. 
D)  will never be criminally liable unless he or she actively participated in the acts.

Exam 36: Third-Party Relations of the Principal and the Agent

_____ occurs when a principal manifests assent that his legal relations be affected,such as stating orally that he wishes to be bound by a contract that has already been made.

Principals may try to escape liability for an agent's misrepresentations by including _____.

_____ arises when the principal's manifestations cause a third party to form a reasonable belief that the agent is authorized to act in a certain way.

If an agent has authorized his subagent to make a certain contract and this authorization is within the authority granted to the agent by his principal,the principal is bound to the subagent's contract.

Adam hired Kim as his agent to drive a cab.On his first day on the job,Kim hit a pedestrian who suffered serious injuries.The pedestrian wants to file a suit against both

Why is it impossible for there to be apparent authority on behalf of an undisclosed principal?

A principal is liable on a contract made by his agent if the agent had actual authority to make the contract.

Implied ratification arises when:

A principal is liable for the misrepresentations made by an agent during a transaction with a third party.

A(n) _____ case involves harm caused by the principal's negligence regarding the agent.

As a general rule,a principal is not liable for torts committed by independent contractors while performing the principal's business.

The principal's ratification of a contract can be implied from his conduct,even if the principal says nothing to ratify.

A principal is _____ if a third party knows or has a reason to know that the agent is acting for a principal and the principal's identity.

If an agent has,within the scope of the agency relationship,committed both negligent and intentional acts resulting in injury to third parties,the principal: