Question 1

An agent filing for bankruptcy automatically terminates the agency relationship.

Accepted Answer

A) True 
 B)False  False

Question 2

________ refers to a two-party relationship in which one party is authorized to act on behalf of,and under the control of,the other party.

Accepted Answer

A) Bailment 
B) Agency 
C) Estoppel 
D) Abatement 
A) Bailment 
B) Agency 
C) Estoppel 
D) Abatement B

Question 3

Peter hires Brian and tells Brian that he has the authority to make purchases for Peter's company.Peter tells Brian he is not to consider himself as Peter's agent.Is Brian Peter's agent?

Accepted Answer

A) Yes,because if a party's conduct indicates an agreement that one person is to act on behalf of and under the control of another,this creates an agency relationship even when the parties expressly say they do not intend to create it. 
B) Yes,because Peter hired Brian and employees are always agents of their employers under all circumstances. 
C) No,because Brian's authority is limited to making purchases only. 
D) No,because Peter expressly said Brian was not to act as his agent. 
A) Yes,because if a party's conduct indicates an agreement that one person is to act on behalf of and under the control of another,this creates an agency relationship even when the parties expressly say they do not intend to create it. 
B) Yes,because Peter hired Brian and employees are always agents of their employers under all circumstances. 
C) No,because Brian's authority is limited to making purchases only. 
D) No,because Peter expressly said Brian was not to act as his agent. A

Question 4

Agency is a two-party relationship in which the agent is authorized to act on behalf of the principal.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following terminates an agency relationship through operation of law?

Accepted Answer

A) A specified result has been accomplished. 
B) There is mutual agreement between principal and agent to terminate the relationship. 
C) The principal dies and the agent is notified of the death. 
D) The principal revokes the agency. 
A) A specified result has been accomplished. 
B) There is mutual agreement between principal and agent to terminate the relationship. 
C) The principal dies and the agent is notified of the death. 
D) The principal revokes the agency.

Question 6

________ generally contract with the principal to produce a result and determine for themselves how that result will be accomplished.

Accepted Answer

A) Employees 
B) Nonemployee agents 
C) Corporate officers 
D) Special agents 
A) Employees 
B) Nonemployee agents 
C) Corporate officers 
D) Special agents

Question 7

Authority is an agent's ability to affect the principal's legal relations and affairs.

Accepted Answer

A) True 
 B)False

Question 8

The term 'independent contractor' is defined in the Restatement (Third)of Contracts.

Accepted Answer

A) True 
 B)False

Question 9

Because she is a minor,Sarah cannot enter into contracts on her own behalf although she is perfectly competent.Her mother wishes to make Sarah an agent of the family business,and Sarah will be responsible for entering into contracts as an agent.Can Sarah act as an agent of the company?

Accepted Answer

A) No,because she is a minor. 
B) No,because she does not have the capacity to enter into contracts. 
C) Yes,but only because it is a family business. 
D) Yes,because she has capacity to do the acts for which she has been retained. 
A) No,because she is a minor. 
B) No,because she does not have the capacity to enter into contracts. 
C) Yes,but only because it is a family business. 
D) Yes,because she has capacity to do the acts for which she has been retained.

Question 10

Juan is going to be out of town when the purchase of his car is completed.He empowers his sister,Tanya,to sign the contract for the purchase of the car.Tanya is a ________.

Accepted Answer

A) general agent 
B) special agent 
C) subagent 
D) principal 
A) general agent 
B) special agent 
C) subagent 
D) principal

Question 11

Joe is the personnel manager for the BFG Corporation.Joe hires employees for BFG.Joe hires Suzy as a management trainee.Suzy is BFG's subagent.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of actual notification of termination of agency to third parties?

Accepted Answer

A) Posting a notice in a public place 
B) Displaying a notice on the company website 
C) A writing delivered to the third party's place of business 
D) Advertising the agency's termination in a newspaper of general circulation 
A) Posting a notice in a public place 
B) Displaying a notice on the company website 
C) A writing delivered to the third party's place of business 
D) Advertising the agency's termination in a newspaper of general circulation

Question 13

Which of the following is true of subagents?

Accepted Answer

A) They must be appointed by the principal,though they report to the agent. 
B) They are considered to be agents of the agent,but not of the principal himself. 
C) Subagents do not have the authority to bind a principal,but can bind the agent. 
D) For a subagency to exist,an agent must have the authority to make the subagent his agent. 
A) They must be appointed by the principal,though they report to the agent. 
B) They are considered to be agents of the agent,but not of the principal himself. 
C) Subagents do not have the authority to bind a principal,but can bind the agent. 
D) For a subagency to exist,an agent must have the authority to make the subagent his agent.

Question 14

Because they serve for free,gratuitous agents have no authority to bind their principals.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following serves as constructive notification of the termination of an agent's apparent authority?

Accepted Answer

A) A direct personal statement to the third party 
B) The death of the principal 
C) A writing delivered personally or to the third party's place of business 
D) Advertising the agency's termination in a newspaper 
A) A direct personal statement to the third party 
B) The death of the principal 
C) A writing delivered personally or to the third party's place of business 
D) Advertising the agency's termination in a newspaper

Question 16

An attorney acquires confidential information about a certain client.However,he discovers that this information is important for the affairs of a second client.In this situation,two duties are in conflict.What are these two conflicting duties? How does agency law resolve the conflict?

Accepted Answer

The two conflicting duties are: (1)the d

Question 17

An agent who receives no compensation for his services is known as:

Accepted Answer

A) an independent contractor. 
B) a special agent. 
C) a gratuitous agent. 
D) a servant. 
A) an independent contractor. 
B) a special agent. 
C) a gratuitous agent. 
D) a servant.

Question 18

Harris is a purchasing agent for Elkin,a sole proprietor.Harris has the express authority to place purchase orders with Elkin's suppliers.Harris typically conducts business through the mail and has very little contact with Elkin.Elkin was incapacitated by a stroke and was declared incompetent in a judicial proceeding.Subsequently,Harris placed an order with Ajax,Inc.on behalf of Elkin.Neither Ajax nor Harris was aware of Elkin's incapacity.With regard to the contract with Ajax,Elkin (or Elkin's legal representative)will:

Accepted Answer

A) not be liable because Harris was without authority to enter into the contract. 
B) not be liable provided that Harris had placed orders with Ajax in the past. 
C) be liable because Harris was acting within the scope of Harris' authority. 
D) be liable because Ajax was unaware of Elkin's incapacity. 
A) not be liable because Harris was without authority to enter into the contract. 
B) not be liable provided that Harris had placed orders with Ajax in the past. 
C) be liable because Harris was acting within the scope of Harris' authority. 
D) be liable because Ajax was unaware of Elkin's incapacity.

Question 19

A principal need not compensate his agent if:

Accepted Answer

A) there was no agreement on the amount of compensation the agent was to receive. 
B) the agent has committed a breach of a fiduciary duty. 
C) there is no market price for the agent's services. 
D) the agent is a special agent. 
A) there was no agreement on the amount of compensation the agent was to receive. 
B) the agent has committed a breach of a fiduciary duty. 
C) there is no market price for the agent's services. 
D) the agent is a special agent.

Question 20

The termination of an agency terminates the agent's express authority,but not his implied authority.

Accepted Answer

A) True 
 B)False

Exam 35: The Agency Relationship

An agent filing for bankruptcy automatically terminates the agency relationship.

________ refers to a two-party relationship in which one party is authorized to act on behalf of,and under the control of,the other party.

Peter hires Brian and tells Brian that he has the authority to make purchases for Peter's company.Peter tells Brian he is not to consider himself as Peter's agent.Is Brian Peter's agent?

Agency is a two-party relationship in which the agent is authorized to act on behalf of the principal.

Which of the following terminates an agency relationship through operation of law?

________ generally contract with the principal to produce a result and determine for themselves how that result will be accomplished.

Authority is an agent's ability to affect the principal's legal relations and affairs.

The term 'independent contractor' is defined in the Restatement (Third)of Contracts.

Because she is a minor,Sarah cannot enter into contracts on her own behalf although she is perfectly competent.Her mother wishes to make Sarah an agent of the family business,and Sarah will be responsible for entering into contracts as an agent.Can Sarah act as an agent of the company?

Juan is going to be out of town when the purchase of his car is completed.He empowers his sister,Tanya,to sign the contract for the purchase of the car.Tanya is a ________.

Joe is the personnel manager for the BFG Corporation.Joe hires employees for BFG.Joe hires Suzy as a management trainee.Suzy is BFG's subagent.

Which of the following is an example of actual notification of termination of agency to third parties?

Which of the following is true of subagents?

Because they serve for free,gratuitous agents have no authority to bind their principals.

Which of the following serves as constructive notification of the termination of an agent's apparent authority?

An attorney acquires confidential information about a certain client.However,he discovers that this information is important for the affairs of a second client.In this situation,two duties are in conflict.What are these two conflicting duties? How does agency law resolve the conflict?

An agent who receives no compensation for his services is known as:

A principal need not compensate his agent if:

The termination of an agency terminates the agent's express authority,but not his implied authority.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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