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Exam 25: Agency Relationships

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Question 21

True/False

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An undisclosed principal is one whose identity is totally unknown by an agent and a third party at the time a contract is made.

A) True
B) False

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Question 22

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When an agent, acting within the scope of his or her authority, contracts with a third party, a disclosed principal is liable to the third party.

A) True
B) False

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Question 23

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Once the agency relationship has been terminated, an agent does not retain the power to bind the principal to a new contract.

Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached

The principal has a duty to pay the agent for services rendered.

Fact Pattern 25-1 Nina and Orin work at Pumps & Pipes Inc. (P&P) . Nina is a sales representative who works with P&P's customers. The company closely supervises all of its sales reps, and dictates their schedules. Orin works in P&P's engineering department, but does not deal with third parties. Refer to Fact Pattern 25-1. With respect to third parties, Nina is P&P's

An agent must act to maximize the benefits of the principal and the agent but not the benefits of a third party.

A n agent has the implied authority to accomplish the objectives of the agency relationship.

Agency relationships normally come about by agreement of the parties.

Mira serves in a representative capacity for Netanya. Orly is injured through Mira's negligence. Netanya may be liable to Orly if Mira's conduct occurred

An agency coupled with an interest is an agency where the principal agrees to pay interest on any payments due to the agent.

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

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.

Lucy is married to Marco. Lucy buys food for their children's lunches and charges the cost to Marco's account. This is an agency by

Apparent authority in an agency relationship arises when the principal causes the agent to reasonably believe that he or she has the authority to act.

Ratification is the affirmation of a previously authorized contract or act.

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity for a one-time project. After the grain is bought, the agency relationship terminates

Roberta introduces Steve to her friends as "my associate." Steve purports to act as Roberta's agent in several business transactions with those friends. If Roberta is liable for Steve's actions, it will be because their relationship is

Darla serves in a representative capacity for Ellen. To accomplish the objectives of this relationship, Darla's authority can be implied

Because independent contractors control the details of their work, independent contractors are never agents.