Question 1

Which of the following is true of revocation and renunciation?

Accepted Answer

A) Revocation is conducted by the agent and renunciation by the principal. 
B) Both result in the termination of agency. 
C) A party cannot revoke or renounce if doing so violates the agency agreement. 
D) No,because there is no contract in writing. 
A) Revocation is conducted by the agent and renunciation by the principal. 
B) Both result in the termination of agency. 
C) A party cannot revoke or renounce if doing so violates the agency agreement. 
D) No,because there is no contract in writing.

Question 2

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

Accepted Answer

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

Question 3

Which of the following tasks can an agent perform on behalf of a principal?

Accepted Answer

A) Signing a will 
B) Making statements under oath 
C) Voting in public elections 
D) Making a contract 
A) Signing a will 
B) Making statements under oath 
C) Voting in public elections 
D) Making a contract

Question 4

Which of the following must exist in order for a person to possess apparent authority?

Accepted Answer

A) The principal's payment of consideration to the agent 
B) The agent's consent to the agency relationship 
C) A third party's belief that agency exists 
D) The principal's written authorization to the agent 
A) The principal's payment of consideration to the agent 
B) The agent's consent to the agency relationship 
C) A third party's belief that agency exists 
D) The principal's written authorization to the agent

Question 5

A gratuitous agent has the same fiduciary duty as a paid agent.

Accepted Answer

A) True 
 B)False

Question 6

Andrew appoints Matthew to be his agent for a period of 2 years.After 6 months,Andrew is involved in an accident,after which he permanently losses his capacity to understand things going on around him.This terminates the contract automatically.But Matthew is demanding damages for breach of contract.Is Andrew liable to pay damages?

Accepted Answer

No,Andrew is not liable to pay.According

Question 7

The principal's death automatically terminates an existing agency under the Restatement (Third)of Agency.

Accepted Answer

A) True 
 B)False

Question 8

The legal relations between agent and subagent closely parallel the legal relations between principal and agent.

Accepted Answer

A) True 
 B)False

Question 9

When is a gratuitous agent liable for failing to perform as promised?

Accepted Answer

A) Never 
B) If her promise relates to her duty of loyalty to the principal and despite her duty of loyalty,she chooses not to perform as promised. 
C) If her promise causes the principal to rely upon her to perform certain acts and the principal suffers losses because he refrained from performing those acts. 
D) Always 
A) Never 
B) If her promise relates to her duty of loyalty to the principal and despite her duty of loyalty,she chooses not to perform as promised. 
C) If her promise causes the principal to rely upon her to perform certain acts and the principal suffers losses because he refrained from performing those acts. 
D) Always

Question 10

Why is agency important to sole proprietors?

Accepted Answer

A) Without agency,a sole proprietor's ability to engage in trade would be limited by the need to make purchases and contracts in person. 
B) Without agency,which vests a sole proprietor with authority,a sole proprietor would not be able to enter into contracts. 
C) Without agency,a sole proprietor's business would die with the proprietor. 
D) Agency is not important to sole proprietors because sole proprietors cannot create an agency relationship 
A) Without agency,a sole proprietor's ability to engage in trade would be limited by the need to make purchases and contracts in person. 
B) Without agency,which vests a sole proprietor with authority,a sole proprietor would not be able to enter into contracts. 
C) Without agency,a sole proprietor's business would die with the proprietor. 
D) Agency is not important to sole proprietors because sole proprietors cannot create an agency relationship

Question 11

An agent's apparent authority ends when:

Accepted Answer

A) the principal revokes authority. 
B) the third party receives notice of the termination of agency. 
C) the principal loses capacity or dies. 
D) the agent's actual authority,both express and implied,ends. 
A) the principal revokes authority. 
B) the third party receives notice of the termination of agency. 
C) the principal loses capacity or dies. 
D) the agent's actual authority,both express and implied,ends.

Question 12

Ginny is an agent of Vroom! Motors,and is designated to sell and deliver antique cars.She spends her own money to call clients,visit them and finalize the deals.There is no express agreement between Ginny and Vroom! Is Vroom meeting its obligations to Ginny,who is acting as Vroom's agent?

Accepted Answer

No.The principal,Vroom! Motors

Question 13

In a situation in which there is a conflict of interest between an agent who is authorized to make a certain transaction for a principal and the principal,the agent is allowed to:

Accepted Answer

A) engage in self-dealing transactions if the principal and the third party are unaware of the transactions. 
B) compete with the principal regarding the agency business. 
C) act as agent for both parties to a transaction without disclosing the double role to both principals. 
D) act as a middleman and serve both parties to a transaction without notifying either principal. 
A) engage in self-dealing transactions if the principal and the third party are unaware of the transactions. 
B) compete with the principal regarding the agency business. 
C) act as agent for both parties to a transaction without disclosing the double role to both principals. 
D) act as a middleman and serve both parties to a transaction without notifying either principal.

Question 14

The agency relationship may be formed even if the parties do not subjectively intend to create it.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true of a principal's duty of indemnity?

Accepted Answer

A) The principal does not have to indemnify the agent for authorized payments made on the principal's behalf as the payments were undertaken in the course of the agent's work. 
B) The principal must indemnify the agent for tort damages resulting from authorized conduct that the agent did not believe was tortious. 
C) The principal is required to indemnify an agent even for losses resulting from the agent's negligence. 
D) The principal is required to indemnify an agent for losses resulting from unauthorized acts so long as the principal did not benefit from such behavior. 
A) The principal does not have to indemnify the agent for authorized payments made on the principal's behalf as the payments were undertaken in the course of the agent's work. 
B) The principal must indemnify the agent for tort damages resulting from authorized conduct that the agent did not believe was tortious. 
C) The principal is required to indemnify an agent even for losses resulting from the agent's negligence. 
D) The principal is required to indemnify an agent for losses resulting from unauthorized acts so long as the principal did not benefit from such behavior.

Question 16

Which of the following best represents an agent's duty of segregation?

Accepted Answer

A) The agent should not deal with the principal's property so that it appears to be the agent's. 
B) The agent should not profit or receive any other benefit from acting on behalf of the principal. 
C) The agent has a duty to act within her actual authority and to obey the principal's reasonable instructions. 
D) The agent may not use or communicate confidential information of the principal for the agent's own purpose. 
A) The agent should not deal with the principal's property so that it appears to be the agent's. 
B) The agent should not profit or receive any other benefit from acting on behalf of the principal. 
C) The agent has a duty to act within her actual authority and to obey the principal's reasonable instructions. 
D) The agent may not use or communicate confidential information of the principal for the agent's own purpose.

Question 17

An agent can bind his principal on a contract or other matter only when the agent has ________ to do so.

Accepted Answer

A) A fiduciary duty 
B) Capacity 
C) Authority 
D) Capability 
A) A fiduciary duty 
B) Capacity 
C) Authority 
D) Capability

Question 18

A principal who instructs an agent to perform an illegal act will have no recourse against an agent who refuses to perform.

Accepted Answer

A) True 
 B)False

Question 19

What is the principal's duty when his agent makes express or implied authorized expenditure while acting on his behalf?

Accepted Answer

A) Duty to compensate 
B) Duty to take care 
C) Duty of accounts 
D) Duty to reimburse 
A) Duty to compensate 
B) Duty to take care 
C) Duty of accounts 
D) Duty to reimburse

Question 20

Which of the following is true of general agents and special agents?

Accepted Answer

A) General agents have the power to bind the principal by their actions,while special agents do not. 
B) A general agent is employed to conduct a series of transactions,while a special agent is employed to conduct a small,simple group of transactions. 
C) Special agents are gratuitous agents,i.e. ,they are not paid by the principal,while general agents receive consideration for their services. 
D) General agents can appoint subagents to carry out the principal's tasks,while special agents cannot. 
A) General agents have the power to bind the principal by their actions,while special agents do not. 
B) A general agent is employed to conduct a series of transactions,while a special agent is employed to conduct a small,simple group of transactions. 
C) Special agents are gratuitous agents,i.e. ,they are not paid by the principal,while general agents receive consideration for their services. 
D) General agents can appoint subagents to carry out the principal's tasks,while special agents cannot.

Exam 35: The Agency Relationship

Which of the following is true of revocation and renunciation?

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

Which of the following tasks can an agent perform on behalf of a principal?

Which of the following must exist in order for a person to possess apparent authority?

A gratuitous agent has the same fiduciary duty as a paid agent.

The principal's death automatically terminates an existing agency under the Restatement (Third)of Agency.

The legal relations between agent and subagent closely parallel the legal relations between principal and agent.

When is a gratuitous agent liable for failing to perform as promised?

Why is agency important to sole proprietors?

An agent's apparent authority ends when:

Ginny is an agent of Vroom! Motors,and is designated to sell and deliver antique cars.She spends her own money to call clients,visit them and finalize the deals.There is no express agreement between Ginny and Vroom! Is Vroom meeting its obligations to Ginny,who is acting as Vroom's agent?

In a situation in which there is a conflict of interest between an agent who is authorized to make a certain transaction for a principal and the principal,the agent is allowed to:

The agency relationship may be formed even if the parties do not subjectively intend to create it.

Which of the following is true of a principal's duty of indemnity?

Which of the following best represents an agent's duty of segregation?

An agent can bind his principal on a contract or other matter only when the agent has ________ to do so.

A principal who instructs an agent to perform an illegal act will have no recourse against an agent who refuses to perform.

What is the principal's duty when his agent makes express or implied authorized expenditure while acting on his behalf?

Which of the following is true of general agents and special agents?

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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