Question 1

________ is actual authority that the principal has manifested to the agent using very specific or detailed language.

Accepted Answer

A) Implied authority 
B) Primary authority 
C) Express authority 
D) Apparent authority 
A) Implied authority 
B) Primary authority 
C) Express authority 
D) Apparent authority

Question 2

Which fiduciary duty continues after the agency ends?

Accepted Answer

A) The duty of loyalty 
B) The duty of segregation 
C) The duty of confidentiality 
D) The duty not to compete with the principal 
A) The duty of loyalty 
B) The duty of segregation 
C) The duty of confidentiality 
D) The duty not to compete with the principal

Question 3

A(n)________ agency is normally terminable by either party without liability.

Accepted Answer

A) gratuitous 
B) fiduciary 
C) employee 
D) individual 
A) gratuitous 
B) fiduciary 
C) employee 
D) individual

Question 4

Which of the following is generally true of the relationship between businesses and employees?

Accepted Answer

A) Business are not bound by the actions of employees. 
B) Businesses are liable on contracts their employees make but not torts their employees commit. 
C) Businesses are liable for torts their employees commit but are not bound on contracts their employees create. 
D) Businesses are liable on contracts their employees make and torts their employees commit. 
A) Business are not bound by the actions of employees. 
B) Businesses are liable on contracts their employees make but not torts their employees commit. 
C) Businesses are liable for torts their employees commit but are not bound on contracts their employees create. 
D) Businesses are liable on contracts their employees make and torts their employees commit.

Question 5

Termination of agency by the principal is known as renunciation and termination by agent is known as revocation.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes the type of relationship that exists between an agent and a principal?

Accepted Answer

A) Dependent 
B) Manifest 
C) Objective 
D) Fiduciary 
A) Dependent 
B) Manifest 
C) Objective 
D) Fiduciary

Question 7

An agency coupled with an interest cannot be terminated by the principal's revocation of the agency.

Accepted Answer

A) True 
 B)False

Question 8

In which of the following cases does apparent authority arise?

Accepted Answer

A) When a principal causes a third party to believe that the agent is authorized to act in a certain way. 
B) When a principal's manifest consent is communicated directly to the agent. 
C) When a person falsely represents himself as an agent of a principal to a third party. 
D) When an agent reasonably believes that the principal wants him to act in a certain way. 
A) When a principal causes a third party to believe that the agent is authorized to act in a certain way. 
B) When a principal's manifest consent is communicated directly to the agent. 
C) When a person falsely represents himself as an agent of a principal to a third party. 
D) When an agent reasonably believes that the principal wants him to act in a certain way.

Question 9

Yum Yum Corporation hired Ursula to be its agent.Yum Yum Corporation has now dissolved.What happens to the agency?

Accepted Answer

A) It continues until officially terminated. 
B) It is terminated through revocation. 
C) It is terminated through renunciation. 
D) It is terminated by operation of law. 
A) It continues until officially terminated. 
B) It is terminated through revocation. 
C) It is terminated through renunciation. 
D) It is terminated by operation of law.

Question 10

Which of the following is a principal's duty to his agent?

Accepted Answer

A) Duty of confidentiality 
B) Duty not to receive a material benefit 
C) Duty of segregation 
D) Duty to reimburse 
A) Duty of confidentiality 
B) Duty not to receive a material benefit 
C) Duty of segregation 
D) Duty to reimburse

Question 11

Which of the following is true of an agent who has the authority to appoint a subagent?

Accepted Answer

A) An agent becomes a principal with respect to the subagent. 
B) An agent is able to appoint a subagent without the principal's knowledge. 
C) An agent has the authority to appoint a subagent when the situation involves a nondelegable duty. 
D) An agent has the authority to appoint a subagent when the co-agent demands such an appointment. 
A) An agent becomes a principal with respect to the subagent. 
B) An agent is able to appoint a subagent without the principal's knowledge. 
C) An agent has the authority to appoint a subagent when the situation involves a nondelegable duty. 
D) An agent has the authority to appoint a subagent when the co-agent demands such an appointment.

Question 12

Under the theory of agency law,the agent is required to follow whose instructions?

Accepted Answer

A) The principal 
B) The subagent 
C) The incorporator 
D) The organizer 
A) The principal 
B) The subagent 
C) The incorporator 
D) The organizer

Question 13

When is constructive notification sufficient for an agent's apparent authority to end?

Accepted Answer

A) For third parties who have previously dealt with the agent. 
B) For third parties who have begun to deal with the agent. 
C) For third parties who are aware of the agency but did no business with the agent. 
D) Never. 
A) For third parties who have previously dealt with the agent. 
B) For third parties who have begun to deal with the agent. 
C) For third parties who are aware of the agency but did no business with the agent. 
D) Never.

Question 14

A bankruptcy by this party would cause a termination in the agency relationship:

Accepted Answer

A) Principal 
B) Agent 
C) Either principal or agent 
D) Subagent 
A) Principal 
B) Agent 
C) Either principal or agent 
D) Subagent

Question 15

Lucia is paying Martha to sell properties that Lucia owns.Can Martha sell one of Lucia's properties to herself?

Accepted Answer

A) Yes,as long as she sells it for fair market value. 
B) Yes,as long as Lucia did not prohibit this type of transaction. 
C) No,because an agent may not deal with himself. 
D) No,because that would make Martha a subagent of Lucia 
A) Yes,as long as she sells it for fair market value. 
B) Yes,as long as Lucia did not prohibit this type of transaction. 
C) No,because an agent may not deal with himself. 
D) No,because that would make Martha a subagent of Lucia

Question 16

Which of the following is true of apparent authority?

Accepted Answer

A) It arises when an agent falsely claims to be acting under the authority of a principal. 
B) It requires express authorization,in words or writing,from the principal. 
C) It arises when the principal leads a third party to believe that an agent is authorized. 
D) It requires that the agent receive consideration from the principal,i.e. ,the agent is not a gratuitous agent. 
A) It arises when an agent falsely claims to be acting under the authority of a principal. 
B) It requires express authorization,in words or writing,from the principal. 
C) It arises when the principal leads a third party to believe that an agent is authorized. 
D) It requires that the agent receive consideration from the principal,i.e. ,the agent is not a gratuitous agent.

Question 17

Under the Restatement (Third)of Agency,which of the following is true of termination of agency by operation of law?

Accepted Answer

A) The principal's permanent loss of capacity ends the agency only if the agent is given notice. 
B) The bankruptcy of the agent automatically terminates the agency relationship. 
C) Termination by the death of the principal is effective only when the agent has notice of the principal's death. 
D) The death of an individual agent does not terminate the agency relationship if the principal is not an individual. 
A) The principal's permanent loss of capacity ends the agency only if the agent is given notice. 
B) The bankruptcy of the agent automatically terminates the agency relationship. 
C) Termination by the death of the principal is effective only when the agent has notice of the principal's death. 
D) The death of an individual agent does not terminate the agency relationship if the principal is not an individual.

Question 18

What should an agent do when a principal's instructions are unclear?

Accepted Answer

A) Interpret the instructions to the best of his ability. 
B) It depends upon the authority granted to the agent. 
C) Act in accordance with what he believes is best for the principal. 
D) Communicate with the principal to clarify the instructions. 
A) Interpret the instructions to the best of his ability. 
B) It depends upon the authority granted to the agent. 
C) Act in accordance with what he believes is best for the principal. 
D) Communicate with the principal to clarify the instructions.

Question 19

Earl is Hall's agent for a real estate transaction.Which of the following will terminate the agency relationship by act of the parties?

Accepted Answer

A) Earl renounces his agency. 
B) Hall announces that he is filing for bankruptcy. 
C) Hall dies,but Earl is not informed. 
D) Notice of the death of Hall placed in a newspaper. 
A) Earl renounces his agency. 
B) Hall announces that he is filing for bankruptcy. 
C) Hall dies,but Earl is not informed. 
D) Notice of the death of Hall placed in a newspaper.

Question 20

Termination of the agency relationship at the option of the principal is known as ________.

Accepted Answer

A) revocation 
B) renunciation 
C) falsification 
D) liquidation 
A) revocation 
B) renunciation 
C) falsification 
D) liquidation

Exam 35: The Agency Relationship

________ is actual authority that the principal has manifested to the agent using very specific or detailed language.

Which fiduciary duty continues after the agency ends?

A(n)________ agency is normally terminable by either party without liability.

Which of the following is generally true of the relationship between businesses and employees?

Termination of agency by the principal is known as renunciation and termination by agent is known as revocation.

Which of the following describes the type of relationship that exists between an agent and a principal?

An agency coupled with an interest cannot be terminated by the principal's revocation of the agency.

In which of the following cases does apparent authority arise?

Yum Yum Corporation hired Ursula to be its agent.Yum Yum Corporation has now dissolved.What happens to the agency?

Which of the following is a principal's duty to his agent?

Which of the following is true of an agent who has the authority to appoint a subagent?

Under the theory of agency law,the agent is required to follow whose instructions?

When is constructive notification sufficient for an agent's apparent authority to end?

A bankruptcy by this party would cause a termination in the agency relationship:

Lucia is paying Martha to sell properties that Lucia owns.Can Martha sell one of Lucia's properties to herself?

Which of the following is true of apparent authority?

Under the Restatement (Third)of Agency,which of the following is true of termination of agency by operation of law?

What should an agent do when a principal's instructions are unclear?

Earl is Hall's agent for a real estate transaction.Which of the following will terminate the agency relationship by act of the parties?

Termination of the agency relationship at the option of the principal is known as ________.

The Nature of Law

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Introduction to Contracts

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