Question 1

When an agency relationship is gratuitous, the agent does not act in exchange for payment.

Accepted Answer

A) True 
 B)False  True

Question 2

Diego is a truck driver for Entertainment Supplies Company (ESC). Diego does exactly what ESC tells him. Diego is

Accepted Answer

A)  an employee. 
B)  an employer. 
C)  an independent contractor. 
D)  a principal. 
A)  an employee. 
B)  an employer. 
C)  an independent contractor. 
D)  a principal. A

Question 3

Agency relationships normally are consensual.

Accepted Answer

A) True 
 B)False  True

Question 4

Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.

Accepted Answer

A) True 
 B)False

Question 5

Ella agrees to act as Fab's agent in settlement negotiations with Global Insurance Company. Ella works out a profitable compromise for Fab, but deposits the company's payment in her own account and refuses to give it to Fab. Fab files a suit against Ella. What remedies might the court impose

Accepted Answer

Possible remedies include the normal con

Question 6

An agent is authorized to act on behalf of a principal in doing business with third parties.

Accepted Answer

A) True 
 B)False

Question 7

Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is

Accepted Answer

A)  an agent and has the authority. 
B)  an agent but does not have the authority. 
C)  not an agent and does not have the authority. 
D)  not an agent but does have the authority. 
A)  an agent and has the authority. 
B)  an agent but does not have the authority. 
C)  not an agent and does not have the authority. 
D)  not an agent but does have the authority.

Question 8

Normally, all employees who deal with third parties are deemed to be agents.

Accepted Answer

A) True 
 B)False

Question 9

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely

Accepted Answer

A)  an agent. 
B)  an independent contractor. 
C)  a principal. 
D)  a work for hire. 
A)  an agent. 
B)  an independent contractor. 
C)  a principal. 
D)  a work for hire.

Question 10

Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is

Accepted Answer

A)  liable, because notice to Mackenzie is notice to Lindsay. 
B)  liable, because notice to Kirk is notice to Lindsay. 
C)  not liable, because Mackenzie did not tell Lindsay about the tax. 
D)  not liable, because Kirk did not tell Lindsay about the tax. 
A)  liable, because notice to Mackenzie is notice to Lindsay. 
B)  liable, because notice to Kirk is notice to Lindsay. 
C)  not liable, because Mackenzie did not tell Lindsay about the tax. 
D)  not liable, because Kirk did not tell Lindsay about the tax.

Question 11

A person cannot be both an independent contractor and an agent.

Accepted Answer

A) True 
 B)False

Question 12

Arnold is the chief executive officer of Beta Corporation. Arnold's responsibilities include decisions on product development, marketing, and other significant business directions. Arnold is subject to the approval and oversight of Beta's board of directors. Carol is a Beta manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Dave is a Beta salesperson, whose daily activities are controlled by Carol. Erin writes technical manuals for Beta products according to Arnold's instructions and subject to Beta's control, but has no dealings with Beta customers or suppliers. Fred edits the manuals on a contract-per-manual basis and is not otherwise subject to Beta's control. Who is a principal Who is an agent Who is an employee Who is an independent contractor

Accepted Answer

Beta is a principal. Arnold, Carol, Dave

Question 13

Miracle Motors employs Norris as a sales agent for a trial period. At the end of the period, Miracle Motors and Norris disagree on the amount of the commissions Norris is due for sales that he made. Norris may demand

Accepted Answer

A)  a constructive trust. 
B)  an accounting. 
C)  nothing. 
D)  specific performance. 
A)  a constructive trust. 
B)  an accounting. 
C)  nothing. 
D)  specific performance.

Question 14

Tri-state Financial Corporation hires Uri, a real estate agent, to locate investment properties for Tri-state. Uri learns of a warehouse available for $100,000, informs Tri-state, and makes an offer of $90,000 on Tri-state's instruction. The offer is rejected. Uri

Accepted Answer

A)  breached the agent's fiduciary duties to the principal. 
B)  did nothing wrong. 
C)  failed to take advantage of a business opportunity. 
D)  made an unreasonable offer based on current market value. 
A)  breached the agent's fiduciary duties to the principal. 
B)  did nothing wrong. 
C)  failed to take advantage of a business opportunity. 
D)  made an unreasonable offer based on current market value.

Question 15

Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of

Accepted Answer

A)  accounting. 
B)  obedience. 
C)  performance. 
D)  safe working conditions. 
A)  accounting. 
B)  obedience. 
C)  performance. 
D)  safe working conditions.

Question 16

An employee may not act in the capacity of an agent.

Accepted Answer

A) True 
 B)False

Question 17

Glen is an agent for Hi-Flite, Inc. On Hi-Flite's behalf and at its request, Glen pays Ian for certain plane maintenance and repair services. Glen's right to obtain the amount of those payments from Hi-Flite arises under the principal's duty of

Accepted Answer

A)  avoidance. 
B)  cooperation. 
C)  indemnification. 
D)  reimbursement. 
A)  avoidance. 
B)  cooperation. 
C)  indemnification. 
D)  reimbursement.

Question 18

Delicious Coffee Company hires Elton to sell Delicious's products in a certain area. Delicious agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delicious's employee is

Accepted Answer

A)  the amount of Elton's salary. 
B)  the control Delicious has over the details of the work. 
C)  the length of the trial period. 
D)  the title that designates Elton's position. 
A)  the amount of Elton's salary. 
B)  the control Delicious has over the details of the work. 
C)  the length of the trial period. 
D)  the title that designates Elton's position.

Question 19

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

Accepted Answer

A) True 
 B)False

Question 20

Teresa owns a used-car lot where Salvatore works as a salesperson. Teresa tells Salvatore not to make any warranties for the cars. To make a sale to Rosa, however, Salvatore adds a 50,000-mile warranty. Later, Rosa sues Teresa for breach of warranty. Teresa's right to hold Salvatore liable for any damages she has to pay is the right of

Accepted Answer

A)  avoidance. 
B)  cooperation. 
C)  indemnification. 
D)  reimbursement. 
A)  avoidance. 
B)  cooperation. 
C)  indemnification. 
D)  reimbursement.

Exam 32: Agency Formation and Duties

When an agency relationship is gratuitous, the agent does not act in exchange for payment.

Diego is a truck driver for Entertainment Supplies Company (ESC). Diego does exactly what ESC tells him. Diego is

Agency relationships normally are consensual.

Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.

Ella agrees to act as Fab's agent in settlement negotiations with Global Insurance Company. Ella works out a profitable compromise for Fab, but deposits the company's payment in her own account and refuses to give it to Fab. Fab files a suit against Ella. What remedies might the court impose

An agent is authorized to act on behalf of a principal in doing business with third parties.

Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is

Normally, all employees who deal with third parties are deemed to be agents.

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely

Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is

A person cannot be both an independent contractor and an agent.

Miracle Motors employs Norris as a sales agent for a trial period. At the end of the period, Miracle Motors and Norris disagree on the amount of the commissions Norris is due for sales that he made. Norris may demand

Tri-state Financial Corporation hires Uri, a real estate agent, to locate investment properties for Tri-state. Uri learns of a warehouse available for $100,000, informs Tri-state, and makes an offer of $90,000 on Tri-state's instruction. The offer is rejected. Uri

Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of

An employee may not act in the capacity of an agent.

Glen is an agent for Hi-Flite, Inc. On Hi-Flite's behalf and at its request, Glen pays Ian for certain plane maintenance and repair services. Glen's right to obtain the amount of those payments from Hi-Flite arises under the principal's duty of

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

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