Question 1

Most agency rules spring from:

Accepted Answer

A)  customary law. 
B)  common law. 
C)  statutory law. 
D)  regulatory law. 
A)  customary law. 
B)  common law. 
C)  statutory law. 
D)  regulatory law.

Question 2

An agency coupled with an interest means:

Accepted Answer

A)  either party may terminate the agency at any time. 
B)  the agency may not be able to recover the debt in the event of the principal's death. 
C)  the agency is irrevocable without the consent of the agent. 
D)  each party has the power to terminate without breach of contract if done so within 18 months. 
A)  either party may terminate the agency at any time. 
B)  the agency may not be able to recover the debt in the event of the principal's death. 
C)  the agency is irrevocable without the consent of the agent. 
D)  each party has the power to terminate without breach of contract if done so within 18 months.

Question 3

Independent contractors:

Accepted Answer

A)  are under the control of their employer or principal as to both the objective of their work and the means used to achieve it. 
B)  are under the control of their principals as to the result that is to be achieved, but not as to the means used to accomplish that result. 
C)  do not maintain their own inventory of goods; instead, they take orders on behalf of their principal. 
D)  bring the parties together rather than actually negotiating a contract of sale. 
A)  are under the control of their employer or principal as to both the objective of their work and the means used to achieve it. 
B)  are under the control of their principals as to the result that is to be achieved, but not as to the means used to accomplish that result. 
C)  do not maintain their own inventory of goods; instead, they take orders on behalf of their principal. 
D)  bring the parties together rather than actually negotiating a contract of sale.

Question 4

When the principal is trying to avoid being bound by the acts of the agent after the agency has ended, constructive notice is sufficient for:

Accepted Answer

A)  persons who have dealt with the former agent. 
B)  persons who knew of the agency but had never dealt with it before termination. 
C)  persons who never knew of existence of the agency. 
D)  everyone who the principal was in contract with before the termination. 
A)  persons who have dealt with the former agent. 
B)  persons who knew of the agency but had never dealt with it before termination. 
C)  persons who never knew of existence of the agency. 
D)  everyone who the principal was in contract with before the termination.

Question 5

When an agent's duties conflict with the principal's own interests, _____.

Accepted Answer

A)  the agent has breached the duty of loyalty 
B)  the agent must disclose these facts to the principal 
C)  if the agency is gratuitous, there is no duty of disclosure 
D)  the agent must resign immediately 
A)  the agent has breached the duty of loyalty 
B)  the agent must disclose these facts to the principal 
C)  if the agency is gratuitous, there is no duty of disclosure 
D)  the agent must resign immediately

Question 6

Normally, a duty to pay the agent is implied unless special circumstances or the relationship of the parties suggests that a gratuitous agency was intended.

Accepted Answer

A) True 
 B)False

Question 7

If an agent indulges in commingling, he _____.

Accepted Answer

A)  probably will not be liable for loss to the principal 
B)  bears the risk of any loss to the principal 
C)  will not be liable for any loss to the principal if the property is not wrongfully used 
D)  is breaching the duty to communicate information 
A)  probably will not be liable for loss to the principal 
B)  bears the risk of any loss to the principal 
C)  will not be liable for any loss to the principal if the property is not wrongfully used 
D)  is breaching the duty to communicate information

Question 8

In an agency at will, when one party exercises the power to terminate in violation of the right to terminate, the other party:

Accepted Answer

A)  is left without a remedy. 
B)  may recover monetary damages in a breach of contract suit. 
C)  may recover specific performance only terminating the contract. 
D)  can recover only if the relationship was not based on mutual consent. 
A)  is left without a remedy. 
B)  may recover monetary damages in a breach of contract suit. 
C)  may recover specific performance only terminating the contract. 
D)  can recover only if the relationship was not based on mutual consent.

Question 9

A feature which distinguishes commercial agents from distributors and nonagents is that commercial agents:

Accepted Answer

A)  generally maintain their own inventory of goods unlike distributors. 
B)  are usually compensated through a straight salary when a sale is completed. 
C)  always bear the financial risk of nonpayment by the purchaser. 
D)  often possess the authority to contract on behalf of their principals. 
A)  generally maintain their own inventory of goods unlike distributors. 
B)  are usually compensated through a straight salary when a sale is completed. 
C)  always bear the financial risk of nonpayment by the purchaser. 
D)  often possess the authority to contract on behalf of their principals.

Question 10

Whereas a sales representative can bind its principal to a contract with third persons, a commercial agent may only solicit business.

Accepted Answer

A) True 
 B)False

Exam 23: The Agency Relationship-Creation, Duties, and Termination

Most agency rules spring from:

An agency coupled with an interest means:

Independent contractors:

When the principal is trying to avoid being bound by the acts of the agent after the agency has ended, constructive notice is sufficient for:

When an agent's duties conflict with the principal's own interests, _____.

Normally, a duty to pay the agent is implied unless special circumstances or the relationship of the parties suggests that a gratuitous agency was intended.

If an agent indulges in commingling, he _____.

In an agency at will, when one party exercises the power to terminate in violation of the right to terminate, the other party:

A feature which distinguishes commercial agents from distributors and nonagents is that commercial agents:

Whereas a sales representative can bind its principal to a contract with third persons, a commercial agent may only solicit business.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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