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Q:
Generally, the agent's duty to keep an accounting means that the agent must:
A. keep records, receipts, and other documentation of costs or income for the principal.
B. be able to verify the exact number of hours the agent spends acting within the scope of employment.
C. prepare tax returns for the principal pertinent to the agent's financial activities.
D. be able to account for any and all of the principal's funds when they are commingled with the agent's or anyone else's funds.
Q:
The IRS has developed a three-prong test to determine an agent's status. Which of the following is not a prong in this test?
A. whether the working relationship is written or oral
B. behavioral aspects of the agency
C. the type of working relationship between the principal and the agent
D. the financial arrangements between the principal and the agent
Q:
Mike calls Beth and asks her to referee a soccer game. Beth is not obligated to work the game. If she accepts the assignment and works the game, she is told the time of the game, she must wear an approved uniform, and she is paid a fee. Once on the pitch (field) she is in complete control. Beth is considered:
A. an incidental contractor.
B. a principal.
C. an employee agent.
D. an independent contractor.
Q:
An agency relationship is terminated by expiration in all of the following situations except:
A. the time period ends.
B. an event occurs.
C. the purpose has been accomplished.
D. the principal dies.
Q:
If a principal wants to keep her identity secret, she would use:
A. a disclosed agency.
B. a partially disclosed agency.
C. an undisclosed agency.
D. an independent agency.
Q:
With regard to negligent hiring, the courts would require the least amount of scrutiny regarding:
A. an office worker.
B. a teacher.
C. a tour guide.
D. a pizza delivery person.
Q:
Courts apply the ________ analysis to determine the classification of an agent.
A. consistency-over-form
B. fundamentals-over-style
C. substance-over-form
D. classification-over-mode
Q:
In which of the following situations is the agent not liable should the principal breach the contract with the third party?
A. none (Agents are liable in all agency situations.)
B. partially disclosed agency
C. undisclosed agency
D. disclosed agency
Q:
In Edgewater Motels Inc., v. A. J. Gatzke and Walgreen Company, Gatzke, an employee agent of Walgreen, while filling out expense reports under the scope of his employment, accidentally started a fire due to careless smoking, severely damaging the Edgewater Motel. With regard to the smoking the court determined that:
A. defendant Walgreen has no liability because smoking had nothing to do with Gatzke's duties, so the fire was caused by an act outside the scope of his employment.
B. defendant Walgreen is liable only if it knew that Gatzke smoked and did not order him to stop or if it condoned or authorized smoking.
C. Edgewater wins because the smoking occurred as Gatzke was performing his job and the slight deviation for his personal comfort was reasonable and was not a severe departure from his duties.
D. Edgewater wins because Walgreen authorized Gatzke to rent the room and is therefore liable for any intentional or unintentional acts of its employee agent that result in harm to others.
Q:
A gratuitous agent:
A. has no duty of care owed to the principal.
B. breaches the duty of care when ordinarily negligent.
C. breaches the duty of care when grossly negligent.
D. is held to the same standard of care as any other type of agent except the independent contractor.
Q:
Young has just fired Kathy, who was her agent. Young places an ad in the classified section of the local newspapers that states, "Kathy no longer works for or represents Young in any way." Young placed this ad to eliminate any possible liability resulting from:
A. actual authority.
B. apparent authority.
C. ratification.
D. respondeat superior.
Q:
Jack is a truck driver employee of Ace Trucking. While delivering his cargo, he sees that the truck assigned to him is low on gas. Jack pulls into a convenient station and puts $50 worth of gas into the truck, which will allow him to complete his assignment and return to the depot.
A. Ace is not required to reimburse Jack unless, prior to starting the delivery, he had been given the express actual authority to purchase gas on behalf of the principal.
B. Ace is not required to reimburse Jack unless he phoned in and asked for and was granted permission to purchase gas.
C. Ace will be required to reimburse Jack for the cost of the gas based on implied authority stemming from his express authority to drive the truck.
D. Ace will be required to reimburse Jack because apparent authority gives him the right to buy gas when it is apparent that it is needed.
Q:
If an agent acts in a disloyal manner and realizes a personal profit from his or her acts, the court may order a return of the funds, which is called:
A. replenishment.
B. disgorgement.
C. restoration.
D. reinstatement.
Q:
Agency law generally exists on the state statutory level and is based on:
A. common law.
B. the Restatement (Second) of Agency.
C. tort law.
D. the federal regulation of agency.
Q:
Which of the following is a form of vicarious liability?
A. respondeat superior
B. disgorgement
C. repudiation
D. ratification
Q:
Respondeat superior makes a principal liable for:
A. acts of the agent based on implied authority.
B. unauthorized acts of the third party.
C. frolics and detours of the agent.
D. negligent acts of independent contractors.
Q:
Karl is a driver for Arnold's Appliance Store and delivers appliances to customers. One day, Karl negligently secures a washer and dryer in the back of his truck, and while he is driving, the washer falls out of the truck. Jan, driving behind the truck, sees the appliance flying at her and swerves into a telephone pole. Which of the following is correct?
A. Karl, but not Arnold's, is liable.
B. Both Karl and Arnold's are liable.
C. Arnold's, but not Karl, is liable.
D. No one is liable; it was an accident.
Q:
Mike worked for Frank's Pizza as a driver and was an agent. His duties consisted of making deliveries along a designated route. One day Mike decided to see his girlfriend, Jackie, who lived 50 miles off his pizza route. While driving to his girlfriend's, Mike injured a pedestrian, Chuck. The accident was caused by Mike's negligent driving. Chuck is now suing both Mike and Frank's for personal injuries. Under the circumstances:
A. Frank's is liable under the doctrine of respondeat superior.
B. Frank's is never liable for the negligent torts of its agents.
C. Chuck can recover damages from both Frank's and Mike.
D. Frank's is not liable because Mike was on a frolic of his own.
Q:
Joyce contracted with Mega Drug Corporation to buy vitamins on behalf of Howard, a personal trainer. Howard told Joyce to use her own name and not to disclose to Mega that she was working for Howard. If Joyce signs the contract in her own name only and Howard won't honor it:
A. Joyce can't be sued because she's only an agent.
B. Joyce is liable but may sue Howard based on indemnification.
C. Joyce is liable but may sue Howard based on failure of loyalty.
D. Howard has no liability to anyone, since his name was never disclosed.
Q:
In Hannington v. University of Pennsylvania, the court had to determine whether an attorney acted under apparent authority regarding the negotiation and signing of a settlement agreement. The court determined that:
A. attorneys are generally independent contractors and cannot possess apparent authority to bind a principal.
B. after six months of negotiations it is reasonable to believe that an attorney has apparent authority to finalize an agreement on behalf of the principal.
C. because the agency was disclosed and the principal's identity well known, the university could have easily verified the enforceability of the agreement with Hannington, so it is at fault for not doing so.
D. third parties may never enforce an agreement that the principal has not authorized and signed.
Q:
The Happy Days Day Care is hiring a child care worker. On the employment application Happy Days specifically asks if the applicant has ever been arrested. Tina applies for a job at Happy Days and answers no to that question. She also answers no to the question that asks if there is any reason that she would not be qualified to work with children. Soon after Tina is hired, she severely shakes a baby to stop it from crying, causing the baby injuries. It is discovered at trial that Tina has been fired from numerous day cares for baby shaking and various other offenses. If the baby's parents sue Happy Days:
A. Happy Days is not liable because it made a good faith effort to screen applicants and because it specifically asked about past indiscretions.
B. Happy Days is liable because Tina was dealing not with the public but only with children.
C. Happy Days is liable for negligent hiring.
D. Happy Days is liable for negligent retention.
Q:
Angelina hires Brad to drive a truck to a depot 200 miles away. She specifies the route that he is to take and tells him to be sure to arrive by 5 p.m. On the way, Brad finds himself nodding off due to hunger. He checks the time and finds that he has plenty of time to make the 5 p.m. deadline, so he decides to stop at a diner that he is familiar with. The diner is three-quarters of a mile off the route that Angelina had specified. Brad does not call Angelina to ask for permission. On the way to the diner, Brad runs a red light and has a collision with Billy Bob. Billy Bob sues Angelina.
A. Angelina wins because Brad was on a detour, freeing her from liability.
B. Angelina wins because Brad was on a frolic, freeing her from liability.
C. Angelina loses because Brad was on a detour, so she is liable.
D. Angelina loses because Brad was on a frolic, so she is liable.
Q:
Which of the following is the true statement?
A. Ratification applies to previously unauthorized acts.
B. Actual authority must be expressly created and cannot be based on custom or past dealings.
C. Apparent authority is based on what the principal communicates to the agent and not to the third party.
D. Actual authority must always be expressed in writing.
Q:
In California, courts determine independent contractor status by considering each of the following except:
A. whether the worker is engaged in a distinct occupation or business.
B. whether the work is usually done under the principal's direction or by a specialist without supervision.
C. the skill required.
D. what the parties agreed to.
Q:
Robert is a wealthy businessman who wishes to purchase a particular property. Realizing that the price might become inflated if his name is made known, he asks Faye to negotiate the purchase of the property on his behalf. Faye is the general manager of Robert's east coast operations. Faye reports directly to Robert and is supervised in all respects. Faye is told to tell Philip, the property owner, that she represents someone, but she's told not to specify who she works for. The agency would be described as:
A. partially disclosed.
B. disclosed.
C. undisclosed.
D. indemnified.
Q:
Sanchez borrowed money from Fifth National Bank to buy a car. She defaulted on the loan. Fifth National hired Rex's Recovery Service to repossess the car for a set fee. Rex's was simply told to locate and seize the car. Rex's would be classified as:
A. an agent/employee.
B. a principal.
C. a gratuitous agent.
D. an independent contractor.
Q:
The nonagent employee relationship is sometimes referred to as the:
A. superior-inferior relationship.
B. supervisor-worker relationship.
C. director-directee relationship.
D. master-servant relationship.
Q:
If an agent is acting within the scope of his or her employment and commits an intentional tort harming a third party, the principal may be liable for the injuries sustained.
Q:
A principal has the power to terminate an agency relationship whether or not the principal has the legal right to terminate that relationship.
Q:
In an agency relationship the principal's control must be total and continuous over the agent.
Q:
The doctrine of negligent hiring applies to independent contractors only when the contractor is hired to do a hazardous or inherently dangerous job.
Q:
Whether an agency is classified as disclosed, undisclosed, or partially disclosed, the principal has the duty to fully perform the contract obligations.
Q:
Agency law primarily exists on the:
A. state level.
B. federal level.
C. common law level.
D. constitutional level.
Q:
The Restatement (Third) of Agency has been adopted in about half of the states.
Q:
The manager at an apartment complex has no prior criminal record but has just been arrested for possession of child pornography. If he is convicted but given probation and not jailed, the apartment complex may be liable if it does not fire him and he later harms a child on the premises.
Q:
Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.
Q:
Courts apply a subjective standard when examining the existence of offer and acceptance by the parties when they created an agency relationship.
Q:
One significant benefit of an employer's completing an IRS Form SS-8 is that even if the employer does, in fact, misclassify a worker, the proper completion of the form may evidence a good faith effort by the employer, reducing or even eliminating IRS penalties for misclassification.
Q:
Jethro is having a sweet-16 birthday party for his daughter Kate in his backyard. To make the party special, he hires Tony to put on a fireworks display. He found Tony through a classified ad in the local newspaper. In the written contract, Jethro simply instructs Tony to begin the display at 8 p.m., make it last 16 minutes, and make it spectacular; no safety parameters are mentioned or discussed. During the finale, one of the rockets malfunctions and explodes amid the party guests, injuring eight people. Jethro has no liability because Tony was an independent contractor.
Q:
Actual authority is the authority that the third party may reasonably assume that the agent possesses.
Q:
A principal has a duty to reimburse or indemnify the agent for payments made or expenses incurred event if incurred outside the agent's actual authority.
Q:
An agent may work for two principals at the same time if the agent deals fairly with both.
Q:
A revocation of the agency relationship requires that the principal and the agent agree to terminate the agency.
Q:
Vince is a general contractor who hires Brad to install plumbing in a government building under construction. The morning that Brad is to begin work, Vince discovers that Brad has lost his plumbing license and is no longer eligible to do work on government buildings. When Brad shows up ready to work, Vince informs him that he can't use his services and sends him away. The agency relationship terminated due to operation of law.
Q:
Gina has hired Frank, an attorney, to handle her divorce. If, during face-to-face negotiations, Frank strikes Gina's husband's attorney, Gina will be liable because Frank was her agent employee.
Q:
If an agent suffers losses while acting for the principal, the principal has a duty to indemnify the agent for those losses.
Q:
One of the principal's duties is to keep an accounting during the agency relationship.
Q:
In a fully disclosed agency situation, the agent is not contractually liable to the third party.
Q:
In an agency relationship, one party agrees to act as an agent for another party.
Q:
An express termination of the agency relationship by the agent is called a renunciation.
Q:
To develop your understanding of agency law, you need to be aware of the legal requirements for creating an agency, the liability of a principal for an agent's conduct, and the remedies available to the parties.
Q:
An agent is generally prohibited from using his or her own judgment as a substitute for the principal's judgment unless specifically authorized by the principal.
Q:
The principal may be an individual or entity (such as a corporation), but the agent must be an individual.
Q:
The centerpiece of a fiduciary relationship is the agent's duty to act with due care when performing the responsibilities of the agency.
Q:
Craig has been hired by Brian to negotiate a deal with Rudy. Brian instructs Craig that while he is in Rudy's office, should he be able to steal the Johnson file, he is to do so. If Craig has the opportunity to steal the file but fails to do so, he is in violation of his duty of obedience and obligation to follow his principal's instructions.
Q:
Sam is hired by a pest company to go into people's homes, and six months after he starts working, it is discovered that Sam had previously been arrested and found guilty of criminal assault. Failure to fire Sam or reassign him to a nonpublic-related position may give rise to a suit based on ________ should Sam attack a customer in the customer's home while in the course of employment.
Q:
The person from whom an agent has received instruction and authorization and to whose benefit the agent is expected to perform and make decisions pursuant to an agency relationship is called the __________.
Q:
Clyde has been hired to deliver a truckload of hogs to a cross-state slaughterhouse. On the way there he stops to visit his girlfriend Samantha, who lives five minutes off his prescribed route. He spends five minutes with her. During those five minutes he is considered to be on a _____.
Q:
Acceptance of an agent's previously unauthorized act by a principal is called _____.
Q:
An independent contractor is not considered an employee but is entitled to minimum wage and overtime protections.
Q:
Tom has been injured on the job, so Dick hires Harry to fill in for Tom. The agreement with Harry is that he will work until Tom is ready to return. When Tom is indeed ready to return, Dick's position is terminated by an express act defined as _____.
Q:
Authority based on what the third party reasonably believes the agent to possess is called ______ authority.
Q:
One who agrees to act and is authorized to act on behalf of another, a principal, to legally bind the principal in particular business transactions with third parties pursuant to an agency relationship is the ___________.
Q:
Your professor is in the middle of her lecture when the dean from a competing school walks into class and offers her a position at his school at double her present salary. When she asks when the position will start, he says tomorrow. Your professor looks at the class, says good-bye, and walks out to start cleaning out her office. Your school can sue your professor for tortious interference with an existing contractual relationship.
Q:
In Palsgraf v. Long Island Railroad Co., the court first articulated and established the concept of proximate cause.
Q:
Agents who act on behalf of a principal without receiving any compensation are called ________ agents.
Q:
Fred has a toothache and is driving to the dentist. He's in a lot of pain, so he speeds down the road 20 miles over the speed limit. If he has an accident, it is an intentional tort and not negligence because he knowingly was speeding.
Q:
A person cannot be guilty of negligence if he or she has no duty owed to the plaintiff.
Q:
Disparagement has to do with industries, companies, and corporations but not individuals.
Q:
Courts enforce fraudulent misrepresentation for intentional lies but will not enforce fraudulent misrepresentation for negligent ones.
Q:
Bill has shoplifted at a local store, stealing three mobile phones. The theft is not detected until store camera videos are examined later that afternoon. Store management has the right to go to Bill's home and detain him until police arrive.
Q:
Brad is drunk and driving his car 20 miles over the speed limit. He hits Angelina, who is crossing the street against a red light. Angelina has over $95,000 in medical bills and has significant pain and suffering. If Angelina sues in a state that still follows the theory of contributory negligence, she will get nothing.
Q:
Professor Smith announces to his dean that the students in his noon class are the worst students that he has ever had and that they should never have been admitted to the school. The students are actually as qualified as any other students admitted to the school. The students may sue Professor Smith for slander.
Q:
Faye is driving when she sees an accident occur a half mile in front of her. Sarah has negligently swerved her car, forcing Lindsay's car off the road and into a tree. Lindsay is thrown from the car and appears injured. Faye stops to render aid, and while helping Lindsay, she slips and breaks her leg. Sarah is not liable in negligence for Faye's injury because the injury was not foreseeable and Sarah's act was not the proximate cause of Faye's injury.
Q:
Employers, in some states, enjoy an absolute privilege when giving employment references as long as the reference is factual and without malice.
Q:
A public official or public figure can win a defamation case only by proving actual malice by the defendant.
Q:
When Ford runs a commercial stating that Fords are better than Chevrolets and that "you'll be happier if you buy a Ford," Ford is committing trade libel.
Q:
The Restatement (Third) of Torts is currently the most recent edition.
Q:
Jimmy is annoyed because his neighbor's dog is constantly barking. He intentionally walks up to the dog in his neighbor's yard and viciously kicks it. Jimmy has committed battery.
Q:
Because there is no general duty to act or assist others, a store is not liable if, after washing a floor, it fails to notify the public of the slippery condition and someone is injured. Stores give such notification as a convenience to customers but not because of a legal duty.