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Q:
Quick Supplies Company (QSC) requires its customers to pay by check. Ron, a QSC driver, tells customers on his route that they can pay him with cash. When QSC learns of Ron's collections, it takes no action to stop it. Ron steals some of the cash. QSC may be suffer the loss under the doctrine of
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Q:
Lynn may hire employees to work in the computer store she manages despite the fact that her employment agreement with the owner says nothing about her being able to hire employees. This is
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Q:
Cal employs Daily Employment Agency as an agent under a written agreement that describes the rights and duties of both parties. This is
a. apparent authority.
b. equal authority.
c. express authority.
d. implied authority.
Q:
An agency relationship is not normally affected when the principal's country and the agent's country are at war with each other.
Q:
Wrongful termination of an agency relationship can subject the canceling party to a suit for damages.
Q:
A principal is not liable for an agent's crime simply because it was committed while the agent was acting within the scope of employment.
Q:
Under the theory of respondeat superior, liability for the wrongful acts of employees within the scope of their employment is imposed on employers.
Q:
A principal is liable for harm caused to a third party by an agent who commits a tort while acting in the scope of his or her employment.
Q:
An e-agent is a person.
Q:
If an agent acts within the scope of his or her authority, an undisclosed principal is liable to a third party for contracts made by the agent.
Q:
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.
Q:
When an agent enters into a contract on behalf of a principal, the principal must ratify the contract to be bound to it.
Q:
A disclosed principal is one whose identity is known by a third party with whom a contract is made.
Q:
If a principal does not ratify an unauthorized contract, the principal is not bound.
Q:
The failure of a principal to affirm promptly an unauthorized transaction by an agent is a ratification of the transaction.
Q:
Apparent authority exists if a principal causes a third party to believe reasonably that an agent has authority to act.
Q:
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.
Q:
A power of attorney can be given only by an actual attorney.
Q:
A power of attorney is a written document.
Q:
A principal may confer authority on an agent only in writing.
Q:
An agent's authority to act on behalf of a principal derives exclusively from the agent's express authority.
Q:
An agent's authority must be implied for the agent's act to bind a principal.
Q:
If a contract is in writing, the agent's authority to perform the same duty must be in writing.
Q:
National Computer Corporation (NCC) employs Cynthia as an agent. NCC gives her an exclusive territory in which to sell NCC products. NCC cannot compete with her in that territory under the duty of
a. compensation.
b. cooperation.
c. indemnification.
d. reimbursement.
Q:
Jody is an agent for Kwik Credit Company (KCC). In the course of Jody's performance for KCC, Jody pays Leo for certain auto maintenance and repair services. Jody's right to obtain the amount of those payments from KCC arises under the principal's duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Q:
Mona is an agent for Nationwide Restaurant Corporation (NRC). In acting as an agent, Mona follows all of NRC's clearly stated instructions. This responsibility arises under
a. no agent's duty.
b. the agent's duty of loyalty.
c. the agent's duty of notification.
d. the agent's duty of obedience.
Q:
Regional Investment Corporation (RIC) hires Sam, a real estate agent, to locate investment properties for RIC. Sam learns of a warehouse available for $100,000, buys it himself, and offers it to RIC for $200,000. Under the reasoning of the court in Case 31.3, Cousins v. Realty Ventures, Inc., Sam
a. breached the agent's fiduciary duties to the principal.
b. did nothing wrong.
c. failed to take advantage of a business opportunity.
d. set an unreasonable price based on current market value.
Q:
Hugh is an agent for Industrial Solvents, Inc. Hugh owes Industrial Solvents the duty of
a. compensation.
b. loyalty.
c. reimbursement.
d. safe working conditions.
Q:
Elle is an agent for Fine Cosmetics, Inc. Elle owes Fine Cosmetics the duty of
a. avoidance.
b. compensation.
c. indemnification.
d. performance.
Q:
Prospective Enterprises (PE) employs Quinn to buy property for a possible commercial development. Quinn secretly buys some of the property and sells it to PE at a profit. Quinn has breached
a. no duty.
b. the duty of accounting.
c. the duty of loyalty.
d. the duty of notification.
Q:
Jay holds himself out as possessing special accounting skills. As an agent, he must exercise the degree of skill or care expected of
a. a person having those skills.
b. an average, unskilled person.
c. a reasonable person.
d. the principal.
Q:
Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must
a. achieve nothing because the agreement says nothing on the issue.
b. attain the level that Rita achieved with her previous employer.
c. maintain the level Superior attained before Rita became an agent.
d. use reasonable diligence and skill in selling.
Q:
Macro Corporation and National Purchasing Company may create an agency agreement
a. by conduct, in writing, or orally.
b. by conduct or orally only.
c. in writing only.
d. under no circumstances.
Q:
A court declares Rose to be legally incompetent. Rose can be
a. an agent only.
b. an agent or a principal.
c. a principal only.
d. neither an agent nor a principal.
Q:
Irma retains Jerry as her authorized agent, unaware that Jerry is a minor. Jerry enters into a contract with Ken on Irma's behalf. The contract is
a. binding on Irma.
b. binding on Jerry and Ken, but not Irma.
c. binding on Ken, but not Irma or Jerry.
d. void.
Q:
Bob contracts with Computerama, Inc., to develop a new computer game. Computerama does not withhold taxes from his pay or control his work methods. Bob claims the game's copyright, which Computerama also claims, and the dispute ends up in court. The court is most likely to rule in favor of
a. Bob, because he created the game.
b. Bob, because he is an independent contractor.
c. Computerama, because Bob is its employee.
d. Computerama, because it distributes the game.
Q:
Dora is Eagle Corporation's chief executive officer. On Eagle's behalf, Dora solicits business, hires and fires workers, and handles the finances. Eagle pays Dora varying amounts, depending on her "needs." According to the decision of the court in Case 31.2, Nu-Look Design, Inc. v. Commissioner of Internal Revenue, for federal income tax purposes, Dora is most likely
a. an agent.
b. an employee.
c. an employer.
d. an independent contractor.
Q:
Mike is an architect who works for General Construction Company. The most important factor in determining whether Mike is General's employee or an independent contractor is
a. the degree of control that General exercises over Mike.
b. the distinction between General's business and Mike's occupation.
c. the length of the working relationship between General and Mike.
d. the method of payment.
Q:
Fact Pattern 31-1
Liz and Sara work as clerks in Ann's Dress Shop. Ann withholds federal taxes from their pay, and controls the methods and details of the performance of their work. Liz and Sara are not authorized to modify the prices or other terms of a sale at the shop.Refer to Fact Pattern 31-1. Ann hires Krupp Carpet Company to clean the carpets of her shop. Ann gives Krupp instructions as to what needs to be cleaned and when. Krupp is
a. Ann's employee only.
b. Ann's employee and agent.
c. an independent contractor.
d. none of the above.
Q:
Fact Pattern 31-1
Liz and Sara work as clerks in Ann's Dress Shop. Ann withholds federal taxes from their pay, and controls the methods and details of the performance of their work. Liz and Sara are not authorized to modify the prices or other terms of a sale at the shop.Refer to Fact Pattern 31-1. Ann authorizes Liz to sell clothes at remote locations at prices that Liz negotiates in those locations. With respect to sales at those locations, Liz is
a. Ann's employee only.
b. Ann's employee and agent.
c. an independent contractor.
d. none of the above.
Q:
Fact Pattern 31-1
Liz and Sara work as clerks in Ann's Dress Shop. Ann withholds federal taxes from their pay, and controls the methods and details of the performance of their work. Liz and Sara are not authorized to modify the prices or other terms of a sale at the shop.Refer to Fact Pattern 31-1. At the shop, Liz and Sara are
a. Ann's employees only.
b. Ann's employees and agents.
c. independent contractors.
d. none of the above.
Q:
Erin is the agent of Franco, an actor. Erin makes a deal for Franco to act in a new movie for Great Productions, Inc. The contract is binding on Franco if it is signed on his behalf by
a. Erin.
b. Great Productions.
c. the Screen Actors Guild.
d. none of the above.
Q:
An agent can be liable for breach of a duty of "obedience."
Q:
An agent can take advantage of an agency relationship to make a "secret" profit.
Q:
An agent must notify the principal of all material matters that come to his or her attention regarding the subject matter of the agency.
Q:
All agency relationships are based on contract.
Q:
An agency relationship may be created by operation of law when one spouse purchases certain basic necessaries and charges them to the account of the other spouse.
Q:
A principal can ratify an agreement made without authorization on his or her behalf by one who is not his or her agent.
Q:
A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.
Q:
An agency relationship may be created for any illegal purpose.
Q:
A licensed professional can employ an unlicensed agent to perform professional actions.
Q:
An agency relationship may be created for any legal purpose.
Q:
An agency relationship cannot exist in the absence of a formal agreement.
Q:
A minor cannot be appointed as an agent.
Q:
An independent contractor always acts in the capacity of an agent.
Q:
An independent contractor may act in the capacity of an agent.
Q:
A fiduciary relationship involves civility but not trust.
Q:
An employee may not act in the capacity of an agent.
Q:
Employees who deal with third parties are agents of their employers.
Q:
In a standard principal-agent relationship, the principal has the right to control the actions of the agent.
Q:
An agent is authorized to act on behalf of a principal in doing business with third parties.
Q:
A corporate officer is not an agent for the corporation.
Q:
Adam contracts with Beth to buy a certain restaurant, Coffee Café, for Beth, who asks Adam not to reveal her identity. Adam makes a deal with Dina, the owner of the restaurant, and makes a down payment. Beth fails to pay the rest of the price, and does not pay Adam for his services. Does Adam have any recourse against Beth? If so, on what basis and to what extent?
Q:
Mark agrees to act as Nora's agent for the purpose of investing Nora's money. Mark violates his duty to Nora by depositing the money in his own account and spending it. What remedies are available to Nora?
Q:
United Sales Corporation hires Victor to act as its agent. United's right not to perform a contract entered into by Victor, if Victor breaches their agency agreement, is the right of
a. avoidance.
b. indemnification.
c. nullification.
d. termination.
Q:
Paula agrees to act as Rick's agent in settlement negotiations with an insurance company. Paula works out a profitable compromise for Rick, but deposits the company's payment in her own account and refuses to give it to Rick. Besides normal contract and tort remedies, what remedy might a court impose for Rick?
Q:
Arnold is the chief executive officer of Beta Corporation. Arnold's responsibilities include decisions on product development, marketing, and other significant business directions. Arnold is subject to the approval and oversight of Beta's board of directors. Carol is a Beta manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Dave is a Beta salesperson, whose daily activities are controlled by Carol. Erin writes technical manuals for Beta products according to Arnold's instructions and subject to Beta's control, but has no dealings with Beta customers or suppliers. Fred edits the manuals on a contract-per-manual basis and is not otherwise subject to Beta's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?
Q:
Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of
a. accounting.
b. obedience.
c. performance.
d. safe working conditions.
Q:
Glen is an agent for High Flight, Inc. On High Flight's behalf and at its request, Glen pays Ilsa for certain plane maintenance and repair services. Glen's right to obtain the amount of those payments from High Flight arises under the principal's duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Q:
Regional Products, Inc., hires Sam to act as its agent. Tina sues Regional for Sam's negligent conduct. Regional's right to sue Sam for an equal amount of damages is the right of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Q:
Beta Distribution Company grants its agent Cathy an exclusive territory in which to sell Beta products. Beta cannot compete with Cathy in that territory under the principal's duty of
a. avoidance.
b. cooperation.
c. indemnification.
d. reimbursement.
Q:
Tri-state Financial Corporation hires Uma, a real estate agent, to locate investment properties for Tri-state. Uma learns of a warehouse available for $100,000, informs Tri-state, and makes an offer of $90,000 on Tri-state's instruction. The offer is rejected. Uma
a. breached the agent's fiduciary duties to the principal.
b. did nothing wrong.
c. failed to take advantage of a business opportunity.
d. made an unreasonable offer based on current market value.
Q:
Ben trains with, and works as an agent for, Computer Associates. For his personal gain after termination of the relationship, Ben can use
a. funds and supplies stolen from Computer Associates.
b. information acquired during the relationship.
c. knowledge acquired during the relationship.
d. skills acquired during the relationship.
Q:
Internet Services, Inc., employs Joe as an agent. During the agency, Joe acquires new skills. After the termination of the relationship, Joe uses those skills in a new job. Joe has breached
a. no duty.
b. the duty of loyalty.
c. the duty of notification.
d. the duty of performance.
Q:
Dan, an agent for Eve, signs an agreement with Fred on Eve's behalf but neglects to tell Eve that the agreement requires the payment of a certain tax. The government prosecutes Eve for failing to pay the tax. Eve is
a. liable, because Dan's knowledge is imputed to Eve.
b. liable, because Fred's knowledge is imputed to Eve.
c. not liable, because Dan did not tell Eve about the tax.
d. not liable, because Fred did not tell Eve about the tax.
Q:
Bob, a salesperson at a Carpets Galore store, tells Dina, a customer, "Buy your carpet here, and I"ll install it for half of what the store would charge." Dina buys the carpet, which Bob installs for half the store's price. Bob keeps the money. Bob has breached
a. no duty.
b. the duty of loyalty.
c. the duty of notification.
d. the duty of obedience.
Q:
AAA Development Company employs Bud to buy property for a future residential development. Bud secretly buys some of the property and sells it to AAA at a profit. Bud has breached
a. no duty.
b. the duty of accounting.
c. the duty of loyalty.
d. the duty of notification.
Q:
Jill introduces Kelly to her friends as "my associate." Kelly purports to act as Jill's agent in several business transactions with those friends. If Jill is liable for Kelly's actions, it will be under
a. the doctrine of estoppel.
b. the equal dignity rule.
c. the fiduciary principle.
d. the good faith statute.
Q:
Fact Pattern 31-2
Quinn employs Roy as his authorized business agent on April 1. Quinn's son Stan petitions a court to declare Quinn mentally incompetent. The court grants Stan's request on May Refer to Fact Pattern 31-2. Roy enters into a contract on Quinn's behalf on May 15, before Roy knows of the court's action. The contract is
a. binding on Quinn.
b. binding on Roy.
c. binding on Stan.
d. void.
Q:
Fact Pattern 31-2
Quinn employs Roy as his authorized business agent on April 1. Quinn's son Stan petitions a court to declare Quinn mentally incompetent. The court grants Stan's request on May Refer to Fact Pattern 31-2. Roy enters into a contract on Quinn's behalf on April 15. After May 1, the contract, which has not been performed, is
a. binding on Quinn.
b. binding on Roy.
c. binding on Stan.
d. void.