Question 1

The person appointing a representative in an agency relationship is known as the

Accepted Answer

A)  power of attorney. 
B)  principal. 
C)  administrator. 
D)  agent. 
E)  supervising director. 
A)  power of attorney. 
B)  principal. 
C)  administrator. 
D)  agent. 
E)  supervising director.

Question 2

A franchise agreement most likely gives the franchisee the right to

Accepted Answer

A)  use their own accounting, inventory control, and purchasing systems. 
B)  franchisee protection legislation. 
C)  demand direct financial assistance from the franchisor. 
D)  trademarks, trade names, and logos belonging to the franchisor. 
E)  locate and design their own business premises. 
A)  use their own accounting, inventory control, and purchasing systems. 
B)  franchisee protection legislation. 
C)  demand direct financial assistance from the franchisor. 
D)  trademarks, trade names, and logos belonging to the franchisor. 
E)  locate and design their own business premises.

Question 3

Courts consider an agent to be an employee of the principal.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not part of the duties of an agent to his principal?

Accepted Answer

A)  to obey the principal's instructions except where they conflict with the law 
B)  to see that "apparent" is the same as "actual" authority 
C)  to delegate agent duties when he is unable to perform himself 
D)  to place the interest of the principal above all else except the law 
E)  to use care, skill, competence, and diligence, at all times 
A)  to obey the principal's instructions except where they conflict with the law 
B)  to see that "apparent" is the same as "actual" authority 
C)  to delegate agent duties when he is unable to perform himself 
D)  to place the interest of the principal above all else except the law 
E)  to use care, skill, competence, and diligence, at all times

Question 5

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 b

Question 6

None of the contracts between the six independent manufacturer's agents and the ABC Company speak as to how the contracts can be terminated. All six agents have been doing a splendid job for several years in selling ABC's products. However last week, ABC's board of directors decided to turn the selling function over to the company's own employees. This is to be completed within the next 30 days. How can the company's agency contracts with the independent agents be legally terminated?

Accepted Answer

A)  By simply having the principal give notice that he wishes the relationship to come to an end; no other explanation is required. 
B)  No problem, since a reasonable time has passed for each agency contract. 
C)  Can be terminated by declaring the company's sales project to be at an end. 
D)  By failing to renew the contracts upon expiration. 
E)  Not possible, without a breach and the resulting severance damages. 
A)  By simply having the principal give notice that he wishes the relationship to come to an end; no other explanation is required. 
B)  No problem, since a reasonable time has passed for each agency contract. 
C)  Can be terminated by declaring the company's sales project to be at an end. 
D)  By failing to renew the contracts upon expiration. 
E)  Not possible, without a breach and the resulting severance damages.

Question 7

James was an ordinary salesman for Bulldog Electric Ltd., but his business card read "Territory Manager". He had no authority to sell his company's products for a reduced price, yet he told a potential customer, "I'll give you a 10% reduction if you place an order today". Legally speaking, will the customer be able to get the reduced price should he sign the contract?

Accepted Answer

A)  No, because James did not have actual authority. 
B)  Yes, because James had apparent authority. 
C)  Yes, since trade practice would establish the terms of sale. 
D)  No, since there had been no past dealings. 
E)  Yes, because the contract is already in existence. 
A)  No, because James did not have actual authority. 
B)  Yes, because James had apparent authority. 
C)  Yes, since trade practice would establish the terms of sale. 
D)  No, since there had been no past dealings. 
E)  Yes, because the contract is already in existence.

Question 8

The major difference between franchisee- franchisor relationship and the agent- principal relationship is that only

Accepted Answer

A)  franchisors give authorisation for entering into contracts. 
B)  franchisees contract with members of the public on their own behalf, not as agent for the franchisor. 
C)  principals employ the assistance of others in order to reach out to a wider public. 
D)  agents market the principal's products. 
E)  the franchise relationship permits a business to expand rapidly. 
A)  franchisors give authorisation for entering into contracts. 
B)  franchisees contract with members of the public on their own behalf, not as agent for the franchisor. 
C)  principals employ the assistance of others in order to reach out to a wider public. 
D)  agents market the principal's products. 
E)  the franchise relationship permits a business to expand rapidly.

Question 9

When an agent approaches a third party and forms a contract but fails to disclose his status,

Accepted Answer

A)  the agency relationship is terminated since the agent did not represent himself properly. 
B)  the third party's recourse is against the principal as he is liable for all actions of the agent. 
C)  the principal is the victim of misrepresentation by the agent and the third party. 
D)  the third party's recourse is only against the principal as he is liable for performance of the contract. 
E)  the third party can exercise the option of either holding the principal or the agent responsible for performance on the contract. 
A)  the agency relationship is terminated since the agent did not represent himself properly. 
B)  the third party's recourse is against the principal as he is liable for all actions of the agent. 
C)  the principal is the victim of misrepresentation by the agent and the third party. 
D)  the third party's recourse is only against the principal as he is liable for performance of the contract. 
E)  the third party can exercise the option of either holding the principal or the agent responsible for performance on the contract.

Question 10

In relation to each of the following statements, identify the way in which the agency relationship has been established.
a. X consigned his automobile to Z with instructions to sell same immediately. Z was a mercantile agent. Z used the vehicle as security for a loan from Y who knew nothing about X or his instructions to Z.
b. Z, a common carrier, transported perishable goods for X. The goods started to spoil and Z was unable to contact X who had left the country on an extended vacation. Z sold the goods to Y and received a reasonable price with regard to the condition of the goods.
c. X executes a power of attorney in favour of Z authorising Z to sell specific land described in the power of attorney.
d. X, without the authority of Z, sells certain of Z's furniture at a garage sale. Shortly after the sale Z learns of it and approves of X's actions.

Accepted Answer

In statement (a), the agency was created

Question 11

To date, the only province that has enacted legislation regarding franchises is Ontario.

Accepted Answer

A) True 
 B)False

Exam 19: Agency and Franchising

The person appointing a representative in an agency relationship is known as the

A franchise agreement most likely gives the franchisee the right to

Courts consider an agent to be an employee of the principal.

Which of the following is not part of the duties of an agent to his principal?

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

The major difference between franchisee- franchisor relationship and the agent- principal relationship is that only

When an agent approaches a third party and forms a contract but fails to disclose his status,

To date, the only province that has enacted legislation regarding franchises is Ontario.

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

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

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

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

The Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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