Question 1

When a person makes a contract as an agent for another but lacks authority to do so,the contract:

Accepted Answer

A)  binds the principal but not the agent. 
B)  binds the principal and the agent. 
C)  does not bind the principal. 
D)  none of the above. 
A)  binds the principal but not the agent. 
B)  binds the principal and the agent. 
C)  does not bind the principal. 
D)  none of the above.

Question 2

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 3

A principal is liable for crimes of an agent:

Accepted Answer

A)  if committed at the principal's direction. 
B)  if the agent is an employee and sells liquor to a minor without permission. 
C)  if the agent in the course of employment violates environmental protection laws. 
D)  all of the above. 
A)  if committed at the principal's direction. 
B)  if the agent is an employee and sells liquor to a minor without permission. 
C)  if the agent in the course of employment violates environmental protection laws. 
D)  all of the above.

Question 4

A principal may be liable to a third person for an agent's unauthorized contracts.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following parties has the power to bind an organization to a contract?

Accepted Answer

A)  A soliciting agent for the organization. 
B)  A contracting agent for the organization. 
C)  A sales agent for the organization. 
D)  None of the above. 
A)  A soliciting agent for the organization. 
B)  A contracting agent for the organization. 
C)  A sales agent for the organization. 
D)  None of the above.

Question 6

The concept of imposing liability for the fault of another is known as __________ liability.

Accepted Answer

A)  imperious 
B)  gregarious 
C)  vicarious 
D)  virtual 
A)  imperious 
B)  gregarious 
C)  vicarious 
D)  virtual

Question 7

A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent's authority.

Accepted Answer

A) True 
 B)False

Question 8

When a fact is known to the agent of a seller,the sale is deemed made by the seller with knowledge of that fact.

Accepted Answer

A) True 
 B)False

Question 9

An employer may be liable on the theory of negligent hiring:

Accepted Answer

A)  when it is shown the employer knew the employee would create an undue risk of harm in carrying out job responsibilities. 
B)  by hiring an individual with a criminal record. 
C)  whether or not prospective employees fill out applications forms and are subject to pre-employment background checks and character qualifications. 
D)  all of the above. 
A)  when it is shown the employer knew the employee would create an undue risk of harm in carrying out job responsibilities. 
B)  by hiring an individual with a criminal record. 
C)  whether or not prospective employees fill out applications forms and are subject to pre-employment background checks and character qualifications. 
D)  all of the above.

Question 10

Payment to an authorized agent is:

Accepted Answer

A)  payment to the principal only if the agent remits the payment. 
B)  payment to the principal if the third person informs the principal. 
C)  payment to the principal,provided the agent does not misappropriate the payment. 
D)  payment to the principal. 
A)  payment to the principal only if the agent remits the payment. 
B)  payment to the principal if the third person informs the principal. 
C)  payment to the principal,provided the agent does not misappropriate the payment. 
D)  payment to the principal.

Question 11

__________ 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)  None of the above statements are true. 
A)  Agents may intentionally make themselves 
B)  Agents are never able to make themselves 
C)  Agents are always 
D)  None of the above statements are true.

Question 12

In general,a principal is liable for crimes of the agent committed while acting within the scope of the agency,even if the principal did not authorize commission of the crimes.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Agents are liable for harm caused third persons by the agents' fraudulent,intentional,or negligent acts.

Accepted Answer

A) True 
 B)False

Question 15

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.R

Question 16

Statements or declarations of an agent:

Accepted Answer

A)  will not bind the principal. 
B)  will bind the principal if the statements were made by an agent while transacting business within the scope of agency authority. 
C)  will not bind the principal if made after performance of the transaction concerned. 
D)  none of the above. 
A)  will not bind the principal. 
B)  will bind the principal if the statements were made by an agent while transacting business within the scope of agency authority. 
C)  will not bind the principal if made after performance of the transaction concerned. 
D)  none of the above.

Question 17

Hiring an individual with a criminal record is conclusive proof that the employer is liable for the tort of negligent hiring.

Accepted Answer

A) True 
 B)False

Question 18

The rule of law imposing vicarious liability on an innocent employer for the wrong of an employee is known as the doctrine of respondeat superior.

Accepted Answer

A) True 
 B)False

Question 19

The principal is bound by knowledge but not by notice of any fact that is acquired by an agent while acting within the scope of actual or apparent authority.

Accepted Answer

A) True 
 B)False

Question 20

The employer of a salesperson:

Accepted Answer

A)  is only bound by a contract if the employee is acting as a soliciting agent. 
B)  is not bound by a contract if the employee is acting as a contracting agent. 
C)  is not bound by a contract until the contract is accepted. 
D)  is always bound by contracts made by all employee salespersons. 
A)  is only bound by a contract if the employee is acting as a soliciting agent. 
B)  is not bound by a contract if the employee is acting as a contracting agent. 
C)  is not bound by a contract until the contract is accepted. 
D)  is always bound by contracts made by all employee salespersons.

Exam 38: Third Persons in Agency

When a person makes a contract as an agent for another but lacks authority to do so,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.

A principal is liable for crimes of an agent:

A principal may be liable to a third person for an agent's unauthorized contracts.

Which of the following parties has the power to bind an organization to a contract?

The concept of imposing liability for the fault of another is known as __________ liability.

A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent's authority.

When a fact is known to the agent of a seller,the sale is deemed made by the seller with knowledge of that fact.

An employer may be liable on the theory of negligent hiring:

Payment to an authorized agent is:

__________ liable on contracts with third persons.

In general,a principal is liable for crimes of the agent committed while acting within the scope of the agency,even if the principal did not authorize commission of the crimes.

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.

Agents are liable for harm caused third persons by the agents' fraudulent,intentional,or negligent acts.

Statements or declarations of an agent:

Hiring an individual with a criminal record is conclusive proof that the employer is liable for the tort of negligent hiring.

The rule of law imposing vicarious liability on an innocent employer for the wrong of an employee is known as the doctrine of respondeat superior.

The principal is bound by knowledge but not by notice of any fact that is acquired by an agent while acting within the scope of actual or apparent authority.

The employer of a salesperson:

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

The Legal Environment of International Trade

Crimes

Torts

Intellectual Property Rights

Cyberlaw

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 Instruments, parties, 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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