Exam 29: Agency Formation and Termination

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter in to contracts on his or her behalf?

Canton has listed his house for sale but cannot be present for the sale because he needs to go out of town.He intends to give his brother Stratham the power of attorney to just make decisions regarding the selling of his house while he is gone.What kind of power of attorney should Canton execute?

The outbreak of a war between the principal's country and the agent's country may be grounds for terminating an agency.

In a contingent fee contract,the principal must pay the agent prior to the completion of the agency.

Taylor gives a power of attorney to his twin brother Corey,permitting Corey to make all decisions on his behalf while he is abroad.Per the terms of the power of attorney,Corey is allowed make decisions to buy or sell stocks on Taylor's behalf,sell Taylor's real estate if he deems it to be in Taylor's best interest,pursue or defend lawsuits on Taylor's behalf,and make all other relevant decisions for Taylor.What kind of power of attorney would confer such powers to Corey?

How can a principal extinguish an agent's apparent authority?

The ________ includes keeping records of all property and money received and expended during the course of an agency.

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.Who performs the role of the agent in this land sale transaction?

The bankruptcy of a principal is not a valid reason to terminate an agency.

Which of the following is true of an apparent agency?

An express agency agreement that is often used to give an agent the control to sign legal documents on behalf of the principal is known as a(n)________.

Greg,who wants to sell a car he owns,authorizes his concierge,Walter,to find a potential buyer,and finalize a deal above a stipulated price.Walter contracts Jacob,an independent car sales broker,and instructs him to only find a potential buyer and send them over to Walter for the sale.Greg then contracts CarWreckers,an automobile modification company to renovate his car.CarWreckers completes its work and Greg pays them.Jacob then searches for a suitable buyer and finds one in Carl.Carl buys the car and Jacob is paid for his services.Who is the principal during the car sale transaction?

A principal works on behalf of an agent.

The legal rule of imputed knowledge means that the principal is assumed to know what the agent knows.

Ashley owns a piece of vacant real estate through which a small river runs.Ashley hires Warren,a licensed real estate broker,to list the property for sale and help sell the property.While inquiring in the neighborhood,Ashley's neighbor Lenny tells Warren that a chemical plant upstream has polluted his property and that Warren should have environmental engineers test Ashley's property as well.Warren does not tell Ashley about Lenny's suggestion.Warren manages to find a buyer for Ashley's property in Martha.It is later discovered that the property Martha bought from Ashley is polluted.What important agent's duty has Warren failed to perform?

A constructive trust helps the agent retain profits made during the completion of the agency.

Which of the following would lead to the termination of an agency by operation of law?

An agent given a power of attorney is known as an attorney-in-fact.

An employer-employee relationship exists when an employer gives an employee authority to act and enter into contracts on his or her behalf.

An agency that occurs when a principal and an agent categorically agree to enter into an agency agreement with each other is known as a(n)________.