Question 1

The agent's duty not to use or disclose confidential information about the principal's business continues after the agency ends.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following factors is most likely to distinguish employees from independent contractors?

Accepted Answer

A) Whether or not consideration is given by the principal for the agent's performance 
B) The principal's right to control the manner and means of the agent's performance 
C) Whether the agent has authority to bind the principal by his actions 
D) The agent's personal liability for illegal actions taken on behalf of the principal 
A) Whether or not consideration is given by the principal for the agent's performance 
B) The principal's right to control the manner and means of the agent's performance 
C) Whether the agent has authority to bind the principal by his actions 
D) The agent's personal liability for illegal actions taken on behalf of the principal

Question 3

Which of the following is true of a person's capacity to be a principal or agent?

Accepted Answer

A) To be an agent,a person must have the ability to make his own contracts,independent of the principal. 
B) Any duty that a principal has the capacity to perform can be delegated to an authorized agent. 
C) A principal must have the capacity to do the acts for which the agent has been retained. 
D) To be an agent,a person must have the capacity to perform non-delegable obligations for the principal. 
A) To be an agent,a person must have the ability to make his own contracts,independent of the principal. 
B) Any duty that a principal has the capacity to perform can be delegated to an authorized agent. 
C) A principal must have the capacity to do the acts for which the agent has been retained. 
D) To be an agent,a person must have the capacity to perform non-delegable obligations for the principal.

Question 4

A subagent is an agent of an agent.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following represents an agency coupled with an interest?

Accepted Answer

A) A contingent fee arrangement in which a plaintiff's attorney will receive 20% of any recovery she achieves. 
B) A professional sports contract in which a team owner agrees to pay a player insurance premiums on a policy that compensates the player should he suffer a career-ending injury. 
C) A loan agreement in which the borrower pledges collateral to the lender and gives the lender the power to take the collateral should the borrower default on the loan. 
D) A contract in which a sales agent is hired for three years at a salary of $80,000 plus 5% of sales. 
A) A contingent fee arrangement in which a plaintiff's attorney will receive 20% of any recovery she achieves. 
B) A professional sports contract in which a team owner agrees to pay a player insurance premiums on a policy that compensates the player should he suffer a career-ending injury. 
C) A loan agreement in which the borrower pledges collateral to the lender and gives the lender the power to take the collateral should the borrower default on the loan. 
D) A contract in which a sales agent is hired for three years at a salary of $80,000 plus 5% of sales.

Question 6

Tom Smith is hired as an agent of Lakes Computer System.As part of the agency responsibilities Tom is to wire offices for clients in the country of Israel.Prior to his leaving war breaks out and the U.S.government posts a ban on travel to Israel.What is the status of the agency of Tom Smith?

Accepted Answer

A) It is probably terminated by operation of law. 
B) It is terminated by the act of the parties. 
C) It is terminated under international law. 
D) It is terminated under religious law. 
A) It is probably terminated by operation of law. 
B) It is terminated by the act of the parties. 
C) It is terminated under international law. 
D) It is terminated under religious law.

Question 7

Under the Restatement (Third)of Agency,the principal's death automatically terminates an agent's apparent authority.

Accepted Answer

A) True 
 B)False

Question 8

Kim hires Kyle to sell bike locks for her.She orders Kyle to tell potential customers that the bike locks are the world's strongest,even though this is not true.Does Kyle have a duty to obey Kim's instructions?

Accepted Answer

A) Yes,as long as he continues to act as her agent. 
B) Yes,but he must make a disclaimer to potential customers that he is speaking for Kim. 
C) No,because he is not a gratuitous agent and only gratuitous agents are obligated to follow a principal's instructions. 
D) No,because a sales agent need not follow directions to misrepresent the quality of a principal's goods. 
A) Yes,as long as he continues to act as her agent. 
B) Yes,but he must make a disclaimer to potential customers that he is speaking for Kim. 
C) No,because he is not a gratuitous agent and only gratuitous agents are obligated to follow a principal's instructions. 
D) No,because a sales agent need not follow directions to misrepresent the quality of a principal's goods.

Question 9

When do a principal's communications to an agent have an impact on whether the agent has apparent authority?

Accepted Answer

A) Never. 
B) Only if the principal's communications to the agent become known to the third party or affect the agent's behavior. 
C) Only if the agent abuses his power and acts outside of his apparent and implied authority. 
D) Always. 
A) Never. 
B) Only if the principal's communications to the agent become known to the third party or affect the agent's behavior. 
C) Only if the agent abuses his power and acts outside of his apparent and implied authority. 
D) Always.

Question 10

Which of the following is true of an agent who terminates in violation of the agency agreement?

Accepted Answer

A) The agent has the right,but not the power,to terminate. 
B) The agent has the power,but not the right,to terminate. 
C) The agent has neither the power nor the right to terminate. 
D) The agent has both the power and the right to terminate. 
A) The agent has the right,but not the power,to terminate. 
B) The agent has the power,but not the right,to terminate. 
C) The agent has neither the power nor the right to terminate. 
D) The agent has both the power and the right to terminate.

Question 11

A principal is always liable for the acts of his agent.

Accepted Answer

A) True 
 B)False

Question 12

Larry works for Shannon as a salesperson.Shannon gave Larry a credit card with Larry's name on it so that Larry could charge necessary business expenses to Shannon's business account.Larry charged $1,000 in personal expenses,wholly unrelated to Larry's employment.Does apparent authority exist? Discuss.

Accepted Answer

Yes.It is likely that apparent authority

Question 13

Which of the following is true of the duty of agents to the principal?

Accepted Answer

A) The duty not to use or disclose confidential information terminates after the agency ends. 
B) When conducting the principal's business,an agent can deal with himself. 
C) Except for compensation,an agent should not profit from acting on behalf of the principal. 
D) A gratuitous agent does not have the same fiduciary duty as a paid agent. 
A) The duty not to use or disclose confidential information terminates after the agency ends. 
B) When conducting the principal's business,an agent can deal with himself. 
C) Except for compensation,an agent should not profit from acting on behalf of the principal. 
D) A gratuitous agent does not have the same fiduciary duty as a paid agent.

Question 14

Which of the following is true of a subagent's duties to a principal?

Accepted Answer

A) A subagent does not owe the agent any of the duties that agents owe their principals. 
B) A subagent who knows of the original principal's existence also owes that principal all the duties agents owe their principals. 
C) The agent who appoints the subagent is not liable to the original principal when he/she is harmed by the subagent's conduct. 
D) A subagent owes the original principal for duties arising solely from the original principal's contract with the agent. 
A) A subagent does not owe the agent any of the duties that agents owe their principals. 
B) A subagent who knows of the original principal's existence also owes that principal all the duties agents owe their principals. 
C) The agent who appoints the subagent is not liable to the original principal when he/she is harmed by the subagent's conduct. 
D) A subagent owes the original principal for duties arising solely from the original principal's contract with the agent.

Question 15

When an agent suffers losses in conducting the principal's business,the principal's obligation is to ________ the agent.

Accepted Answer

A) indemnify 
B) renounce 
C) reimburse 
D) compensate 
A) indemnify 
B) renounce 
C) reimburse 
D) compensate

Question 16

The apparent authority of a general agent for a disclosed principal will terminate without notice to third parties when:

Accepted Answer

A) the principal dismisses the agent. 
B) the third party has notice of the principal's death. 
C) the purpose of the agency relationship has been fulfilled. 
D) the time period set forth in the agency agreement has expired. 
A) the principal dismisses the agent. 
B) the third party has notice of the principal's death. 
C) the purpose of the agency relationship has been fulfilled. 
D) the time period set forth in the agency agreement has expired.

Question 17

Which of the following requires an agent to subordinate his personal concerns?

Accepted Answer

A) The duty of loyalty 
B) The duty of segregation 
C) The duty of confidentiality 
D) The duty of indemnity 
A) The duty of loyalty 
B) The duty of segregation 
C) The duty of confidentiality 
D) The duty of indemnity

Question 18

What happens if the principal is completely insane at the time of the agency's formation,and what happens if the principal is sane at the time of agency formation,but loses sanity some time later?

Accepted Answer

In case the principal lacks capacity at

Question 19

If Tom Smith works in the in-house counsel department of Supermart Corporation then he will be considered an employee not a nonemployee agent.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is most likely to be classed as an independent contractor rather than an employee?

Accepted Answer

A) An assembly line worker 
B) A lawyer who works as in-house counsel for a corporation 
C) A franchisee of a fast-food chain 
D) The president of a corporation 
A) An assembly line worker 
B) A lawyer who works as in-house counsel for a corporation 
C) A franchisee of a fast-food chain 
D) The president of a corporation

Exam 35: The Agency Relationship

The agent's duty not to use or disclose confidential information about the principal's business continues after the agency ends.

Which of the following factors is most likely to distinguish employees from independent contractors?

Which of the following is true of a person's capacity to be a principal or agent?

A subagent is an agent of an agent.

Which of the following represents an agency coupled with an interest?

Tom Smith is hired as an agent of Lakes Computer System.As part of the agency responsibilities Tom is to wire offices for clients in the country of Israel.Prior to his leaving war breaks out and the U.S.government posts a ban on travel to Israel.What is the status of the agency of Tom Smith?

Under the Restatement (Third)of Agency,the principal's death automatically terminates an agent's apparent authority.

Kim hires Kyle to sell bike locks for her.She orders Kyle to tell potential customers that the bike locks are the world's strongest,even though this is not true.Does Kyle have a duty to obey Kim's instructions?

When do a principal's communications to an agent have an impact on whether the agent has apparent authority?

Which of the following is true of an agent who terminates in violation of the agency agreement?

A principal is always liable for the acts of his agent.

Which of the following is true of the duty of agents to the principal?

Which of the following is true of a subagent's duties to a principal?

When an agent suffers losses in conducting the principal's business,the principal's obligation is to ________ the agent.

The apparent authority of a general agent for a disclosed principal will terminate without notice to third parties when:

Which of the following requires an agent to subordinate his personal concerns?

What happens if the principal is completely insane at the time of the agency's formation,and what happens if the principal is sane at the time of agency formation,but loses sanity some time later?

If Tom Smith works in the in-house counsel department of Supermart Corporation then he will be considered an employee not a nonemployee agent.

Which of the following is most likely to be classed as an independent contractor rather than an employee?

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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