Exam 27: Agency Relationships in Business

A principal may be liable for an agent's or an employee's tort, with the exception of negligence, which is an unintentional tort for which the agent or employee is vicariously liable.

Bread Company hires Craig to sell the company's products in a certain area. Bread agrees to pay Craig a salary, plus commission, for a trial period. They also agree that he can sell using any methods and during any hours that seem appropriate. The key factor in whether Craig is Bread's employee is

Lev, an agent for Mill Grains LLC, executes an unauthorized contract with National Grocers Inc. The deal is highly advantageous to Mill Grains, and the company ratifies the contract. The contract is

A truck driver who drives a company truck on a regular basis is most likely an employee.

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of

Clark hires Dell, a real estate broker, to sell his beach house. The house is destroyed in a storm before it can be sold. Dell is Clark's agent

Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on

A person who cannot legally enter into a certain contract directly can do so indirectly through an agent.

An agent must keep confidential any information acquired through an agency during the term of the relationship, but can disclose it after the agency ends.

Apparent authority in an agency relationship arises when the principal causes the agent to reasonably believe that he or she has the authority to act.

An agency relationship is based on the attributes of power, control, and financial self-interest-not the trust and confidence of a fiduciary relationship.

Actual authority in an agency relationship arises from what a principal makes clear to a third party.

An agency relationship can arise by ratification, which involves a determination of intent expressed by words or conduct.

Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand

Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached

Ingmar asks Jess to contract with Kay's Lawn Service to maintain Ingmar's lawn. Jess orally agrees to do so. This is an agency by

A gratuitous agent can be liable to a principal for breach of contract, even in the absence of a contract, but not liable for the negligent performance of the deal.

Agency relationships cannot exist outside an employment, so agency law has a narrower reach than employment law.

A property owner who hires a realtor to sell a property thereby enters into an agency relationship with an employee for a limited time.