Exam 32: Agency Formation and Duties

An agent acting within the scope of his or her authority to contract with a third party is not liable on the contract if the third party knows the principal's identity.

Farah 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 Farah and Gil is likely

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

A principal is liable only for harm resulting from his or her own negligence, and not in any situation that results in the agent's commission of a tort.

For every duty of an agent, the principal has a corresponding right, but not vice versa.

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

No breach of a fiduciary duty by an agent justifies a principal's termination of the agency.

Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely

Based on Kim's conduct, Lam reasonably believes that Minh has the authority to act on Kim's behalf, although Minh does not have such authority. A contract between Lam and Minh calls for performance by Kim, who refuses to comply. In this situation, Kim may

Lau, an agent for Mae, acts outside the scope of her authority, to enter into a contract on Mae's behalf. Mae approves of the deal and affirms the contract. This is

If a sales agent and principal disagree on the commissions the agent should have received over a certain period, the agent can demand an accounting.

When a third party sues a principal for an agent's negligence, the principal can sue the agent for an equal amount of damages.

Kit hires Lane to obtain insurance for Kit's business. Lane agrees to act on Kit's behalf in the effort, and Kit trusts Lane to so act. Their relationship is

There is no need to notify any third party in order to terminate an agent's apparent authority.

Orin works at Pumps Inc. He works in the company's engineering department, interacting with third parties only to discuss technical issues. With respect to third parties, Orin is

Beryl is a purchasing agent for Cable & Wire Corporation. Doyle, a Cable & Wire corporate officer, gives Beryl written authority to buy for the firm as much copper as necessary. The next day, Doyle calls Beryl and tells her to buy only a certain quantity of copper and no more. Beryl shows the written authority to Earth Resources Inc., and enters into a contract to buy more than the quantity specified by Doyle. Earth Resources ships the order to Cable & Wire. Is Cable & Wire liable to Earth Resources under the contract? Is Beryl liable? In each case, if so, why? If not, why not?

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

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

To cover potential liability for the conduct of an agent or employee, most employers

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