Question 1

A principal is not bound to contracts made by an apparent agency.

Accepted Answer

A) True 
 B)False

Question 2

Martin, who wants to sell a house he owns, authorizes his concierge, Wilhelm, to find a potential buyer and finalize a deal above a stipulated price. Wilhelm contracts Chris, a real estate broker, and instructs him to only find a potential buyer and send them over to Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company to renovate the house. ReNowait completes its work and Martin pays them. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. What sort of commercial relationship exists between Martin and Wilhelm?

Accepted Answer

A)  employer-employee relationship 
B)  agent-agent relationship 
C)  agent-independent contractor relationship 
D)  principal-agent relationship 
A)  employer-employee relationship 
B)  agent-agent relationship 
C)  agent-independent contractor relationship 
D)  principal-agent relationship

Question 3

Ashley owns a piece of vacant real estate through which a small river runs. Ashley hires Warren, a licensed real estate broker, to list the property for sale and help sell the property. While inquiring in the neighborhood, Ashley's neighbor Lenny tells Warren that a chemical plant upstream has polluted his property and that Warren should have environmental engineers test Ashley's property as well. Warren does not tell Ashley about Lenny's suggestion. Warren manages to find a buyer for Ashley's property in Martha. It is later discovered that the property Martha bought from Ashley is polluted. What important agent's duty has Warren failed to perform?

Accepted Answer

A)  duty to indemnify 
B)  duty to account 
C)  duty to reimburse 
D)  duty to notify 
A)  duty to indemnify 
B)  duty to account 
C)  duty to reimburse 
D)  duty to notify

Question 4

The ________ includes keeping records of all property and money received and expended during the course of an agency.

Accepted Answer

A)  duty of accountability 
B)  duty of termination 
C)  duty to reimburse 
D)  duty to notify 
A)  duty of accountability 
B)  duty of termination 
C)  duty to reimburse 
D)  duty to notify

Question 5

The outbreak of a war between the principal's country and the agent's country may be grounds for terminating an agency.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true of a general power of attorney?

Accepted Answer

A)  A power of attorney can be oral. 
B)  Only lawyers can be agents of a power of attorney. 
C)  A power of attorney cannot be claimed once the principal is incapacitated. 
D)  It may allow the agent to sign legal documents on the principal's behalf. 
A)  A power of attorney can be oral. 
B)  Only lawyers can be agents of a power of attorney. 
C)  A power of attorney cannot be claimed once the principal is incapacitated. 
D)  It may allow the agent to sign legal documents on the principal's behalf.

Question 7

List the circumstances that can lead to termination by impossibility of performance.

Accepted Answer

An agency relationship terminates if a s

Question 8

An agent is a party who ________.

Accepted Answer

A)  agrees to act on behalf of another 
B)  employs another person to act on his or her behalf 
C)  directs a worker under an express or implied contract of employment 
D)  receives the services of another for remuneration 
A)  agrees to act on behalf of another 
B)  employs another person to act on his or her behalf 
C)  directs a worker under an express or implied contract of employment 
D)  receives the services of another for remuneration

Question 9

Which of the following is true of an apparent agency?

Accepted Answer

A)  The authority of an apparent agent is implied from the conduct of the parties. 
B)  The third-party is not bound to a contract created by an apparent agent. 
C)  The principal is bound to the contracts entered into by an apparent agent. 
D)  The actions of an apparent agent create an apparent agency. 
A)  The authority of an apparent agent is implied from the conduct of the parties. 
B)  The third-party is not bound to a contract created by an apparent agent. 
C)  The principal is bound to the contracts entered into by an apparent agent. 
D)  The actions of an apparent agent create an apparent agency.

Question 10

The mutual assent of parties can terminate an agency.

Accepted Answer

A) True 
 B)False

Question 11

What is imputed knowledge?

Accepted Answer

A)  information collected by a principal prior to engaging in an agency 
B)  information collected by a principal on an agency 
C)  information learned by an agent that is attributed to the principal 
D)  information learned by a principal that is attributed to an agent 
A)  information collected by a principal prior to engaging in an agency 
B)  information collected by a principal on an agency 
C)  information learned by an agent that is attributed to the principal 
D)  information learned by a principal that is attributed to an agent

Question 12

Which of the following is true of an employer-employee relationship?

Accepted Answer

A)  An employee has implied power of attorney towards the principal. 
B)  An employee has authority to act on behalf of the principal. 
C)  An employee can enter into contracts on behalf of the employer. 
D)  An employee is hired to perform a physical task or service. 
A)  An employee has implied power of attorney towards the principal. 
B)  An employee has authority to act on behalf of the principal. 
C)  An employee can enter into contracts on behalf of the employer. 
D)  An employee is hired to perform a physical task or service.

Question 13

In an agency by ratification, the agent is relieved of any liability for misrepresentation.

Accepted Answer

A) True 
 B)False

Question 14

The termination of an agency does not necessarily extinguish the power of the agent to act on behalf of the principal.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter into contracts on his or her behalf?

Accepted Answer

A)  employer-employee relationship 
B)  employer-agent relationship 
C)  principal-third party relationship 
D)  principal-agent relationship 
A)  employer-employee relationship 
B)  employer-agent relationship 
C)  principal-third party relationship 
D)  principal-agent relationship

Question 16

Which of the following constitutes an agency?

Accepted Answer

A)  principal-agent relationship 
B)  agent-agent relationship 
C)  principal-principal relationship 
D)  agent-independent contractor relationship 
A)  principal-agent relationship 
B)  agent-agent relationship 
C)  principal-principal relationship 
D)  agent-independent contractor relationship

Question 17

Parties with whom an agent has direct dealings must be given direct notice of the termination of an agency.

Accepted Answer

A) True 
 B)False

Question 18

An agent who has negligently or intentionally failed to perform his express duties is liable under tort law.

Accepted Answer

A) True 
 B)False

Question 19

If a principal and an agent enter into an express agency contract, the principal cannot employ any agent other than the exclusive agent.

Accepted Answer

A) True 
 B)False

Question 20

How can a principal extinguish an agent's apparent authority?

Accepted Answer

If a principal fails to give the proper

Exam 29: Agency Formation and Termination

A principal is not bound to contracts made by an apparent agency.

The ________ includes keeping records of all property and money received and expended during the course of an agency.

The outbreak of a war between the principal's country and the agent's country may be grounds for terminating an agency.

Which of the following is true of a general power of attorney?

List the circumstances that can lead to termination by impossibility of performance.

An agent is a party who ________.

Which of the following is true of an apparent agency?

The mutual assent of parties can terminate an agency.

What is imputed knowledge?

Which of the following is true of an employer-employee relationship?

In an agency by ratification, the agent is relieved of any liability for misrepresentation.

The termination of an agency does not necessarily extinguish the power of the agent to act on behalf of the principal.

Which of the following types of relationship exists when a person hires another person to perform some form of physical service but does not authorize that person to enter into contracts on his or her behalf?

Which of the following constitutes an agency?

Parties with whom an agent has direct dealings must be given direct notice of the termination of an agency.

An agent who has negligently or intentionally failed to perform his express duties is liable under tort law.

If a principal and an agent enter into an express agency contract, the principal cannot employ any agent other than the exclusive agent.

How can a principal extinguish an agent's apparent authority?

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