Question 1

A power of attorney is an example of a(n)________ agreement.

Accepted Answer

A) agency by ratification 
B) apparent agency 
C) express agency 
D) implied agency 
A) agency by ratification 
B) apparent agency 
C) express agency 
D) implied agency C

Question 2

Which of the following qualifies as the termination of an agency by impossibility of performance?

Accepted Answer

A) the loss of a required qualification 
B) the bankruptcy of the principal 
C) the insanity of either the principal or the agent 
D) the conviction of either the principal or the agent 
A) the loss of a required qualification 
B) the bankruptcy of the principal 
C) the insanity of either the principal or the agent 
D) the conviction of either the principal or the agent A

Question 3

A principal who signs a contract with a third-party is obligated to perform that contract.

Accepted Answer

A) True 
 B)False  True

Question 4

A durable power of attorney remains effective even if the principal is incapacitated.

Accepted Answer

A) True 
 B)False

Question 5

Ronald,the purchasing manager of Tellys Supermarket in Georgia,was asked to purchase an order of the latest videogame console,FunCase,to keep in the supermarket.However,due to a truckers' strike,he had to make a trip to the FunCase warehouse,which was in Florida.Ronald paid for the trip himself,went to the warehouse,procured the shipment,and returned.After he got back,Tellys Supermarket paid Ronald for the trip he made to Florida.What duty of the principal did Tellys Supermarket perform here when they paid Ronald for the trip to Florida?

Accepted Answer

A) duty to cooperate 
B) duty to reimburse 
C) duty to compensate 
D) duty to indemnify 
A) duty to cooperate 
B) duty to reimburse 
C) duty to compensate 
D) duty to indemnify

Question 6

An agency that occurs when a principal and an agent do not expressly create an agency but is inferred from the conduct of the parties is known as a(n)________.

Accepted Answer

A) apparent agency 
B) agency by ratification 
C) implied agency 
D) agency coupled with an interest 
A) apparent agency 
B) agency by ratification 
C) implied agency 
D) agency coupled with an interest

Question 7

The termination of an agency contract in violation of the terms of the agency contract is referred to as ________.

Accepted Answer

A) termination by an unusual change in circumstances 
B) termination by impossibility of performance 
C) terminated by operation of law 
D) wrongful termination 
A) termination by an unusual change in circumstances 
B) termination by impossibility of performance 
C) terminated by operation of law 
D) wrongful termination

Question 8

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and instructs him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes its work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.What role does ReNowait Goodhouses perform?

Accepted Answer

A) agent 
B) independent contractor 
C) principal 
D) trustee 
A) agent 
B) independent contractor 
C) principal 
D) trustee

Question 9

Matthew employs a real estate agent to sell his house for $10 million.The agent later learns that the house is rumored to be haunted and that brings down the value of the house to about $5 million.The agency terminates because of ________.

Accepted Answer

A) an unusual change in circumstances 
B) impossibility of performance 
C) operation of law 
D) act of the parties 
A) an unusual change in circumstances 
B) impossibility of performance 
C) operation of law 
D) act of the parties

Question 10

A principal owes a duty to indemnify an agent for any losses the agent suffers because of the principal's conduct.

Accepted Answer

A) True 
 B)False

Question 11

Who is an independent contractor?

Accepted Answer

Principals often employ outsiders,person

Question 12

Martin,who wants to sell a house he owns,authorizes his concierge,Wilhelm,to find a potential buyer,and finalize a deal above a stipulated price.Wilhelm contracts Chris,a real estate broker,and instructs him to only find a potential buyer and send them over to Wilhelm for the sale.Martin then contracts ReNowait Goodhouses,a home improvement company to renovate the house.ReNowait completes its work and Martin pays them.Chris then searches for a suitable buyer and finds one in George.George buys the house and Chris is paid for his services.What sort of commercial relationship exists between Martin and Wilhelm?

Accepted Answer

A) employer-employee relationship 
B) agent-agent relationship 
C) agent-independent contractor relationship 
D) principal-agent relationship 
A) employer-employee relationship 
B) agent-agent relationship 
C) agent-independent contractor relationship 
D) principal-agent relationship

Question 13

Which of the following is true of a direct notice of termination?

Accepted Answer

A) It is only applicable in employer-employee relationships. 
B) It is given to all persons with whom an agent dealt. 
C) It can only be given orally. 
D) It is only executed after the death of either the agent or the principal. 
A) It is only applicable in employer-employee relationships. 
B) It is given to all persons with whom an agent dealt. 
C) It can only be given orally. 
D) It is only executed after the death of either the agent or the principal.

Question 14

Frank Hannigan sees a grand piano that his musician friend Scott Kristoff had been looking for in an antique store.Frank enters into a contract to purchase the grand piano from the antique seller and signs the contract,"Frank Hannigan,agent for Scott Kristoff." But because Frank is not Scott's agent,Scott is not bound by the contract.If Scott decides to accept the contract,what kind of agency would be created?

Accepted Answer

A) express agency 
B) implied agency 
C) agency by ratification 
D) power of attorney 
A) express agency 
B) implied agency 
C) agency by ratification 
D) power of attorney

Question 15

An agency by ratification occurs when a principal ratifies an authorized act.

Accepted Answer

A) True 
 B)False

Question 16

What is an agent's duty to account?

Accepted Answer

Unless otherwise agreed,an agent owes a

Question 17

An agent who has negligently or intentionally failed to perform his express duties is liable under tort law.

Accepted Answer

A) True 
 B)False

Question 18

A party who employs another person to act on his or her behalf is known as a(n)________.

Accepted Answer

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

Question 19

A principal can authorize an independent contractor to enter into contracts.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of a general power of attorney?

Accepted Answer

A) A power of attorney can be oral. 
B) Only lawyers can be agents of a power of attorney. 
C) A power of attorney cannot be claimed once the principal is incapacitated. 
D) It may allow the agent to sign legal documents on the principal's behalf. 
A) A power of attorney can be oral. 
B) Only lawyers can be agents of a power of attorney. 
C) A power of attorney cannot be claimed once the principal is incapacitated. 
D) It may allow the agent to sign legal documents on the principal's behalf.

Exam 29: Agency Formation and Termination

A power of attorney is an example of a(n)________ agreement.

Which of the following qualifies as the termination of an agency by impossibility of performance?

A principal who signs a contract with a third-party is obligated to perform that contract.

A durable power of attorney remains effective even if the principal is incapacitated.

An agency that occurs when a principal and an agent do not expressly create an agency but is inferred from the conduct of the parties is known as a(n)________.

The termination of an agency contract in violation of the terms of the agency contract is referred to as ________.

Matthew employs a real estate agent to sell his house for $10 million.The agent later learns that the house is rumored to be haunted and that brings down the value of the house to about $5 million.The agency terminates because of ________.

A principal owes a duty to indemnify an agent for any losses the agent suffers because of the principal's conduct.

Who is an independent contractor?

Which of the following is true of a direct notice of termination?

An agency by ratification occurs when a principal ratifies an authorized act.

What is an agent's duty to account?

An agent who has negligently or intentionally failed to perform his express duties is liable under tort law.

A party who employs another person to act on his or her behalf is known as a(n)________.

A principal can authorize an independent contractor to enter into contracts.

Which of the following is true of a general power of attorney?

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