Question 1

Someone authorized to act on behalf of another is generally known as a(n):

Accepted Answer

A)  agent 
B)  independent contractor 
C)  employee 
D)  surety 
A)  agent 
B)  independent contractor 
C)  employee 
D)  surety

Question 2

Jeff hires Frank to work for his company.As part of his job duties,Frank must negotiate a contract with another an outside company.In this business relationship,what are the respective roles of the parties?

Accepted Answer

A)  Jeff is the agent,Frank is the principal,and the outside company is a third-party. 
B)  Frank is the principal,Jeff is the agent,and the outside company is a third-party. 
C)  Jeff is the principal,Frank is the agent,and the outside company is a third-party. 
D)  The outside company is the principal,Jeff is the agent,and Frank is a third-party. 
A)  Jeff is the agent,Frank is the principal,and the outside company is a third-party. 
B)  Frank is the principal,Jeff is the agent,and the outside company is a third-party. 
C)  Jeff is the principal,Frank is the agent,and the outside company is a third-party. 
D)  The outside company is the principal,Jeff is the agent,and Frank is a third-party.

Question 3

Where the principal makes representations to a third party about the role that an agent is to play,which kind of authority can be created?

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 4

What is the significance of an agency coupled with an interest?

Accepted Answer

A)  Only apparent authority can exist. 
B)  The agency cannot be terminated unilaterally by the principal. 
C)  The agent must be compensated for the agent's efforts. 
D)  The agency cannot be terminated by agreement of the principal and agent. 
E)  Both B and D are true. 
A)  Only apparent authority can exist. 
B)  The agency cannot be terminated unilaterally by the principal. 
C)  The agent must be compensated for the agent's efforts. 
D)  The agency cannot be terminated by agreement of the principal and agent. 
E)  Both B and D are true.

Question 5

Implied authority can be best described as a situation where:

Accepted Answer

A)  the principal and agent undertake actions in accordance with their earlier agreement that one act as agent for the other 
B)  the principal has made representations to a third party that someone is to act as her agent 
C)  the agent has made representations to a third party that he is acting as an agent for another 
D)  the conduct of two parties indicates that they are acting in a principal and agent capacity 
E)  both B and C 
A)  the principal and agent undertake actions in accordance with their earlier agreement that one act as agent for the other 
B)  the principal has made representations to a third party that someone is to act as her agent 
C)  the agent has made representations to a third party that he is acting as an agent for another 
D)  the conduct of two parties indicates that they are acting in a principal and agent capacity 
E)  both B and C

Question 6

An agency coupled with an interest is terminated by the death or incapacity of either the principal or the agent.

Accepted Answer

A) True 
 B)False

Question 7

Agency is a fiduciary relationship.

Accepted Answer

A) True 
 B)False

Question 8

The death of which party or parties will cause an agency to terminate?

Accepted Answer

A)  the principal only 
B)  the agent only 
C)  either the principal or the agent 
D)  neither the principal nor the agent 
A)  the principal only 
B)  the agent only 
C)  either the principal or the agent 
D)  neither the principal nor the agent

Question 9

Pam and Alex enter into a contract for an agency agreement that states that Alex is Pam's agent to sell Pam's house.The term of the agency is from January 1 to April 1,2002.Which is true as of February 29,2002?

Accepted Answer

A)  Neither Pam nor Alex has the power to end this agency. 
B)  Both Pam and Alex have the power to end this agency. 
C)  Pam has both the right and power to end this agency; Alex has neither. 
D)  Alex has both the right and power to end this agency; Pam has neither. 
A)  Neither Pam nor Alex has the power to end this agency. 
B)  Both Pam and Alex have the power to end this agency. 
C)  Pam has both the right and power to end this agency; Alex has neither. 
D)  Alex has both the right and power to end this agency; Pam has neither.

Question 10

Even if an employee cannot enter into contracts,a principal-agent relationship is formed by virtue of the employment relationship itself.

Accepted Answer

A) True 
 B)False

Question 11

The primary function of an agent in a principal-agent relationship is to:

Accepted Answer

A)  protect the principal from legal liability 
B)  conduct business on behalf of the principal 
C)  enter into contracts with the principal 
D)  operate as a partner with the principal 
E)  maintain the principal's status quo 
A)  protect the principal from legal liability 
B)  conduct business on behalf of the principal 
C)  enter into contracts with the principal 
D)  operate as a partner with the principal 
E)  maintain the principal's status quo

Question 12

Which of the following is true?

Accepted Answer

A)  All employees are agents,and no independent contractors are agents. 
B)  All employees are agents,and some independent contractors are agents. 
C)  Some employees are agents,and some independent contractors are agents. 
D)  Some employees are agents,and no independent contractors are agents. 
E)  No employees are agents,and no independent contractors are agents. 
A)  All employees are agents,and no independent contractors are agents. 
B)  All employees are agents,and some independent contractors are agents. 
C)  Some employees are agents,and some independent contractors are agents. 
D)  Some employees are agents,and no independent contractors are agents. 
E)  No employees are agents,and no independent contractors are agents.

Question 13

An agency is not terminated by the loss of a required qualification.

Accepted Answer

A) True 
 B)False

Question 14

In an agency for a fixed term,such as 1 year,prior to the end of the stated period,the agent has:

Accepted Answer

A)  the power,but not the right,to terminate the arrangement 
B)  the right,but not the power,to terminate the arrangement 
C)  both the power and the right to terminate the arrangement 
D)  neither the power nor the right to terminate the arrangement 
A)  the power,but not the right,to terminate the arrangement 
B)  the right,but not the power,to terminate the arrangement 
C)  both the power and the right to terminate the arrangement 
D)  neither the power nor the right to terminate the arrangement

Question 15

Ann has contracted to be Paul's agent for the sale of Paul's home.The contract provides that the duration of this agency is 120 days.Within the first week,Ann has found a potential buyer and is involved in negotiations.The following week,Paul notifies Ann that he is terminating the arrangement,but Ann proceeds to negotiate a sale with the potential buyer.Discuss this situation.

Accepted Answer

Paul had the power to terminate the agen

Question 16

The general reference source for agency law is:

Accepted Answer

A)  Article 4 of the Uniform Commercial Code 
B)  United States Supreme Court opinions 
C)  the Restatement (Second) of Agency 
D)  the Restatement (Second) of Contracts 
E)  state constitutions 
A)  Article 4 of the Uniform Commercial Code 
B)  United States Supreme Court opinions 
C)  the Restatement (Second) of Agency 
D)  the Restatement (Second) of Contracts 
E)  state constitutions

Question 17

An agent assumes the financial responsibility for all expenses within the scope of the agency.

Accepted Answer

A) True 
 B)False

Question 18

Ms.Principal and Mr.Agent sign an agency contract under which Agent will sell Principal's house for a fee of $10,000.Assume that the contract is valid in all respects and that on the third day of the contract period,Ms.Principal tells Mr.Agent that she has changed her mind and doesn't want him to sell the house.The next day Mr.Agent goes to Ms.Principal with a ready,willing,and able buyer.Ms.Principal:

Accepted Answer

A)  must sell to the buyer because the agency is still in existence 
B)  cannot sell to the buyer because the agency is no longer in existence 
C)  can recover damages from Mr. Agent because the agency had ended 
D)  is not obligated to sell to the buyer because her renunciation had terminated the agency arrangement 
E)  may sell to the buyer even though the agency arrangement was no longer in existence 
A)  must sell to the buyer because the agency is still in existence 
B)  cannot sell to the buyer because the agency is no longer in existence 
C)  can recover damages from Mr. Agent because the agency had ended 
D)  is not obligated to sell to the buyer because her renunciation had terminated the agency arrangement 
E)  may sell to the buyer even though the agency arrangement was no longer in existence

Question 19

Principal has entered into a 6-month contract during which Agent will sell Principal's products on a commission basis.Although Agent is complying with all terms of the agreement,during the third month Principal tells Agent she is no longer going to sell his products and will receive no further commissions if she does.Which of the following is true?

Accepted Answer

A)  Agent continues to have a duty to sell because the 6 months are not yet over. 
B)  Principal has the power,but not the right,to terminate the agency. 
C)  Principal has the right,but not the power,to terminate the agency. 
D)  Principal has both the right and the power to terminate the agency. 
E)  Principal has neither the right nor the power to terminate the agency. 
A)  Agent continues to have a duty to sell because the 6 months are not yet over. 
B)  Principal has the power,but not the right,to terminate the agency. 
C)  Principal has the right,but not the power,to terminate the agency. 
D)  Principal has both the right and the power to terminate the agency. 
E)  Principal has neither the right nor the power to terminate the agency.

Question 20

An agency arrangement can be terminated by:

Accepted Answer

A)  achievement of the agency's purpose 
B)  mutual agreement 
C)  occurrence of a specified event 
D)  both A and B 
E)  A,B,and C 
A)  achievement of the agency's purpose 
B)  mutual agreement 
C)  occurrence of a specified event 
D)  both A and B 
E)  A,B,and C

Exam 29: Agency Formation and Termination

Someone authorized to act on behalf of another is generally known as a(n):

Jeff hires Frank to work for his company.As part of his job duties,Frank must negotiate a contract with another an outside company.In this business relationship,what are the respective roles of the parties?

Where the principal makes representations to a third party about the role that an agent is to play,which kind of authority can be created?

What is the significance of an agency coupled with an interest?

Implied authority can be best described as a situation where:

An agency coupled with an interest is terminated by the death or incapacity of either the principal or the agent.

Agency is a fiduciary relationship.

The death of which party or parties will cause an agency to terminate?

Pam and Alex enter into a contract for an agency agreement that states that Alex is Pam's agent to sell Pam's house.The term of the agency is from January 1 to April 1,2002.Which is true as of February 29,2002?

Even if an employee cannot enter into contracts,a principal-agent relationship is formed by virtue of the employment relationship itself.

The primary function of an agent in a principal-agent relationship is to:

Which of the following is true?

An agency is not terminated by the loss of a required qualification.

In an agency for a fixed term,such as 1 year,prior to the end of the stated period,the agent has:

The general reference source for agency law is:

An agent assumes the financial responsibility for all expenses within the scope of the agency.

An agency arrangement can be terminated by:

Legal Heritage and the Information Age

Court Systems and Jurisdiction

Judicial, Alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Strict Liability and Product Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Internet Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Sales and Lease Warranties

Creation of Negotiable Instruments

Transferability and Holder In Due Course

Liability,Defenses and Discharge

Checks, the Banking System, and E-Money

Creditor's and Debtor's Rights

Secured Transactions and Electronic Filing

Bankruptcy and Reorganization

Liability of Principals, Agents, and Independent Contractors

Employment,Worker Protection,and Immigration Laws

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Businesses, Entrepreneurs, and General Partnerships

Limited Partnerships and Limited Liability Limited Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Business

Investor Protection and Online Securities Transactions

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection and Global Warming

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord Tenant Law and Land Use Regulation

Insurance

Accountants' Liability

Wills, Trusts, and Elder Law

Family Law

International and World Trade Law

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