Question 1

Cal directs Diego, Cal's agent, to harvest the hay on Edna's farm, although neither Cal nor Diego has the right to go onto the land and cut and remove the crop. Liability for the trespass and damage to the property extends to

Accepted Answer

A) Cal, Diego, and Edna. 
B) Cal and Diego only. 
C) Cal only. 
D) Diego only.

Question 2

A principal is always directly responsible for an agent's misrepresentation made within the scope of the agent's authority.

Accepted Answer

A) True 
 B)False

Question 3

The agent must maintain separate accounts for the principal's funds and for the agent's personal funds, but may intermingle these accounts.

Accepted Answer

A) True 
 B)False

Question 4

The most important factor weighted by the courts in determining employee status is

Accepted Answer

A) the degree of control an employer exercises over the details of the work. 
B) the distinction between the occupations of a worker and an employer. 
C) the method of payment, whether by time period or completion of work. 
D) the skill required of the worker to do a job.

Question 5

An agent must keep confidential any information acquired through an agency during the term of the relationship, but can disclose it after the agency ends.

Accepted Answer

A) True 
 B)False

Question 6

An agent may not exceed his or her actual authority, even in an unforeseen emergency to protect or preserve the property and rights of the principal.

Accepted Answer

A) True 
 B)False

Question 7

The equal dignity rule requires that a principal and an agent act in good faith and with mutual respect in their dealings with each other.

Accepted Answer

A) True 
 B)False

Question 8

A sudden storm threatens the property of Marina Bay LLC. Ngoc, Marina Bay's sales agent, is on site, but lacks the express or implied authority to bind the firm to the cost of appropriate protective measures. Unable to communicate with Marina Bay, Ngoc

Accepted Answer

A) has emergency powers to deal with the situation. 
B) cannot authorize the expense. 
C) must await the principal's express ratification to act. 
D) can imply a power of attorney to assume the needed authority.

Question 9

Based on Jin's conduct, Kai reasonably believes that Lore has the authority to act on Jin's behalf even though Lore does not have the actual authority to do so. In this circumstance, Lore has

Accepted Answer

A) apparent authority. 
B) express authority. 
C) implied authority. 
D) no authority.

Question 10

Because those who cannot legally enter into contracts directly cannot do so indirectly through an agent, a principal must

Accepted Answer

A) put an agency agreement into writing. 
B) proffer consideration to enter into an agency relationship. 
C) have contractual capacity to be a principal. 
D) employ only one agent at any given time.

Question 11

Anything that an agent obtains by virtue of an agency relationship is his or hers to keep.

Accepted Answer

A) True 
 B)False

Question 12

Luis hires Mieko to act as his agent to buy Noh's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Noh's seller who that third party is. Luis is

Accepted Answer

A) a disclosed principal. 
B) not a principal. 
C) an undisclosed principal. 
D) a partially disclosed principal.

Question 13

Velma is a purchasing agent for Wild-Caught Fish Inc., with the authority to buy the catches of commercial fishers up to a certain quantity. When the limit is reached, the agency relationship terminates

Accepted Answer

A) automatically. 
B) following notice to all fishers within a reasonable geographic area. 
C) following notice to all fishers with whom Velma did business. 
D) following published notice.

Question 14

When a principal has given a third party reason to believe that an agent has authority to act, the principal may be estopped from denying that authority.

Accepted Answer

A) True 
 B)False

Question 15

Milos employs Natalie to handle a list of financial transactions on Milos's behalf. This power will terminate on

Accepted Answer

A) any transaction causing a loss to Milos. 
B) Milos's death or incapacity. 
C) Milos's sixty-fifth birthday. 
D) Natalie's handling of one of each stipulated transaction.

Question 16

There is no condition under which a principal must indemnify an agent for a tort claim arising from the agency relationship.

Accepted Answer

A) True 
 B)False

Question 17

Roc is an agent for Statistics Inc. On the firm's behalf and at its request, Roc pays Tech LLC for specially customized software. Roc's right to obtain the amount of the payment from Statistics Inc. arises under the duty of

Accepted Answer

A) none of the choices. 
B) compensation. 
C) indemnification. 
D) reimbursement.

Question 18

When an agent, acting within the scope of his or her authority, contracts with a third party, in most states, the agent is treated as a party to the contract.

Accepted Answer

A) True 
 B)False

Question 19

Part of the rationale for the doctrine of respondeat superior is that an injured person should be afforded effective relief, which is usually best provided by a business because

Accepted Answer

A) employers today are not the masters of their employees. 
B) employees are normally classified as independent contractors. 
C) agents and other personnel typically execute liability waivers. 
D) the cost of risk can be spread over an entire business enterprise.

Question 20

The doctrine of respondeat superior imposes liability for an agent's tort on a principal without regard to the personal fault of the agent .

Accepted Answer

A) True 
 B)False

Exam 32: Agency Formation and Duties

Cal directs Diego, Cal's agent, to harvest the hay on Edna's farm, although neither Cal nor Diego has the right to go onto the land and cut and remove the crop. Liability for the trespass and damage to the property extends to

A principal is always directly responsible for an agent's misrepresentation made within the scope of the agent's authority.

The agent must maintain separate accounts for the principal's funds and for the agent's personal funds, but may intermingle these accounts.

The most important factor weighted by the courts in determining employee status is

An agent must keep confidential any information acquired through an agency during the term of the relationship, but can disclose it after the agency ends.

An agent may not exceed his or her actual authority, even in an unforeseen emergency to protect or preserve the property and rights of the principal.

The equal dignity rule requires that a principal and an agent act in good faith and with mutual respect in their dealings with each other.

A sudden storm threatens the property of Marina Bay LLC. Ngoc, Marina Bay's sales agent, is on site, but lacks the express or implied authority to bind the firm to the cost of appropriate protective measures. Unable to communicate with Marina Bay, Ngoc

Based on Jin's conduct, Kai reasonably believes that Lore has the authority to act on Jin's behalf even though Lore does not have the actual authority to do so. In this circumstance, Lore has

Because those who cannot legally enter into contracts directly cannot do so indirectly through an agent, a principal must

Anything that an agent obtains by virtue of an agency relationship is his or hers to keep.

Luis hires Mieko to act as his agent to buy Noh's Southeast Asian Café. Luis tells Mieko to reveal only that she is buying the restaurant on behalf of a third party, without telling Noh's seller who that third party is. Luis is

Velma is a purchasing agent for Wild-Caught Fish Inc., with the authority to buy the catches of commercial fishers up to a certain quantity. When the limit is reached, the agency relationship terminates

When a principal has given a third party reason to believe that an agent has authority to act, the principal may be estopped from denying that authority.

Milos employs Natalie to handle a list of financial transactions on Milos's behalf. This power will terminate on

There is no condition under which a principal must indemnify an agent for a tort claim arising from the agency relationship.

Roc is an agent for Statistics Inc. On the firm's behalf and at its request, Roc pays Tech LLC for specially customized software. Roc's right to obtain the amount of the payment from Statistics Inc. arises under the duty of

When an agent, acting within the scope of his or her authority, contracts with a third party, in most states, the agent is treated as a party to the contract.

Part of the rationale for the doctrine of respondeat superior is that an injured person should be afforded effective relief, which is usually best provided by a business because

The doctrine of respondeat superior imposes liability for an agent's tort on a principal without regard to the personal fault of the agent .