Question 1

Eric is employed by Grassly's Food Service as a full-time delivery person. Eric gets into an accident in a Grassly's Food Service van as he is delivering food to one of Grassly's customers. Is Grassly's liable for Eric's accident?

Accepted Answer

A)   Yes, employers are generally liable in tort for the actions of their employees.
B)   Yes, employers are generally liable in tort for the actions of independent contractors.
C)   No, employers are not generally liable in tort for the actions of employees.
D)   No, employers always have employees sign waivers agreeing not to be bound if an accident occurs.
E)   Yes, employers are always liable if employees have a written agreement for employment.F) A) and B)
G) A) and C)

Question 2

[Lakeside Property] Kumar agreed to act as the agent of Melanie in finding a piece of lakeside property for her at a good price, and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Kumar in his duties, Melanie disclosed to him confidential information about her finances and debts. Kumar decided that he needed help and paid Rick $300 to look for property for Melanie. Rick told Kumar about a great deal on a piece of lakeside property that Phil had for sale. In fact, the deal was so good that Kumar purchased the property for himself. When Melanie found out about the property Kumar bought for himself, she complained to Kumar. He defended himself on the basis that he was not actually working for Melanie when he found out about the deal. At the time, he was playing golf with Phil. He also told Melanie that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Melanie for reimbursement of the amount he paid Rick. Melanie fired Kumar threatening to sue him. Kumar told Melanie that he would counterclaim for the $300 owed to Rick. After he was fired, Kumar disclosed to a number of parties information regarding Melanie's spending habits which he thought were excessive.
-Which of the following is the most likely result if Kumar sues Melanie for the $300 paid to Rick?

Accepted Answer

A)   Kumar will lose.
B)   Kumar will win because an agent has an implied right to obtain help.
C)   Kumar will win only if he can establish by a preponderance of the evidence that he acted reasonably.
D)   Kumar will win unless Melanie can establish beyond a reasonable doubt that he acted unreasonably.
E)   Kumar will lose only if Melanie can establish that Rick is incompetent to deal in real estate.F) C) and E)
G) A) and B)

Question 3

[High Maintenance] Malcolm, who runs a retail jewelry store, went to a wholesale jewelry store with Ashley, to whom he was engaged to be married. Malcolm had no express, written agreement with Ashley by which she was his agent. The wholesaler jeweler, Rebecca, asked Malcolm if Ashley was buying for him. Malcolm did not want to embarrass Ashley so he nodded in agreement. A few minutes later Malcolm whispered to Ashley, outside the hearing of the wholesaler, that she should not make any purchases. Malcolm and Ashley had a big disagreement over money that evening, and Ashley broke off their engagement. The next day Ashley went back to the wholesale jeweler and purchased a string of pearls for $2,000. Ashley also purchased a fur jacket for $3,000 from a store next door to the jewelry store owned by Harry. She told Harry that Malcolm wanted a fur jacket for a model in his store and that Malcolm would be glad to pay Harry for the jacket.
-What type of agency, if any, did Ashley have to act on behalf of Malcolm as far as Rebecca is concerned?

Accepted Answer

A)   No type of agency was in effect because no written agreement was in place by which Ashley was Malcolm's agent.
B)   No type of agency was in effect because, in fact, Ashley was not Malcolm's agent.
C)   An express agency.
D)   An implied agency.
E)   An apparent agency.F) A) and C)
G) A) and D)

Question 4

________ occurs when a principal allows a third party to believe another individual serves as his or her agent, but the principal has actually not granted that party any authority. What type of authority has the principal created?

Accepted Answer

A)   Apparent agency
B)   Implied agency
C)   Express agency
D)   Applied agency
E)   Endorsement agencyF) A) and E)
G) B) and C)

Question 5

Robert has agreed to act as an agent for Jill. Which of the following scenarios requires the agency agreement be in writing?

Accepted Answer

A)   Robert is given power of attorney.
B)   Robert is given authority to make business calls on Jill's behalf.
C)   Robert is given authority to read Jill's mail.
D)   Agency agreements are never required to be in writing.
E)   All agency agreements must be in writing.F) A) and D)
G) A) and E)

Question 6

A gratuitous agent is one who acts without consideration.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a term used to describe the duty of an agent to communicate any information to the principal that the agent thinks could be important to the principal?

Accepted Answer

A)   Duty of notification
B)   Duty of information
C)   Requirement of conveyance
D)   Constructive notification
E)   Constructive informationF) C) and D)
G) A) and B)

Question 8

The principal's duty of ________ means that the principal should assist the agent in the performance of their duties and cannot interfere with the reasonable conduct of the agent.

Accepted Answer

A)   compensation
B)   loyalty
C)   affirmation
D)   cooperation
E)   reservationF) None of the above
G) C) and E)

Question 9

Which of the following is false regarding a principal's duties to an agent?

Accepted Answer

A)   An agent can sue the principal if the principal does not fulfill duties owed to the agent.
B)   An agent may be entitled to contract remedies but not tort remedies.
C)   If the principal has failed to meet duties owed to the agent, the agent can refuse to act on behalf of the principal until the failure is remedied.
D)   The principal has a duty to compensate an agent for services provided unless the parties have agreed that the agent will act gratuitously.
E)   The principal has a duty of reimbursement and indemnification to the agent for authorized expenditures.F) A) and E)
G) A) and B)

Question 10

Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

Accepted Answer

A)   A specific power of attorney
B)   An exact order of authority
C)   An exact legal empowerment
D)   A limited power of responeat superior
E)   A specific power of orderF) B) and D)
G) B) and E)

Question 11

[Overstock] Mark owns an electronic resale store. Before Mark left for the weekend, he told Charlie, an employee, not to purchase any more compact discs (CDs)  from customers because they were already having a difficult time selling the ones they had in stock. While Mark is gone, Charlie forgets Mark's instructions and buys nine CDs from customers.
-What if instead of Mark directing Charlie not to buy any CDs he said, "I don't think it is a good idea to buy CDs because we cannot sell the ones we have in stock." Charlie still purchased nine CDs from customers. Would Charlie be liable to Mark?

Accepted Answer

A)   No, because Mark did not put his requirement in writing.
B)   No, because Mark cannot control every aspect of Charlie's work performance.
C)   No, because Mark's statement was merely advisory and not mandatory.
D)   Yes, because Charlie did not follow Mark's instructions.
E)   Yes, because Charlie should have known it was not in Mark's best interests to purchase more CDs when they have a massive overstock.F) A) and E)
G) A) and C)

Question 12

Raul was employed by Vivian. Raul negligently got into an accident while working with Henry when he ran a stoplight while he was texting and driving. Vivian can seek ________ from Raul to recover any damages assessed by a court against Vivian as the principal for Raul's negligence.

Accepted Answer

A)   reformation
B)   indemnification
C)   reimbursement
D)   contribution
E)   recoupmentF) All of the above
G) None of the above

Question 13

Which of the following is false regarding civil law and a power of attorney in Luxembourg?

Accepted Answer

A)   In civil law countries, a power of attorney authorizes the agent only to conduct a series of transactions under instruction from the principal.
B)   In Luxembourg, the person on whose behalf the power of attorney is created is called a donor, instead of a principal.
C)   One type of power of attorney in Luxembourg is a power of attorney that is valid until death.
D)   One type of power of attorney in Luxembourg is a power of attorney that has unlimited validity even after death.
E)   The law in Luxembourg requires that the power of attorney be authenticated by a public authority or a public notary.F) A) and E)
G) A) and D)

Question 14

Which of the following is the best solution for a U.S. company that is attempting to enter a foreign market but is having difficulty due to a language barrier and lack of knowledge?

Accepted Answer

A)   The company should open a local business office to become familiar with the area.
B)   The company should continue to conduct business the way it would in the U.S.
C)   The company should hire an agent familiar with the local laws, customs, and practices to help it function smoothly.
D)   The company should focus all of its advertising in the desired market.
E)   The company should not do business in a foreign market if there is a language barrier.F) A) and C)
G) A) and D)

Question 15

The Italian legal system has created an agency relationship that gives that agent unique powers. The principal and agent enter into a contract under which the agent agrees to the principal's stipulations. This contract, however, also requires that the agent maintain the principal's property. Under Italian law, the agent then becomes ________.

Accepted Answer

A)   the legal owner of the property and can transfer or contract it without the principal's consent.
B)   conservator of the property and must make sure it is returned within 60 days.
C)   an independent contractor and the property becomes his or hers.
D)   responsible in tort if anything happens on the property or to the property.
E)   responsible for the taxes owed to the government on any property that is his or her possession.F) C) and E)
G) C) and D)

Question 16

In the text case, Penny Garrison v. The Superior Court of Los Angeles, plaintiffs sought to sue a residential care facility and avoid the effect of a durable power of attorney by which the decedent's daughter signed agreements to arbitrate disputes involving the facility. Which of the following was the result?

Accepted Answer

A)   The durable power of attorney was ineffective because it did not grant the holder authority to enter into arbitration agreements and the arbitration agreements, therefore, were unenforceable.
B)   The durable power of attorney was ineffective because it did not specifically give the daughter authority to enter into agreements involving health care and the arbitration agreements, therefore, were unenforceable.
C)   The durable power of attorney was ineffective because it was revoked after the decedent became ill and the arbitration agreements, therefore, were unenforceable.
D)   The durable power of attorney was effective but the arbitration agreements were void as against public policy.
E)   The durable power of attorney was effective and the agreements to arbitrate would be upheld.F) A) and B)
G) A) and C)

Question 17

Which of the following is true regarding criteria needed for creation of the agency relationship?

Accepted Answer

A)   The agency must be created for a lawful purpose, and the person hiring an agent must have contractual capacity.
B)   The agency must be created for an equitable as well as a lawful purpose, and the person hiring an agent must have contractual capacity.
C)   The agency must be created for a business and lawful purpose, and the person hiring an agent must have contractual capacity.
D)   The agency must be created for a lawful purpose; and, although there is no requirement that the person hiring an agent have capacity, the person acting as an agent must have contractual capacity.
E)   The agency must be created for an equitable as well as a lawful purpose; and, although there is no requirement that the person hiring an agent have capacity, the person acting as an agent must have contractual capacity.F) A) and E)
G) B) and D)

Question 18

Nadal hires Simon to be his tennis coach for the next six months to prepare him or the Olympic games. Nadal agrees to hire no one else in this time period to help him train. Nadal and Simon have entered into a(n)  ________ agency contract.

Accepted Answer

A)   specific
B)   demand
C)   exemplified
D)   guaranteed
E)   exclusiveF) A) and B)
G) A) and C)

Question 19

A(n)  ________ arises when an agent tries to represent both a principal and a third party at the same time.

Accepted Answer

A)   express agency
B)   dual agency
C)   conflict of interest
D)   representation agency
E)   absolutionF) A) and C)
G) A) and B)

Question 20

Barry is an employee who works as a sales person and receives commission for all sales he receives for a pharmaceutical company. When Alexia, Barry's boss, gives Barry his check on Friday, he believes that he should have been compensated more due to his sales for the week. Barry can ask Alexia for a(n)  ________

Accepted Answer

A)   specific performance.
B)   accounting performance.
C)   audit of accounts
D)   compensation check
E)   accounting.F) B) and E)
G) A) and B)

Exam 33: Agency Formation and Duties

Correct Answer
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Correct Answer
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A(n) ________ arises when an agent tries to represent both a principal and a third party at the same time.

Correct Answer
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Robert has agreed to act as an agent for Jill. Which of the following scenarios requires the agency agreement be in writing?

Correct Answer
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________ occurs when a principal allows a third party to believe another individual serves as his or her agent, but the principal has actually not granted that party any authority. What type of authority has the principal created?

Correct Answer
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Nadal hires Simon to be his tennis coach for the next six months to prepare him or the Olympic games. Nadal agrees to hire no one else in this time period to help him train. Nadal and Simon have entered into a(n) ________ agency contract.

Correct Answer
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Which of the following is true regarding criteria needed for creation of the agency relationship?

Correct Answer
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Correct Answer
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Eric is employed by Grassly's Food Service as a full-time delivery person. Eric gets into an accident in a Grassly's Food Service van as he is delivering food to one of Grassly's customers. Is Grassly's liable for Eric's accident?

Correct Answer
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A gratuitous agent is one who acts without consideration.

Correct Answer
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Correct Answer
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Raul was employed by Vivian. Raul negligently got into an accident while working with Henry when he ran a stoplight while he was texting and driving. Vivian can seek ________ from Raul to recover any damages assessed by a court against Vivian as the principal for Raul's negligence.

Correct Answer
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Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

Correct Answer
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Which of the following is false regarding civil law and a power of attorney in Luxembourg?

Correct Answer
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Which of the following is the best solution for a U.S. company that is attempting to enter a foreign market but is having difficulty due to a language barrier and lack of knowledge?

Correct Answer
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Which of the following is a term used to describe the duty of an agent to communicate any information to the principal that the agent thinks could be important to the principal?

Correct Answer
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Which of the following is false regarding a principal's duties to an agent?

Correct Answer
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Correct Answer
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The principal's duty of ________ means that the principal should assist the agent in the performance of their duties and cannot interfere with the reasonable conduct of the agent.

Correct Answer
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Correct Answer
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Exam 33: Agency Formation and Duties

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A(n) ________ arises when an agent tries to represent both a principal and a third party at the same time.

Correct AnswerverifiedShow Answer

Robert has agreed to act as an agent for Jill. Which of the following scenarios requires the agency agreement be in writing?

Correct AnswerverifiedShow Answer

________ occurs when a principal allows a third party to believe another individual serves as his or her agent, but the principal has actually not granted that party any authority. What type of authority has the principal created?

Correct AnswerverifiedShow Answer

Nadal hires Simon to be his tennis coach for the next six months to prepare him or the Olympic games. Nadal agrees to hire no one else in this time period to help him train. Nadal and Simon have entered into a(n) ________ agency contract.

Correct AnswerverifiedShow Answer

Which of the following is true regarding criteria needed for creation of the agency relationship?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Eric is employed by Grassly's Food Service as a full-time delivery person. Eric gets into an accident in a Grassly's Food Service van as he is delivering food to one of Grassly's customers. Is Grassly's liable for Eric's accident?

Correct AnswerverifiedShow Answer

A gratuitous agent is one who acts without consideration.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Raul was employed by Vivian. Raul negligently got into an accident while working with Henry when he ran a stoplight while he was texting and driving. Vivian can seek ________ from Raul to recover any damages assessed by a court against Vivian as the principal for Raul's negligence.

Correct AnswerverifiedShow Answer

Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

Correct AnswerverifiedShow Answer

Which of the following is false regarding civil law and a power of attorney in Luxembourg?

Correct AnswerverifiedShow Answer

Which of the following is the best solution for a U.S. company that is attempting to enter a foreign market but is having difficulty due to a language barrier and lack of knowledge?

Correct AnswerverifiedShow Answer

Which of the following is a term used to describe the duty of an agent to communicate any information to the principal that the agent thinks could be important to the principal?

Correct AnswerverifiedShow Answer

Which of the following is false regarding a principal's duties to an agent?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The principal's duty of ________ means that the principal should assist the agent in the performance of their duties and cannot interfere with the reasonable conduct of the agent.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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