Question 1

Geoff serves in a representative capacity for Huck.To accomplish the objectives of this relationship,Geoff's authority can be implied

Accepted Answer

A) by contradiction 
B) by custom. 
C) by lack of reason. 
D) under no circumstances. 
A) by contradiction 
B) by custom. 
C) by lack of reason. 
D) under no circumstances.

Question 2

If a principal does not ratify an unauthorized contract,the principal is not bound.

Accepted Answer

A) True 
 B)False

Question 3

Sonia manages a Tasty Pastry store for United Food Company.To manage the business,Sonia's authority can be implied by

Accepted Answer

A) an inference from the position Sonia occupies. 
B) any inference a reasonable customer or supplier would make. 
C) any inference Sonia chooses to make. 
D) no inference. 
A) an inference from the position Sonia occupies. 
B) any inference a reasonable customer or supplier would make. 
C) any inference Sonia chooses to make. 
D) no inference.

Question 4

An agency relationship may occur by operation of law in a family.

Accepted Answer

A) True 
 B)False

Question 5

If a principal does not ratify an authorized contract,the prin-cipal is not bound.

Accepted Answer

A) True 
 B)False

Question 6

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

Accepted Answer

A) True 
 B)False

Question 7

A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.

Accepted Answer

A) True 
 B)False

Question 8

Frida hires Gert,a real estate broker,to act as her agent to sell her house.The house burns down before being sold.The agency agreement is likely

Accepted Answer

A) still in force if Frida gives Gert additional consideration. 
B) still in force if Gert does not tell prospective customers. 
C) terminated by mutual consent of the parties. 
D) terminated by operation of law. 
A) still in force if Frida gives Gert additional consideration. 
B) still in force if Gert does not tell prospective customers. 
C) terminated by mutual consent of the parties. 
D) terminated by operation of law.

Question 9

Clara is a salesperson in The Corner Store.When Carla makes a sale to Jenny,the sale is

Accepted Answer

A) binding on The Corner Store. 
B) binding on Carla. 
C) binding on The Corner Store only if the owner of The Corner Store is present when the sale is made. 
D) not binding on anyone. 
A) binding on The Corner Store. 
B) binding on Carla. 
C) binding on The Corner Store only if the owner of The Corner Store is present when the sale is made. 
D) not binding on anyone.

Question 10

Sela agrees to act on Thom's behalf,subject to Thom's control,and Thom trusts Sela to so act.They set out the terms in a written document,which they both sign.This is

Accepted Answer

A) an agency by agreement. 
B) an agency by estoppel. 
C) anagency by ratification. 
D) not the creation of an agency relationship. 
A) an agency by agreement. 
B) an agency by estoppel. 
C) anagency by ratification. 
D) not the creation of an agency relationship.

Question 11

Rangle contracts with Siena to buy a certain horse for her.Rangle makes a deal with Timberline Stables,the owner of the horse,and makes a down payment.Siena fails to pay the rest of the price.Timberline sues Rangle for breach of contract.His right to hold Siena liable for any damages that he has to pay is the right of

Accepted Answer

A) avoidance. 
B) cooperation. 
C) indemnification. 
D) reimbursement. 
A) avoidance. 
B) cooperation. 
C) indemnification. 
D) reimbursement.

Question 12

Will is an agent for MaryElise.MaryElise gives Will clear instructions to only enter into contracts on Mondays,Wednesdays,or Fridays.Will enters into a contract on MaryElise's behalf on Tuesday.Will has breached

Accepted Answer

A) the duty of performance. 
B) the duty of loyalty. 
C) no duty. 
D) the duty of obedience. 
A) the duty of performance. 
B) the duty of loyalty. 
C) no duty. 
D) the duty of obedience.

Question 13

Picabo drives a truck as an employee for Quik Delivery,Inc.Picabo would most likely be considered acting outside the scope of her employment if she

Accepted Answer

A) crashed into a car at the airport while off duty. 
B) hit a pedestrian in a parking lot during a "working" lunch. 
C) ran over an attendant at Quik's gas station while refueling the truck. 
D) smashed into a store-front while intoxicated on-duty. 
A) crashed into a car at the airport while off duty. 
B) hit a pedestrian in a parking lot during a "working" lunch. 
C) ran over an attendant at Quik's gas station while refueling the truck. 
D) smashed into a store-front while intoxicated on-duty.

Question 14

Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber.In this relationship,Jackson Lumber is the

Accepted Answer

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

Question 15

An employer has no control over an employee's work.

Accepted Answer

A) True 
 B)False

Question 16

KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands.KupaJava agrees to pay Lola a salary,plus commission.KupaJava stipulates the standards that should be observed,the goals that should be attained,and the methods that should be used.Lola is most likely KupaJava's

Accepted Answer

A) employee. 
B) independent contractor. 
C) principal. 
D) power of attorney. 
A) employee. 
B) independent contractor. 
C) principal. 
D) power of attorney.

Question 17

Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building.Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials.Meanwhile,Principal hires Skye,a certified public accountant,to work in its cost-accounting division as an employee,with no authority to hire or supervise others.Skye asks Theo,an outside experienced accountant,to advise her on certain accounting procedures but fails to pay Theo for the service.Principal also contracts with Uma,a salesperson,to solicit orders for its products in a designated territory.Uma obtains an order from Verity Industries,Inc.,which is assured the order will be filled soon.But Uma does not follow through with the paperwork and fails to submit the order to Principal.Verity suffers a loss.Rite Supply,Theo,and Verity Industries claim Principal is liable under agency law.Discuss fully whether an agency relationship was created by Principal with Quality Construction,Skye,or Uma.

Accepted Answer

Whether Principal can be held liable by

Question 18

Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob in-stalls for half the store's price.Bob keeps the money.Bob has breached

Accepted Answer

A) no duty. 
B) the duty of loyalty. 
C) the duty of notificaion. 
D) the duty of obedience. 
A) no duty. 
B) the duty of loyalty. 
C) the duty of notificaion. 
D) the duty of obedience.

Question 19

An agency can terminate once its purpose is achieved.

Accepted Answer

A) True 
 B)False

Question 20

If a principal ratifies a contract without knowing all of the facts,the principal can rescind the contract.

Accepted Answer

A) True 
 B)False

Exam 21: Agency Relationships

Geoff serves in a representative capacity for Huck.To accomplish the objectives of this relationship,Geoff's authority can be implied

If a principal does not ratify an unauthorized contract,the principal is not bound.

Sonia manages a Tasty Pastry store for United Food Company.To manage the business,Sonia's authority can be implied by

An agency relationship may occur by operation of law in a family.

If a principal does not ratify an authorized contract,the prin-cipal is not bound.

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.

Frida hires Gert,a real estate broker,to act as her agent to sell her house.The house burns down before being sold.The agency agreement is likely

Clara is a salesperson in The Corner Store.When Carla makes a sale to Jenny,the sale is

Sela agrees to act on Thom's behalf,subject to Thom's control,and Thom trusts Sela to so act.They set out the terms in a written document,which they both sign.This is

Will is an agent for MaryElise.MaryElise gives Will clear instructions to only enter into contracts on Mondays,Wednesdays,or Fridays.Will enters into a contract on MaryElise's behalf on Tuesday.Will has breached

Picabo drives a truck as an employee for Quik Delivery,Inc.Picabo would most likely be considered acting outside the scope of her employment if she

Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber.In this relationship,Jackson Lumber is the

An employer has no control over an employee's work.

KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands.KupaJava agrees to pay Lola a salary,plus commission.KupaJava stipulates the standards that should be observed,the goals that should be attained,and the methods that should be used.Lola is most likely KupaJava's

Bob,a salesperson at a Carpets Galore store,tells Dita,a customer,"Buy your carpet here,and I'll install it for half of what the store would charge." Dita buys the carpet,which Bob in-stalls for half the store's price.Bob keeps the money.Bob has breached

An agency can terminate once its purpose is achieved.

If a principal ratifies a contract without knowing all of the facts,the principal can rescind the contract.

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