Question 1

What constitutes a 'secret commission' received by an agent? Outline any remedies available to the principal as a consequence of receiving a secret commission.

Accepted Answer

An agency relationship is normally a fiduciary relationship and as such one where the agent owes special duties to the principal.One of these is that the agent is only entitled to the agreed or customary commission as payment for services that have been performed,and to nothing else.All property and moneys received by the agent must be handed over to the principal,less incurred expenses,and deducting commission or remuneration if this is allowed under the contract.If the principal is aware of the agent being paid an additional commission by a third party and sanctions it,no offence arises.However,often the extra commission secretly earned by the agent is nothing less than a bribe,in which case the agent may face criminal law action by the police as well as civil action by the principal.
Under civil law the principal has a number of remedies available which include:
•Claiming the commission;
•Claiming the commission and cancelling the agency agreement;
•Cancelling the agency agreement;
•Recovering damages for any loss suffered from the agent or the party who has paid the bribe;or
•Recover the secret commission.
In addition to these civil remedies,secret commissions are also subject to both Commonwealth,State and Territory legislation,such as for example the Secret Commissions Act 1905 (Cth).

Question 2

Which of the following is an example of an agency created by ratification?

Accepted Answer

A) Adam is entrusted with Peter's property and finds it necessary to do something with it in order to preserve it. 
B) Peter retrospectively affirms the authority of Adam. 
C) Adam and Peter become partners in a partnership. 
D) Peter appoints Adam under a general power of attorney to carry out a particular transaction on his behalf. 
A) Adam is entrusted with Peter's property and finds it necessary to do something with it in order to preserve it. 
B) Peter retrospectively affirms the authority of Adam. 
C) Adam and Peter become partners in a partnership. 
D) Peter appoints Adam under a general power of attorney to carry out a particular transaction on his behalf. B

Question 3

Why was the firm held liable in the case of: Lloyd v Grace,Smith & Co [1912] AC 716?

Accepted Answer

A) The agent's acts were inside the scope of the agent's authority. 
B) The agent's acts were outside the scope of the agent's authority. 
C) The agent's acts were approved by the principal.D0 The agent's acts were for the benefit of the principal. 
A) The agent's acts were inside the scope of the agent's authority. 
B) The agent's acts were outside the scope of the agent's authority. 
C) The agent's acts were approved by the principal.D0 The agent's acts were for the benefit of the principal. A

Question 4

In which of the following circumstances will delegation of an agent's authority NOT be permitted?

Accepted Answer

A) Where the agent's duties are purely administrative. 
B) Where the agent determines that the delegation is in the best interests of the principal. 
C) Where the delegation arises out of necessity. 
D) Where the delegation is permitted by the principal either expressly or impliedly. 
A) Where the agent's duties are purely administrative. 
B) Where the agent determines that the delegation is in the best interests of the principal. 
C) Where the delegation arises out of necessity. 
D) Where the delegation is permitted by the principal either expressly or impliedly.

Question 5

Agency is a contractual relationship.

Accepted Answer

A) True 
 B)False

Question 6

The law presumes that a spouse has authority to obtain credit for necessaries suitable to their lifestyle.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of termination of an agency by operation of law?

Accepted Answer

A) Performance of the agent's task. 
B) Completion of a specific purpose or act. 
C) Revocation of the agent's authority. 
D) Acceptance of a secret commission by the agent. 
A) Performance of the agent's task. 
B) Completion of a specific purpose or act. 
C) Revocation of the agent's authority. 
D) Acceptance of a secret commission by the agent.

Question 8

Authority that is conferred by the principal either verbally or in writing is an example of:

Accepted Answer

A) implied actual authority. 
B) express actual authority. 
C) retrospective actual authority. 
D) apparent or ostensible authority. 
A) implied actual authority. 
B) express actual authority. 
C) retrospective actual authority. 
D) apparent or ostensible authority.

Question 9

When an agent negotiates a contract between a principal and a third party,the agent acquires no rights or duties under the contract.

Accepted Answer

A) True 
 B)False

Question 10

In what circumstances will Samson be an employer and David an independent contractor?

Accepted Answer

A) Samson is paying David to perform a task and David is subject to the control and direction of Samson. 
B) David has authority to bind Samson to a contract with a third party. 
C) Samson is paying David to perform a task but has no control over how David will complete the task. 
D) David is claiming to be Samson's legal representative. 
A) Samson is paying David to perform a task and David is subject to the control and direction of Samson. 
B) David has authority to bind Samson to a contract with a third party. 
C) Samson is paying David to perform a task but has no control over how David will complete the task. 
D) David is claiming to be Samson's legal representative.

Question 11

Which of the following is a right that an agent does NOT have without express or implied agreement to the contrary?

Accepted Answer

A) The right to be reimbursed for authorised expenses. 
B) The right to be remunerated. 
C) The right to retain possession of the principal's goods until the agent has been paid. 
D) The right to be indemnified against liabilities incurred while carrying out the principal's instructions. 
A) The right to be reimbursed for authorised expenses. 
B) The right to be remunerated. 
C) The right to retain possession of the principal's goods until the agent has been paid. 
D) The right to be indemnified against liabilities incurred while carrying out the principal's instructions.

Question 12

Which of the following best describes an agent's right to payment?

Accepted Answer

A) An agent may be entitled to payment as well as indemnity and reimbursement. 
B) An agent is never entitled to payment but will be entitled to either indemnity or reimbursement. 
C) An agent may be entitled to payment and either indemnity or reimbursement. 
D) An agent is never entitled to payment but will be entitled to indemnity and reimbursement. 
A) An agent may be entitled to payment as well as indemnity and reimbursement. 
B) An agent is never entitled to payment but will be entitled to either indemnity or reimbursement. 
C) An agent may be entitled to payment and either indemnity or reimbursement. 
D) An agent is never entitled to payment but will be entitled to indemnity and reimbursement.

Question 13

A del credere agent is a general agent who buys and sells without having possession or control of the goods or their documents.

Accepted Answer

A) True 
 B)False

Question 14

The parties may terminate an agency agreement by:

Accepted Answer

A) resignation by the agent. 
B) mutual agreement. 
C) revocation by the principal. 
D) all of the above. 
A) resignation by the agent. 
B) mutual agreement. 
C) revocation by the principal. 
D) all of the above.

Question 15

An agent must always act in person & never delegate.

Accepted Answer

A) True 
 B)False

Question 16

The decision in Australia and New Zealand Bank Ltd v Ateliers de Constructions [1967] 1 AC 86 was that the bank had authority to negotiate the cheques payable to Ateliers into the agent's account.This is an example of:

Accepted Answer

A) ostensible authority. 
B) express actual authority. 
C) implied actual authority. 
D) apparent authority. 
A) ostensible authority. 
B) express actual authority. 
C) implied actual authority. 
D) apparent authority.

Question 17

An agent who can make contracts of a class that are normal for this type of agency or do some act for the principal which is part of the agent's ordinary course of business is known as:

Accepted Answer

A) a 'special' or 'limited' agent. 
B) a 'universal' agent. 
C) an 'independent' agent. 
D) a 'general' agent. 
A) a 'special' or 'limited' agent. 
B) a 'universal' agent. 
C) an 'independent' agent. 
D) a 'general' agent.

Question 18

The notion of 'apparent authority' means that a principal may be liable for the acts of an agent who behaves contrary to the explicit instructions of the principal.Is this fair? Explain your answer.

Accepted Answer

The notion of 'apparent authority' is a

Question 19

The reason for the classification of agents is to determine the actual extent of an agent's authority.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT a condition that is needed in order to establish that a person has acted as an agent of necessity?

Accepted Answer

A) That there is a genuine emergency. 
B) That a formal written agency agreement exists. 
C) That the person is acting in the principal's best interests. 
D) That it is impossible to obtain the principal's instructions. 
A) That there is a genuine emergency. 
B) That a formal written agency agreement exists. 
C) That the person is acting in the principal's best interests. 
D) That it is impossible to obtain the principal's instructions.

Exam 18: Agency

What constitutes a 'secret commission' received by an agent? Outline any remedies available to the principal as a consequence of receiving a secret commission.

Which of the following is an example of an agency created by ratification?

Why was the firm held liable in the case of: Lloyd v Grace,Smith & Co [1912] AC 716?

In which of the following circumstances will delegation of an agent's authority NOT be permitted?

Agency is a contractual relationship.

The law presumes that a spouse has authority to obtain credit for necessaries suitable to their lifestyle.

Which of the following is an example of termination of an agency by operation of law?

Authority that is conferred by the principal either verbally or in writing is an example of:

When an agent negotiates a contract between a principal and a third party,the agent acquires no rights or duties under the contract.

In what circumstances will Samson be an employer and David an independent contractor?

Which of the following is a right that an agent does NOT have without express or implied agreement to the contrary?

Which of the following best describes an agent's right to payment?

A del credere agent is a general agent who buys and sells without having possession or control of the goods or their documents.

The parties may terminate an agency agreement by:

An agent must always act in person & never delegate.

The decision in Australia and New Zealand Bank Ltd v Ateliers de Constructions [1967] 1 AC 86 was that the bank had authority to negotiate the cheques payable to Ateliers into the agent's account.This is an example of:

An agent who can make contracts of a class that are normal for this type of agency or do some act for the principal which is part of the agent's ordinary course of business is known as:

The notion of 'apparent authority' means that a principal may be liable for the acts of an agent who behaves contrary to the explicit instructions of the principal.Is this fair? Explain your answer.

The reason for the classification of agents is to determine the actual extent of an agent's authority.

Which of the following is NOT a condition that is needed in order to establish that a person has acted as an agent of necessity?

Legal Foundations

Legal Systems

How Law Is Made: Precedentstatute Law

Civil Liability: the Law of Torts and Negligence

Applications of Negligence to Business

Introduction to Contracts

Agreement Between the Parties

Intention to Create Legal Relations

Consideration

Capacity of the Parties

Genuine Consent

Is the Contract Legal

Terms of the Contract

Rights and Liabilities of the Parties,discharge and Remedies

Remedies in Contract

Statutory Consumer Guarantees and the Australian Consumer Law

General and Specific Consumer Protections Under the Acl

Introduction to Companies and Incorporated Associations

Partnerships

Choosing a Business Entity

Other Business-Related Torts

Insurance

Sale of Goodsbusiness to Business

Property and Mortgages

Intellectual Property

Ethics and Business Practice

Criminal Law in a Business Context

Competition Law

Insolvency and Debt Recovery

The Work Environment and the Employment Relationship

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