Question 1

A principal must compensate an agent at the completion of the agency or some other agreed upon time.

Accepted Answer

A) True 
 B)False

Question 2

Compared to an employee,an independent contractor is characterized by:

Accepted Answer

A)  not being paid as much for the work performed 
B)  a lack of liability for her own actions 
C)  more freedom to do her work in the manner she determines 
D)  less ability to hire others to assist her 
A)  not being paid as much for the work performed 
B)  a lack of liability for her own actions 
C)  more freedom to do her work in the manner she determines 
D)  less ability to hire others to assist her

Question 3

When a principal hires another to kill someone,an agency is created.

Accepted Answer

A) True 
 B)False

Question 4

Any money or other benefit received by the agent in the course of the agency belongs to the agent.

Accepted Answer

A) True 
 B)False

Question 5

Bob,owner of a small business,goes to Sally to negotiate the purchase of some inventory.Bob has Paul with him,who he introduces to Sally as "Paul,my purchasing manager." A short while later,Bob says he must leave and says,"You two can conclude this deal." Paul signs a contract to buy 2,500 units of her product.Paul tells Bob,and Bob then says,"You know you weren't supposed to buy more than 1,000 units!" Assume that Bob,in fact,had instructed Paul,prior to meeting with Sally,not to buy more than 1,000 units.Can Sally hold Bob to the contract?

Accepted Answer

A)  No,because Paul did not have authority to buy 2,500 units. 
B)  No,but she can hold him to a purchase of 1,000 units. 
C)  Yes,because there was implied authority for the transaction. 
D)  Yes,because there was apparent authority for the transaction. 
A)  No,because Paul did not have authority to buy 2,500 units. 
B)  No,but she can hold him to a purchase of 1,000 units. 
C)  Yes,because there was implied authority for the transaction. 
D)  Yes,because there was apparent authority for the transaction.

Question 6

An agency may be created even if a person misrepresents himself or herself as being another's agent when he or she really is not if the purported principal accepts the unauthorized act.

Accepted Answer

A) True 
 B)False

Question 7

In an express agency called a power of attorney,the principal is the attorney-in-fact.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true about determining whether someone working for another is an independent contractor or an employee?

Accepted Answer

A)  The classification of the person doing the work depends on that person's job title. 
B)  The classification of the person doing the work depends on whether the parties to the arrangement consider the person doing the work to be an employee or independent contractor. 
C)  The classification of the person doing the work depends on if the person is also an agent. 
D)  The classification of the person doing the work depends on a number of factors,with no single factor being any more important than the others. 
E)  The classification of the person doing the work depends on a number of factors,with the degree of control over that person's work by the person who is paying for the work being the most important factor. 
A)  The classification of the person doing the work depends on that person's job title. 
B)  The classification of the person doing the work depends on whether the parties to the arrangement consider the person doing the work to be an employee or independent contractor. 
C)  The classification of the person doing the work depends on if the person is also an agent. 
D)  The classification of the person doing the work depends on a number of factors,with no single factor being any more important than the others. 
E)  The classification of the person doing the work depends on a number of factors,with the degree of control over that person's work by the person who is paying for the work being the most important factor.

Question 9

An express written agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal is know as a(n):

Accepted Answer

A)  exclusive agency contract 
B)  power of attorney 
C)  employer-employee relationship 
D)  employer-independent contractor relationship 
A)  exclusive agency contract 
B)  power of attorney 
C)  employer-employee relationship 
D)  employer-independent contractor relationship

Question 10

Which of the following is not one of the common types of agent authority?

Accepted Answer

A)  apparent 
B)  implied 
C)  actual 
D)  dependent 
E)  agency by ratification 
A)  apparent 
B)  implied 
C)  actual 
D)  dependent 
E)  agency by ratification

Question 11

An agent may continue to represent the principal even after the agency relationship is terminated.

Accepted Answer

A) True 
 B)False

Question 12

An agent who has negligently failed to perform as per the agency contract is liable only for breach of contract.

Accepted Answer

A) True 
 B)False

Question 13

A corporation must conduct all of its business affairs through agents.

Accepted Answer

A) True 
 B)False

Question 14

A principal gives an agent express authority to "get his car running right." The authority that the agent has to enter into contracts for the purchase of auto parts is:

Accepted Answer

A)  apparent authority 
B)  authority by estoppel 
C)  inherent authority 
D)  express authority 
E)  implied authority 
A)  apparent authority 
B)  authority by estoppel 
C)  inherent authority 
D)  express authority 
E)  implied authority

Question 15

The principal has the duty to cooperate with the agent in the performance of his or her duties.

Accepted Answer

A) True 
 B)False

Question 16

When an agent terminates an agency arrangement,the agent's action is called:

Accepted Answer

A)  revocation of authority 
B)  rejection of authority 
C)  renunciation of authority 
D)  reaffirmation of authority 
E)  reacquisition of authority 
A)  revocation of authority 
B)  rejection of authority 
C)  renunciation of authority 
D)  reaffirmation of authority 
E)  reacquisition of authority

Question 17

A person who is not an employee who is employed by a principal to perform a certain task on his behalf is an independent contractor.

Accepted Answer

A) True 
 B)False

Question 18

An agency always requires:

Accepted Answer

A)  both an agent and principal who are adults 
B)  a written contract 
C)  consideration on the part of both the principal and the agent 
D)  an identified underlying transaction 
E)  intent by both the principal and agent to be in the arrangement 
A)  both an agent and principal who are adults 
B)  a written contract 
C)  consideration on the part of both the principal and the agent 
D)  an identified underlying transaction 
E)  intent by both the principal and agent to be in the arrangement

Question 19

Susan Marie works as a receptionist for a computer software company.Susan Marie works from 8 a.m.to 5 p.m.on Monday through Thursday,and from 8 a.m.to noon on Friday.Susan Marie is paid $15 per hour,and is told how to do her job and what she should be working on at any particular time.The software company and Susan Marie have executed an "independent contractor agreement" in which the terms of this arrangement are specified.Which of the following is true?

Accepted Answer

A)  Susan Marie would be treated as an employee because she is paid for the work that she does. 
B)  Susan Marie would be treated as an employee because of the control exercised by the software company over her work and because of the manner in which she is paid. 
C)  Susan Marie would be treated as an independent contractor because of the terms of the express agreement with the software firm. 
D)  Susan Marie would be treated as an independent contractor because of the irregular working hours of working only part of the day on Fridays. 
A)  Susan Marie would be treated as an employee because she is paid for the work that she does. 
B)  Susan Marie would be treated as an employee because of the control exercised by the software company over her work and because of the manner in which she is paid. 
C)  Susan Marie would be treated as an independent contractor because of the terms of the express agreement with the software firm. 
D)  Susan Marie would be treated as an independent contractor because of the irregular working hours of working only part of the day on Fridays.

Question 20

A principal and agent enter into an agency agreement under which the agent has a fixed 90-day period to sell the principal's house.Which of the following will end the agency arrangement prior to the end of the 90-day period?

Accepted Answer

A)  Notification by the principal that the arrangement is over. 
B)  Notification by the agent that the arrangement is over. 
C)  Notification by either the agent or the principal that the arrangement is over. 
D)  Neither the agent nor the principal can unilaterally end the arrangement prior to the expiration of the 90-day period. 
A)  Notification by the principal that the arrangement is over. 
B)  Notification by the agent that the arrangement is over. 
C)  Notification by either the agent or the principal that the arrangement is over. 
D)  Neither the agent nor the principal can unilaterally end the arrangement prior to the expiration of the 90-day period.

Exam 29: Agency Formation and Termination

A principal must compensate an agent at the completion of the agency or some other agreed upon time.

Compared to an employee,an independent contractor is characterized by:

When a principal hires another to kill someone,an agency is created.

Any money or other benefit received by the agent in the course of the agency belongs to the agent.

An agency may be created even if a person misrepresents himself or herself as being another's agent when he or she really is not if the purported principal accepts the unauthorized act.

In an express agency called a power of attorney,the principal is the attorney-in-fact.

Which of the following is true about determining whether someone working for another is an independent contractor or an employee?

An express written agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal is know as a(n):

Which of the following is not one of the common types of agent authority?

An agent may continue to represent the principal even after the agency relationship is terminated.

An agent who has negligently failed to perform as per the agency contract is liable only for breach of contract.

A corporation must conduct all of its business affairs through agents.

A principal gives an agent express authority to "get his car running right." The authority that the agent has to enter into contracts for the purchase of auto parts is:

The principal has the duty to cooperate with the agent in the performance of his or her duties.

When an agent terminates an agency arrangement,the agent's action is called:

A person who is not an employee who is employed by a principal to perform a certain task on his behalf is an independent contractor.

An agency always requires:

A principal and agent enter into an agency agreement under which the agent has a fixed 90-day period to sell the principal's house.Which of the following will end the agency arrangement prior to the end of the 90-day period?

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Title to Goods and Risk of Loss

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