Deck 38: Relationships Between Principal and Agent

Question 1

Marlene hires Arthur to find a location for her new pizza store. Arthur owns a former gas station that would be just right for a pizza place, and he sells it to Marlene at a fair price, not disclosing his interest. He has breached his fiduciary duty to Marlene.

Answer 1

True

Question 2

The shop rights doctrine allows a company to use an invention developed by an employee on its premises, using company resources, without payment of royalties.

Answer 2

True

Question 3

An agent's authority can usually be revoked by the principal at any time.

Answer 3

True

Question 4

Oral agencies are not legally binding unless reduced to writing.

Question 5

The principal owes the agent a fiduciary duty.

Question 6

The principal is allowed to compete with an agent unless the agreement specifically prohibits it.

Question 7

An agent may appoint his or her own agents to carry out his/her duties, with or without the authorization of his/her principal.

Question 8

A contract is no less binding when negotiated by an agent than by the principal.

Question 9

A person can do via an agent whatever business activity she could do herself.

Question 10

In case where, Michelle, in anticipation of her death, gives Adam, her son, power of attorney, Adam will be acting as a general agent on behalf of Michelle.

Question 11

Most agencies are created by contracts.

Question 12

The fiduciary responsibility of an agent is imposed by law.

Question 13

The agent's duty to preserve the confidential information of a principal exists only until the agency relationship lasts.

Question 14

Agency law imposes both fiduciary as well as nonfiduciary duties on an agent.

Question 15

An author's agent would be considered a "special agent."

Question 16

A gratuitous agent owes the principal the same duties as does a compensated agent.

Question 17

The fiduciary relation between an agent and principal is two-way, that is, the agent is the principal's fiduciary and the principal is the agent's fiduciary.

Question 18

A contract entered into by an undisclosed agent does not create any liability different from that made by a disclosed agent.

Question 19

An independent contractor is, by definition, not an agent.

Question 20

A general agent has the authority to act in any way required by the principal's business.

Question 21

Alberto, a carpenter, was hired by Raul for the building season, through September 30 when his employment would end. During the summer Alberto regularly charged items on Raul's account at the lumber yard, and Raul always pays the bill; the lumber yard knew nothing of Alberto's contract with Raul. On October 1 Alberto, as he has done for several months, charged items on Raul's account, but these were for Alberto's personal use. Raul is not responsible for these items.

Question 22

A person who is hired to accomplish a result but is not subject to specific control by the one hiring is known as a(n) _____.

A) servant
B) general agent
C) independent contractor
D) subagent
E) agent with an interest

Question 23

A person cannot be an employee (a "servant") if he is not paid.

Question 24

Garry hired Draco, who is a realtor, to help him buy a house. Draco has rights to speak to Ron, the realtor of a house that Garry wants to buy, on Garry's behalf. He may discuss prices that Garry is willing to pay for the house, but does not have the right to close the sale by himself. It can be said that Draco is a(n) _____.

A) servant
B) term agent
C) subagent
D) special agent
E) independent contractor

Question 25

All employees are agents.

Question 26

A(n) _____ is defined as a person who acts in the name of and on behalf of another, having been given and assumed some degree of authority to do so.

A) grantor
B) insured
C) agent
D) testator
E) tenant

Question 27

Merlin gives Ralph authority to sell her land, and to pay himself out of the proceeds, the debts due to him from Merlin. Under such circumstances, it can be said that Ralph:

A) is acting as Merlin's servant.
B) is an independent contractor.
C) is a subagent, the principal being Merlin.
D) has an agency coupled with an interest.
E) is a general agent to Merlin.

Question 28

Whether a person is an employee (a "servant") or an independent contractor is dependent on the facts, not on the agreement between the parties.

Question 29

An agent who accepts a bribe to purchase goods for a principal only from a seller who is a personal friend breaches his _____ duty by taking the money, since it is the agent's duty to work only for the best interests of the principal.

A) statutory
B) gratuitous
C) fiduciary
D) expressed
E) apparent

Question 30

_____ is a form of agency where the agent receives no compensation.

A) Agency coupled with an interest
B) Special agency
C) Exclusive agency
D) Executive agency
E) Gratuitous agency

Question 31

A plumber hired to fix a broken toilet for a homeowner is a "servant."

Question 32

Raul asks his friend Alberto to make a run to the lumber yard to buy lumber and screws for Raul's deck project. Alberto is not paid. He is, legally, an agent.

Question 33

A "servant" is an employee who is hired to accomplish a result, but the employer does not directly control how the task is accomplished.

Question 34

Children in most states may purchase necessary items-food or medical services-on the parent's account. This is an example of _____ agency.

A) general
B) specific
C) express
D) implied
E) apparent

Question 35

Whether a person is an independent contractor or an employee is legally determined by the parties' agreement.

Question 36

Under the traditional _____ doctrine, an employee who is not hired for a specific period can be fired at any time, for any reasons except bad reasons.

A) employment-at-will
B) shop rights
C) master-servant
D) delectus personae
E) ultra vires

Question 37

In the legal relationship known as "agency":

A) the agent cannot have any personal property interest in the principal's business.
B) the principal must authorize all subagents appointed by an agent.
C) a general agent has the authority to act in any way required by the principal's business.
D) the principal is primarily liable for all actions undertaken by agents and subagents.
E) a general agent must be appointed for business purposes, while a special agent can be appointed for personal purposes.

Question 38

The penalty for breach of the fiduciary duty of an agent is:

A) loss of compensation and profit.
B) imprisonment for a period of 5 years.
C) $1000 for each instance of the act.
D) permanent reduction in the rate of commission.
E) loss of possession and title to the property.

Question 39

An attorney hired by a client is an independent contractor.

Question 40

The _____ doctrine states that a company has the rights to exploit the inventions made by its employees on the company time and resources.

A) employment- at-will
B) shop rights
C) master-servant
D) delectus personae
E) ultra vires

Question 41

The _____ rule bars any form of recovery from an employer for torts committed by one employee against another.

A) shop rights
B) fellow-servant
C) ultra vires
D) shop rights
E) no-faults

Question 42

In which of the following states of the U.S. are workers' compensation laws not compulsory?

A) Oklahoma
B) California
C) New York
D) New Jersey
E) Washington

Question 43

If Alice were a partner with Dubious in the car business, describe how-if at all-- that would change the results in 1a and 2a as to who is responsible for the window washing and for Betty's injuries.
b. If Dubious were liable, he would have to pay the $500. All common-law contracts, including modifications of contracts, must be supported by consideration. The contract, made by his agent, is for $500. There is no consideration being given to Windows 'R' Us in return for its agreement to accept less than the full amount owing. Dubious owes $500; he has a pre-existing obligation to pay that much. Absent consideration, you cannot demand extra to do that which you are obligated to do, and absent consideration you cannot pay less than you agreed to do (and expect to get discharged from the obligation).
2a. As to Betty's injuries: the relevant rules involve the master-servant doctrine: the employer is liable for torts committed by the employee in the scope of employment; the employee is also liable. Also the doctrine of comparative negligence: a person who contributed to her own injuries will be responsible to contribute to paying for her own injuries. Alice and Dubious are liable and Betty is also partly liable for her own injuries. Clearly Alice was negligent in bumping or crashing into Betty; if Alice was negligent, then under master-servant theories Dubious is liable, for Alice was in the scope of employment when she ran out of the store (unless taking a food break is outside the scope--it is not). However it seems that Betty was also partly to blame for the accident: she was not watching what was going on; she contributed to the loss and under comparative negligence theories bears some of the damages.
2b. As for the bicycle pump: Betty will bear the cost of replacing it. A person is liable for her own tort of destruction of another's property, but self-defense may be a good defense. Alice committed an intentional tort when she smashed the pump, and a person is usually liable for intentional torts. But self-defense is a good defense, and here Alice may take advantage of that doctrine.

Question 44

Which of the following is true of worker's compensation?

A) Household workers and domestic employees are not eligible to receive worker's compensation.
B) Worker's compensation is compulsory in all states of the U.S.
C) Worker's compensation acts cover the costs of medical care, but not payment of lost wages.
D) Worker's compensation is a no-fault system.
E) The employees covered by worker's compensation retain the right to sue the employer for any injury.

Question 45

Who is an agent? List the various types of agents.

Question 46

Differentiate between a servant and an independent contractor (as under agency law).

Question 47

Employers not infrequently "mislabel" employees as independent contractors in order to

A) give the employees more autonomy.
B) encourage them to be creative in work-related problem solving.
C) avoid liability for payroll taxes.
D) reduce the scope of their liability for torts.
E) eliminate the possibility that the employee will enter into contracts that bind the employer.