Question 1

Name five occasions in the absence of an employment relationship when an agent's authority may be terminated.

Accepted Answer

In the absence of evidence of an employm

Question 2

An agent will be liable for breach of warranty of authority if

Accepted Answer

A) the agent misrepresents the scope of the agent's authority,and the principal is not bound to the contract with the third party. 
B) the agent accepts commissions from both principal and third party without full disclosure. 
C) there is a clause in the contract between principal and third party that makes it clear that the principal is not bound until the principal approves the contract. 
D) the agent does not make it clear to the third party that the agent is acting in a representative capacity. 
E) the agent breaches the terms and conditions of the agent's contract with the principal. 
A) the agent misrepresents the scope of the agent's authority,and the principal is not bound to the contract with the third party. 
B) the agent accepts commissions from both principal and third party without full disclosure. 
C) there is a clause in the contract between principal and third party that makes it clear that the principal is not bound until the principal approves the contract. 
D) the agent does not make it clear to the third party that the agent is acting in a representative capacity. 
E) the agent breaches the terms and conditions of the agent's contract with the principal.

Question 3

A franchisor,Garden Delicious Inc,has 73 franchised outlets across Canada using the theme "healthy eating." Its Surrey,B.C. ,franchisee,Tom Cain,has been adding bagels to the regular "authorized" menu.Garden Delicious Inc.has asked Tom on several occasions to stop,but he has refused,saying that the contract does not specifically prohibit adding items to the menu.Legally speaking,will the franchisor be able to stop this practice?

Accepted Answer

A) Yes,he will,since the franchisor has the money and legal clout to force compliance. 
B) Yes,he will,because there is an implied term that the franchisee is to protect the goodwill and trademarks and trade secrets of the franchisor. 
C) Yes,he will,since this practice will decrease the profits for all franchisees. 
D) No,he won't,since Tom is an independent businessperson,he can manage his business as he sees fit-within the law. 
E) No,he won't,since this practice will set a healthy precedent among the other franchisees. 
A) Yes,he will,since the franchisor has the money and legal clout to force compliance. 
B) Yes,he will,because there is an implied term that the franchisee is to protect the goodwill and trademarks and trade secrets of the franchisor. 
C) Yes,he will,since this practice will decrease the profits for all franchisees. 
D) No,he won't,since Tom is an independent businessperson,he can manage his business as he sees fit-within the law. 
E) No,he won't,since this practice will set a healthy precedent among the other franchisees.

Question 4

For "selling-off-price-list," Vera was terminated from her position as sales rep for the Crouger Co.Two months after the termination,Vera is still sending in orders from her former customers.This raises the issue of

Accepted Answer

A) whether Vera was really terminated or not. 
B) whether notification was given to customers. 
C) whether the company is estopped from accepting liability. 
D) whether there is "holding out" by Crouger Co. 
E) who gets the commissions. 
A) whether Vera was really terminated or not. 
B) whether notification was given to customers. 
C) whether the company is estopped from accepting liability. 
D) whether there is "holding out" by Crouger Co. 
E) who gets the commissions.

Question 5

The president of A Co.introduces B to a third party as his vice-president of marketing and sales.In reality,however,A Co.'s president makes it clear to B that he is only the vice-president of marketing and has no authority to make sales.If B now enters into a contract for the sale of A Co.'s goods to the third party,as between A Co.and the third party,

Accepted Answer

A) there is no contract because B does not have express authority over sales. 
B) there is a contract because B had apparent or ostensible authority to enter into it. 
C) there is no contract because B can only deal with matters of marketing. 
D) there is no contract because it was not ratified by A Co. 
E) none of the above 
A) there is no contract because B does not have express authority over sales. 
B) there is a contract because B had apparent or ostensible authority to enter into it. 
C) there is no contract because B can only deal with matters of marketing. 
D) there is no contract because it was not ratified by A Co. 
E) none of the above

Question 6

Does the franchisor have a fiduciary duty towards the franchisee? How about the other way around?

Accepted Answer

In general,there is no fiduciary duty be

Question 7

John,while acting as Henry's sales agent,negligently drives his car into the wall of Alice's house.In this situation

Accepted Answer

A) Alice can only sue Henry,because he is John's principal. 
B) Alice can sue both John,who is primarily negligent,and Henry,who is vicariously liable for John's acts or omissions. 
C) Alice is estopped from suing Henry,who had no control over John. 
D) Alice can only sue John,because he was negligent. 
E) all of the above 
A) Alice can only sue Henry,because he is John's principal. 
B) Alice can sue both John,who is primarily negligent,and Henry,who is vicariously liable for John's acts or omissions. 
C) Alice is estopped from suing Henry,who had no control over John. 
D) Alice can only sue John,because he was negligent. 
E) all of the above

Question 8

A real estate agent tells a purchaser that she has authority to sign a contract for sale of property on behalf of the vendor.The purchaser relies on that representation and signs an acceptance.The vendor refuses to complete the contract because the agent did not have authority to sign the contract on behalf of the vendor.The vendor will be bound to complete the contract.

Accepted Answer

A) True 
 B)False

Question 9

X Co.owns land all over downtown Toronto.From time to time,X Co.has used John Jones as its agent to sell land that it owns.X Co.hires John and tells him it wants to sell a downtown property located on Front Street.It instructs John to list the property for $1 million,but that it will take $900 000.00.John has a friend,Mary,who is interested in buying the Front Street property,but rather than listing it at $1 million,he simply tells Mary "For $900 000.00 it's yours," and she agrees.John,having effected the sale,now wants to be paid his commission by X Co.In this situation,

Accepted Answer

A) John has apparent or ostensible authority to sell the land. 
B) John has breached his fiduciary duty owed to X Co. 
C) X Co.can refuse to pay John his commission. 
D) there is an agreement of purchase and sale between X Co.and Mary for the Front Street property. 
E) all of the above 
A) John has apparent or ostensible authority to sell the land. 
B) John has breached his fiduciary duty owed to X Co. 
C) X Co.can refuse to pay John his commission. 
D) there is an agreement of purchase and sale between X Co.and Mary for the Front Street property. 
E) all of the above

Question 10

If conflicts arise with the agent's own interests or with the interests of those with whom he or she is connected,disclosure to all persons affected is unnecessary.

Accepted Answer

A) True 
 B)False

Question 11

David,the owner of BayView Reality Inc. ,decided to buy one of his own firm's listings for investment purposes.The principal (owner of the property)refused to pay any commissions or reduce the price on this transaction.Can this impasse be legally resolved?

Accepted Answer

A) Yes,it can;all we need is an "arms-length" transaction with third party involvement. 
B) No,it cannot,since the agent has placed his own interest in conflict with that of the principal,therefore such a contract is illegal and void. 
C) Yes,it can;they both simply need to negotiate between them a satisfactory deal. 
D) No,it cannot,because David would lose his realtor's license if he completed this transaction. 
E) Yes,it can,since the real estate arbitration board would issue a ruling. 
A) Yes,it can;all we need is an "arms-length" transaction with third party involvement. 
B) No,it cannot,since the agent has placed his own interest in conflict with that of the principal,therefore such a contract is illegal and void. 
C) Yes,it can;they both simply need to negotiate between them a satisfactory deal. 
D) No,it cannot,because David would lose his realtor's license if he completed this transaction. 
E) Yes,it can,since the real estate arbitration board would issue a ruling.

Question 12

Ratification of a contract by a principal serves to terminate the contract with a third party made by the principal's agent.

Accepted Answer

A) True 
 B)False

Question 13

Where a person who is really acting as agent for another does not tell this to a third party and enters into a contract with the third party,the third party

Accepted Answer

A) can only sue the agent,whether or not the principal is disclosed. 
B) must decide whether to sue the agent or the principal. 
C) can argue a mistake rendering the contract voidable at the third party's option. 
D) can only sue the undisclosed principal,but not the agent. 
E) must attempt to limit its losses by rescinding the contract. 
A) can only sue the agent,whether or not the principal is disclosed. 
B) must decide whether to sue the agent or the principal. 
C) can argue a mistake rendering the contract voidable at the third party's option. 
D) can only sue the undisclosed principal,but not the agent. 
E) must attempt to limit its losses by rescinding the contract.

Question 14

Charlie owns a small parcel of land in Toronto.He wants his sister,who lives within a short distance of the land,to sell the parcel for him.In order for his sister to be able to sign all the real estate documents,Charlie needs to authorize

Accepted Answer

A) a lawyer to act as principal during the closing. 
B) a broker to bring the parties together. 
C) a sales agent to carry out his instructions. 
D) power of attorney for his sister. 
E) a local real estate agent to make out the papers. 
A) a lawyer to act as principal during the closing. 
B) a broker to bring the parties together. 
C) a sales agent to carry out his instructions. 
D) power of attorney for his sister. 
E) a local real estate agent to make out the papers.

Question 15

A Co.develops land.From time to time,it has used B,an independent contractor,as its agent to help it buy land.In fact,A Co.even lets B keep an office in its head offices,and on occasion C,a third party,has seen B's office when he has had meetings at A Co.If B enters into an agreement of purchase and sale on behalf of A Co.to purchase C's land,

Accepted Answer

A) there will be no agreement because B does not have the necessary authority. 
B) there will be no agreement because A Co.did not ratify the contract. 
C) there will be an agreement because B had express authority to enter into it. 
D) there will be an agreement between A Co.and C because A Co.is estopped from arguing that B did not have the authority to enter into it. 
E) none of the above 
A) there will be no agreement because B does not have the necessary authority. 
B) there will be no agreement because A Co.did not ratify the contract. 
C) there will be an agreement because B had express authority to enter into it. 
D) there will be an agreement between A Co.and C because A Co.is estopped from arguing that B did not have the authority to enter into it. 
E) none of the above

Question 16

Ingrid was the purchasing agent for Fashion Boutique Inc.She was authorized to place orders up to $10 000 but would have to get the owner's approval for anything larger.On January 17,she placed an order for $13 672 without getting approval.Will the vendor be able to enforce this contract?

Accepted Answer

A) No,he won't,since this size of order would be expected in the trade. 
B) Yes,he will,because the customer was clearly informed of the limitation. 
C) Yes,he will,since it is within actual authority. 
D) No,he won't,because they did not check to see if Ingrid had approval. 
E) Yes,he will,since they had no reason to believe that Ingrid did not have the authority. 
A) No,he won't,since this size of order would be expected in the trade. 
B) Yes,he will,because the customer was clearly informed of the limitation. 
C) Yes,he will,since it is within actual authority. 
D) No,he won't,because they did not check to see if Ingrid had approval. 
E) Yes,he will,since they had no reason to believe that Ingrid did not have the authority.

Exam 17: Agency and Franchising

Name five occasions in the absence of an employment relationship when an agent's authority may be terminated.

An agent will be liable for breach of warranty of authority if

For "selling-off-price-list," Vera was terminated from her position as sales rep for the Crouger Co.Two months after the termination,Vera is still sending in orders from her former customers.This raises the issue of

Does the franchisor have a fiduciary duty towards the franchisee? How about the other way around?

John,while acting as Henry's sales agent,negligently drives his car into the wall of Alice's house.In this situation

If conflicts arise with the agent's own interests or with the interests of those with whom he or she is connected,disclosure to all persons affected is unnecessary.

David,the owner of BayView Reality Inc. ,decided to buy one of his own firm's listings for investment purposes.The principal (owner of the property)refused to pay any commissions or reduce the price on this transaction.Can this impasse be legally resolved?

Ratification of a contract by a principal serves to terminate the contract with a third party made by the principal's agent.

Where a person who is really acting as agent for another does not tell this to a third party and enters into a contract with the third party,the third party

Charlie owns a small parcel of land in Toronto.He wants his sister,who lives within a short distance of the land,to sell the parcel for him.In order for his sister to be able to sign all the real estate documents,Charlie needs to authorize

Ingrid was the purchasing agent for Fashion Boutique Inc.She was authorized to place orders up to $10 000 but would have to get the owner's approval for anything larger.On January 17,she placed an order for $13 672 without getting approval.Will the vendor be able to enforce this contract?

Law, society, and Business

The Machinery of Justice

Government Regulation of Business

The Law of Torts

Professional Liability: the Legal Challenges

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration and Intention

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

Writing and Interpretation

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

Breach of Contract and Its Remedies

Sale of Goods and Consumer Contracts

Bailment and Leasing

Insurance and Guarantee

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

Corporate Governance: the Internal Affairs of Corporations

Corporate Governance: External Responsibilities

Secured Transactions

Creditors Rights

International Business Transactions

Electronic Commerce

Privacy

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