Question 1

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

Accepted Answer

A) True 
 B)False

Question 2

If a principal does not ratify an unauthorized contract,the principal is not bound.

Accepted Answer

A) True 
 B)False

Question 3

Brenda,a salesperson at a Cabinets & Countertops store,tells D'Antoni,a customer,"Buy your cabinets here,and I'll install them for half of what the store would charge." D'Antoni buys the cabinets,which Brenda in-stalls for half the store's price. Brenda keeps the money. Brenda has breached

Accepted Answer

A)  no duty.
B)  the agent's duty of loyalty.
C)  the principal's duty of indemnification.
D)  the agent's duty of obedience.E) A) and B)
F) A) and C)

Question 4

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

Accepted Answer

A)  no duty.
B)  the agent's duty of accounting.
C)  the agent's duty of loyalty.
D)  the principal's duty of compensation.E) All of the above
F) B) and C)

Question 5

An agency agreement can be implied by conduct.

Accepted Answer

A) True 
 B)False

Question 6

Normally,employees who deal with third parties are not deemed to be agents.

Accepted Answer

A) True 
 B)False

Question 7

A principal's ratification of an agent's unauthorized act must be express.

Accepted Answer

A) True 
 B)False

Question 8

HomeBaked Bread Company hires Ike to sell the company's products in a certain area. HomeBaked Bread agrees to pay Ike a salary,plus commission,for a trial period. They also agree that Ike can sell using any methods and during any hours that seem appropriate. The key factor in whether Ike is HomeBaked Bread's employee is

Accepted Answer

A)  the amount of Ike's salary.
B)  thecontrol HomeBaked Bread has over the details of the work.
C)  thelength of the trial period.
D)  the size of Ike's sales area.E) B) and C)
F) None of the above

Question 9

An agency relationship created for an illegal purpose is enforceable.

Accepted Answer

A) True 
 B)False

Question 10

An agency agreement can be created by an oral agreement.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  apparent authority.
B)  express authority.
C)  implied authority.
D)  no authority.E) C) and D)
F) A) and C)

Question 12

Roman is the chief executive officer of Salty Snax Corporation. Roman's re-sponsibilities include decisions on product development,marketing,and other significant business directions. Roman is subject to the approval and oversight of Salty Snax's board of directors. Teri is a Salty Snax manager whose duties include the firm's day-to-day hiring,firing,purchasing,and sell-ing. Umberto is a Salty Snax salesperson,whose daily activities are con-trolled by Teri. Velma writes sales manuals and promotional materials for Salty Snax's products ac-cording to Roman's instructions and subject to Salty Snax's control,but has no dealings with the company's custom-ers or sup-pliers. Warren writes copy on a contract-per-project basis and is not otherwise subject to Salty Snax's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?

Accepted Answer

Salty Snax is a principal. Roman,Teri,Umberto,and Velma are the company's agents and employees. Warren is an independent contractor.
In an agency relationship,an agent agrees to act for or on behalf of a principal. An agent is subject to the control of the principal. An employee is sub-ject to the control of employer. An independent contractor is not subject to an employer's control. A corporation is a "person" who has contrac-tual ca-pacity but who can act only through its agents.
Salty Snax,as a corpo-ration,is acting through its agents. Roman,Teri,Umberto,and Velma act on behalf of the company,from which they obtain their authority. This author-ity differs-Roman,Teri,and Umberto can bind Salty Snax in certain ways in their dealings with third parties,but Velma does not have the authority to legally bind the company. Because Roman,Teri,Umberto,and Velma are subject to the control of Salty Snax,through their superiors,they are employees. Because Warren is not subject to Salty Snax's control with respect to the physical conduct in the per-formance of his contracts,Warren is an independent contractor.

Question 13

Rondiholds herself out as possessing special accounting skills. As an agent,she must exercise the degree of skill or care expected of

Accepted Answer

A)  a person having those skills.
B)  an average,unskilled person.
C)  a reasonable person.
D)  the principal.E) None of the above
F) B) and D) A

Question 14

Yoshi contracts with Zach to buy a certain pub,Aficionado's,for Yoshi,who asks Zach not to reveal her identity. Zach makes a deal with Burcet,the owner of the pub,and makes a down payment. Yoshi fails to pay the rest of the price,and does not pay Zach for his services. Does Zach have any recourse against Yoshi? If so,on what basis and to what extent?

Accepted Answer

Zach can seek to hold Yoshi liable for breach of contract,and Yoshi may be liable for whatever damages Zach has to pay to Burcet,and more.
With respect to the contract with Burcet,a prin-cipal has a duty to in-demnify an agent for liabilities in-curred because of authorized and lawful acts and transactions and for losses suf-fered because of the princi-pal's failure to per-form his or her duties.
With respect to payment for Zach's services,if an agent is not a gratuitous agent (that is,one who does not perform for money),a principal owes the agent com-pensation for his or her services rendered. In the facts of this question,if no amount had been agreed to,Yoshi would owe Zach the customary amount for his services. Of course,payment must be timely,and there may be a penalty associated with the delay. Also,a principal's duties include the responsi-bility to reimburse an agent for expenses related to the agency,unless the parties have agreed otherwise. Thus,Yoshi may owe an amount for Zach's disbursements,including the down payment,and other ex-penses,as well.

Question 15

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

Accepted Answer

A)  automatically.
B)  following notice to all actual grain sellers.
C)  following notice to all potential grain sellers.
D)  following published notice in a local newspaper.E) All of the above
F) B) and C)

Question 16

An agent has the implied authority to do what is reasonably necessary to carry out express au-thor-ity.

Accepted Answer

A) True 
 B)False

Question 17

If an agent has no authority but nevertheless contracts with a third party,the principal can be held liable on the contract.

Accepted Answer

A) True 
 B)False

Question 18

Emmett,an agent for Fridley,signs an agreement with Glover on Fridley's behalf but ne-glects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is

Accepted Answer

A)  liable,because notice to Emmett is notice to Fridley.
B)  liable,because notice to Glover is notice to Fridley.
C)  not liable,because Emmett did not notify Fridleyof the tax.
D)  not liable,because Glover did not tell Fridley about the tax.E) A) and B)
F) B) and C)

Question 19

An agent is authorized to act on behalf and instead of a principal in doing business with third parties.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  any transaction causing a loss to Miklos.
B)  Miklos's death or incapacity.
C)  Miklos's sixty-fifth birthday.
D)  Nathalie's handling of one of each stipulated transaction.E) A) and C)
F) A) and B)

Exam 27: Agency Relationships in Business

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

Correct Answer
verified

If a principal does not ratify an unauthorized contract,the principal is not bound.

Correct Answer
verified

Brenda,a salesperson at a Cabinets & Countertops store,tells D'Antoni,a customer,"Buy your cabinets here,and I'll install them for half of what the store would charge." D'Antoni buys the cabinets,which Brenda in-stalls for half the store's price. Brenda keeps the money. Brenda has breached

Correct Answer
verified

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

Correct Answer
verified

An agency agreement can be implied by conduct.

Correct Answer
verified

Normally,employees who deal with third parties are not deemed to be agents.

Correct Answer
verified

A principal's ratification of an agent's unauthorized act must be express.

Correct Answer
verified

Correct Answer
verified

An agency relationship created for an illegal purpose is enforceable.

Correct Answer
verified

An agency agreement can be created by an oral agreement.

Correct Answer
verified

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

Correct Answer
verified

Rondiholds herself out as possessing special accounting skills. As an agent,she must exercise the degree of skill or care expected of

Correct Answer
verified
A

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

Correct Answer
verified

An agent has the implied authority to do what is reasonably necessary to carry out express au-thor-ity.

Correct Answer
verified

If an agent has no authority but nevertheless contracts with a third party,the principal can be held liable on the contract.

Correct Answer
verified

Emmett,an agent for Fridley,signs an agreement with Glover on Fridley's behalf but ne-glects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is

Correct Answer
verified

An agent is authorized to act on behalf and instead of a principal in doing business with third parties.

Correct Answer
verified

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

Correct Answer
verified

Exam 27: Agency Relationships in Business

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

Correct AnswerverifiedShow Answer

If a principal does not ratify an unauthorized contract,the principal is not bound.

Correct AnswerverifiedShow Answer

Brenda,a salesperson at a Cabinets & Countertops store,tells D'Antoni,a customer,"Buy your cabinets here,and I'll install them for half of what the store would charge." D'Antoni buys the cabinets,which Brenda in-stalls for half the store's price. Brenda keeps the money. Brenda has breached

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An agency agreement can be implied by conduct.

Correct AnswerverifiedShow Answer

Normally,employees who deal with third parties are not deemed to be agents.

Correct AnswerverifiedShow Answer

A principal's ratification of an agent's unauthorized act must be express.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An agency relationship created for an illegal purpose is enforceable.

Correct AnswerverifiedShow Answer

An agency agreement can be created by an oral agreement.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rondiholds herself out as possessing special accounting skills. As an agent,she must exercise the degree of skill or care expected of

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

An agent has the implied authority to do what is reasonably necessary to carry out express au-thor-ity.

Correct AnswerverifiedShow Answer

If an agent has no authority but nevertheless contracts with a third party,the principal can be held liable on the contract.

Correct AnswerverifiedShow Answer

Emmett,an agent for Fridley,signs an agreement with Glover on Fridley's behalf but ne-glects to tell him that the agreement requires the payment of a certain tax. The government prosecutes Fridley for failing to pay the tax. He is

Correct AnswerverifiedShow Answer

An agent is authorized to act on behalf and instead of a principal in doing business with third parties.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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