Question 1

A real estate agent tells a purchaser that she has authority to sign a contract for sale of property on behalf of the vendor. The purchaser relies on that representation and signs an acceptance. The vendor refuses to complete the contract because the agent did not have authority to sign the contract on behalf of the vendor. The vendor will be bound to complete the contract.

Accepted Answer

A) True 
 B)False

Question 2

An agency agreement can be established

Accepted Answer

A)  by written memorandum. 
B)  by being written under seal. 
C)  orally. 
D)  by ratification. 
E)  all of the above.

Question 3

Holding out is the phrase used to describe the representation, by a business, either by words suggestive of that relationship or by acquiescing in similar contracts made for it by that person in the past, that someone is its agent.

Accepted Answer

A) True 
 B)False

Question 4

Explain for each of the following statements, whether the agent has liability to the third party?
a. The agent enters into a contract on behalf of its principal with a third party. Unknown to the agent its principal had died two months previously.
b. The agent acts on behalf of an undisclosed principal. The agent acting on behalf of the principal enters into a contract with the third party. The contract is made in the agent's name and the circumstances surrounding the contract show the agent categorically described himself as a principal throughout the negotiations.
c. The agent enters into a contract with the third party but neither represents himself as a principal or an agent.
d. The agent enters into a contact with the third party. Prior to entering the contract the agent advised the third party that he was acting on behalf of a principal who did not wish to disclose its name at the present time.

Accepted Answer

The answer of Explain for each of the following statements,...

Question 5

Barney explains to Mrs. Adams that the contract is an option on her land, that he is an agent, and that the principal wants to remain undisclosed at the present time. If Mrs. Adams signs the option agreement, can it be enforced against her even though the principal is not named and the agent fails to sign?

Accepted Answer

A)  No, because an agent always lacks the authority to bind an undisclosed principal. 
B)  No, since this agreement is for interest in land, it must have all the essential terms of a written contract. 
C)  No, since the names of both parties are needed on a written contract. 
D)  Yes, since only the charged party needs to sign the agreement. 
E)  Yes, because the agent clearly identified himself.

Question 6

What four duties are generally owed by an agent to its principal?

Accepted Answer

The answer of What four duties are generally owed by...

Question 7

Identify which duty of agent to principal, if any, is being breached.
a. X, a valued client of the agent, requests the agent to attend a land auction and to bid on a specific piece of land if it is free and clear of encumbrances and restrictions. The agent, although not knowledgeable about auctions or real estate, attends and successfully bids on the property. However, the agent did not understand the legalese contained in a brochure given each of the bidders which stated the property the agent obtained would be subject to a restrictive covenant restricting the development and use of the property.
b. The agent is instructed to attempt to purchase a specific piece of land and is authorised to offer up to
$100,000 for same. The agent purchases the property for $85,000 and collects $95,000 from his principal, and in so doing advises the principal that the acquisition cost was $95,000.
c. The principal retains agent X due to the agent's public reputation as an outstanding tax expert and requests that the agent attend a tax inquiry to represent him. X agrees to do this but instead delegates it to a sub- agent who unsatisfactorily represents the principal.
d. The principal instructs the agent not to pay more than $50,000 for a lot. The agent commits its principal to pay $60,000 for the lot.

Accepted Answer

The answer of Identify which duty of agent to principal,...

Question 8

An agent will be liable for breach of warranty of authority if:

Accepted Answer

A)  the agent accepts commissions from both principal and third party without full disclosure. 
B)  if there is a clause in the contract between principal and third party that makes it clear that the principal is not bound until the principal approves the contract 
C)  the agent misrepresents the scope of the agent's authority, and the principal is not bound to the contract with the third party 
D)  the agent breaches the terms and conditions of the agent's contract with the principal 
E)  the agent does not make it clear to the third party that the agent is acting in a representative capacity

Question 9

In the absence of evidence of an employment relationship, an agent's authority is terminated on any of the following occasions EXCEPT

Accepted Answer

A)  at the completion of the particular project for which the agency was formed. 
B)  upon the bankruptcy of the agent. 
C)  upon the death or insanity of either the principal or the agent. 
D)  upon notice by either the principal or the agent that she wishes to end the agency. 
E)  at the end of the time specified in the agency agreement.

Question 10

Gene Stone told the Harders that he was an agent for the Trouplow Corp. and was raising money for a local expansion programme. He then proceeded to sell them fifteen $1,000 12% bonds. In truth, the Trouplow Corp. had never heard of Gene Stone, but they did have 12% bonds available for local residents to buy. To recover the $15.000 paid, the Harders should sue

Accepted Answer

A)  Gene Stone for breach of warranty of authority. 
B)  Gene Stone for rescission of contract. 
C)  both agent and principal on the breach of contract. 
D)  for criminal prosecution of Gene Stone. 
E)  the Trouplow Corp. on the tort of deceit.

Question 11

What documents can an agent who has been granted a power of attorney sign.

Accepted Answer

The answer of What documents can an agent who has...

Question 12

An agency contract may be terminated upon the bankruptcy of the principal.

Accepted Answer

A) True 
 B)False

Question 13

An agency is a relationship in which one person, called the agent, authorizes another person to enter into contracts with a third party on its behalf.

Accepted Answer

A) True 
 B)False

Question 14

A company that represents, either by words suggestive of that relationship or by acquiescing in similar contracts made for it by that person in the past, that someone is its agent, is permitted to deny any such relationship, upon the provision of notice.

Accepted Answer

A) True 
 B)False

Question 15

The franchise agreement is usually a standard form contract written by the franchisor. This agreement usually includes provisions regarding

Accepted Answer

A)  services and assistance from other franchisees. 
B)  renting of equipment and sometimes premises of the franchisee. 
C)  ongoing payments to be used by franchisee for promotion and advertising. 
D)  exclusive supply contracts through certain vendors. 
E)  paying the franchisee a "basic franchise fee".

Question 16

Name five occasions in the absence of an employment relationship when an agent's authority may be terminated.

Accepted Answer

The answer of Name five occasions in the absence of...

Question 17

An agency contract will most likely contain

Accepted Answer

A)  private instructions restricting the agent's authority. 
B)  provisions for keeping the principal informed. 
C)  only custom and trade usage provisions. 
D)  termination procedures. 
E)  both express and implied terms.

Question 18

Is it legally permissible for an agent to work for two principals; such as for both the seller and the buyer in a real estate transaction?

Accepted Answer

The answer of Is it legally permissible for an agent...

Question 19

Define agency.

Accepted Answer

The answer of Define agency....

Question 20

A franchisor has a fiduciary duty towards the franchisee?

Accepted Answer

A) True 
 B)False

Exam 19: Agency and Franchising

An agency agreement can be established

Holding out is the phrase used to describe the representation, by a business, either by words suggestive of that relationship or by acquiescing in similar contracts made for it by that person in the past, that someone is its agent.

What four duties are generally owed by an agent to its principal?

An agent will be liable for breach of warranty of authority if:

In the absence of evidence of an employment relationship, an agent's authority is terminated on any of the following occasions EXCEPT

What documents can an agent who has been granted a power of attorney sign.

An agency contract may be terminated upon the bankruptcy of the principal.

An agency is a relationship in which one person, called the agent, authorizes another person to enter into contracts with a third party on its behalf.

A company that represents, either by words suggestive of that relationship or by acquiescing in similar contracts made for it by that person in the past, that someone is its agent, is permitted to deny any such relationship, upon the provision of notice.

The franchise agreement is usually a standard form contract written by the franchisor. This agreement usually includes provisions regarding

Name five occasions in the absence of an employment relationship when an agent's authority may be terminated.

An agency contract will most likely contain

Is it legally permissible for an agent to work for two principals; such as for both the seller and the buyer in a real estate transaction?

Define agency.

A franchisor has a fiduciary duty towards the franchisee?