Exam 27: Agency Relationships in Business

If an agent has represented himself or herself as possessing special skills, the agent is expected to use them.

A principal who creates an exclusive agency and then competes with the agent can be held liable for the agent's lost profits or sales.

Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is

Any person can be an agent, regardless of whether he or she has the capacity to contract.

Once the agency relationship between a principal and an agent has ended, the agent loses the right to bind the principal.

Using an agent provides benefits to a principal, but can also result in liability imposed on the principal.

Fara hires Gil, a real estate broker, to act as her agent to sell her land for $150,000. Before the land is sold at the stated price, oil is discovered beneath it, causing its market value to increase considerably. The agreement between Fara and Gil is likely

Bey indicates that he is acting as an agent on behalf of an unidentified client-Cuisine LLC-when he enters into a contract with Diners Bistro. Cuisine is

Both parties to an agency relationship have the power and the right to terminate the relationship at any time.

When an agent, acting within the scope of his or her authority, contracts with a third party, a disclosed principal is liable to the third party.

Gary drives a truck as an employee for Hauling Inc. Gary would most likely be considered acting outside the scope of her employment if he

The greater the employer's control over the work, the more likely it is that the worker is an employee.

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

The duties that an agent owes a principal must be set forth in the agency agreement because they do not arise by operation of law.

Emmett, an agent for Fridley, signs an agreement with Glover on Fridley's behalf but neglects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is

Bern, a salesperson at a Carpet & Tile store, tells Dan, a customer, "Buy your flooring here, and I'll install it for less than the store would charge." Dan buys carpeting, which Bern installs for half the store's price. Bern keeps the money. With respect to the store, Bern has breached

An undisclosed principal is one whose identity is totally unknown by an agent and a third party at the time a contract is made.

Jon contracts with Kino to buy a certain number of sheep for Kino's Animal Farm. Jon makes a deal with Lila for the sheep, but neither Jon nor Kino pays the price. Lila sues Jon for breach. Jon's right to hold Kino liable for any damages is the right to

In some situations, the courts find an agency relationship where there is no formal agreement.

By using agents, a principal can conduct multiple business operations simultaneously in various locations.