Question 1

An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.

Accepted Answer

A) True 
 B)False

Question 2

__________ liable on contracts with third persons.

Accepted Answer

A)  Agents may intentionally make themselves 
B)  Agents are never able to make themselves 
C)  Agents are always 
D)  Principals are rarely 
A)  Agents may intentionally make themselves 
B)  Agents are never able to make themselves 
C)  Agents are always 
D)  Principals are rarely

Question 3

An agent should never sign a contract using "by" or "per" and then his or her name.

Accepted Answer

A) True 
 B)False

Question 4

In which of the following scenarios is the agent exposed to the greatest risk of liability?

Accepted Answer

A)  disclosed principal and authorized contract 
B)  undisclosed principal and authorized contract 
C)  partially disclosed principal and authorized contract 
D)  authorized receipt of money from third person remitted to disclosed principal 
A)  disclosed principal and authorized contract 
B)  undisclosed principal and authorized contract 
C)  partially disclosed principal and authorized contract 
D)  authorized receipt of money from third person remitted to disclosed principal

Question 5

If a contract is ambiguous regarding whether the agent has signed in a representative or an individual capacity:

Accepted Answer

A)  there is a presumption that the agent signed in a representative capacity. 
B)  there is a presumption that the agent signed in an individual capacity. 
C)  the agent and the principal will both be liable on the contract. 
D)  parol evidence is admissible to establish the character in which the agent was acting. 
A)  there is a presumption that the agent signed in a representative capacity. 
B)  there is a presumption that the agent signed in an individual capacity. 
C)  the agent and the principal will both be liable on the contract. 
D)  parol evidence is admissible to establish the character in which the agent was acting.

Question 6

John Smyth is an agent for L. T. Adams. To avoid becoming a party to any contract that Smyth signs for Adams, Smyth should sign in which of the following ways?

Accepted Answer

A)  John Smyth, agent 
B)  John Smyth, for the principal 
C)  John Smith, as agent for the principal 
D)  L. T. Adams, per John Smyth 
A)  John Smyth, agent 
B)  John Smyth, for the principal 
C)  John Smith, as agent for the principal 
D)  L. T. Adams, per John Smyth

Question 7

An agent who commits a crime is:

Accepted Answer

A)  always liable. 
B)  only liable if acting in self-interest. 
C)  only liable if the act is done to advance the interest of the principal. 
D)  never liable when acting in the role of an agent. 
A)  always liable. 
B)  only liable if acting in self-interest. 
C)  only liable if the act is done to advance the interest of the principal. 
D)  never liable when acting in the role of an agent.

Question 8

Sid worked as the agent of Rosemary. Rosemary was in the business of buying antique clocks and selling them to the public. She became so successful at this that people began to become reluctant to sell to her, feeling that if she was buying the clock, it probably could be sold for more. Rosemary instructed Sid to purchase several clocks but not to reveal that the purchases were being made on her behalf. Sid contracted to buy several clocks and gave his own check as down payment to keep Rosemary's identity concealed. Although Rosemary had authorized the contracts, she reneged on the contracts. Sid thereupon told the seller what had happened and stopped payment on the down payment check. The seller of the clocks sued Rosemary on the bounced check and for breach of contract. Sid was sued on the same causes of action. Decide all cases.

Accepted Answer

Sid is liable on both causes of action.

Question 9

A customer who has given a purchase order to a salesperson is not bound by any contract until the employer of the salesperson accepts the order.

Accepted Answer

A) True 
 B)False

Question 10

When a third person makes payment to an authorized agent, such payment is deemed made to the principal at the time the agent remits the payment to the principal.

Accepted Answer

A) True 
 B)False

Question 11

When an agent who lacks a principal's authority executes a contract with a third party, the contract: ______.

Accepted Answer

A)  binds the principal but not the agent. 
B)  binds both the principal and the agent. 
C)  does not bind the principal. 
D)  binds the third party only. 
A)  binds the principal but not the agent. 
B)  binds both the principal and the agent. 
C)  does not bind the principal. 
D)  binds the third party only.

Question 12

If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss.

Accepted Answer

A) True 
 B)False

Question 13

An agent is considered a party to a contract when the principal is partially disclosed.

Accepted Answer

A) True 
 B)False

Exam 37: Third Persons in Agency

An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.

__________ liable on contracts with third persons.

An agent should never sign a contract using "by" or "per" and then his or her name.

In which of the following scenarios is the agent exposed to the greatest risk of liability?

If a contract is ambiguous regarding whether the agent has signed in a representative or an individual capacity:

John Smyth is an agent for L. T. Adams. To avoid becoming a party to any contract that Smyth signs for Adams, Smyth should sign in which of the following ways?

An agent who commits a crime is:

A customer who has given a purchase order to a salesperson is not bound by any contract until the employer of the salesperson accepts the order.

When a third person makes payment to an authorized agent, such payment is deemed made to the principal at the time the agent remits the payment to the principal.

When an agent who lacks a principal's authority executes a contract with a third party, the contract: ______.

If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss.

An agent is considered a party to a contract when the principal is partially disclosed.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

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