agency formation and duties liability to third party and termination

8/9/2019 Agency formation and duties Liability to third party and termination

http://slidepdf.com/reader/full/agency-formation-and-duties-liability-to-third-party-and-termination 1/3

Sample Questions (CH 33, 34)TRUE/FALSE:

1. Express authority is authority declared in clear, direct, definite terms.

True

False

ANS: T

2. In considerin the scope of an aent!s implied authority, the test is "hether the aent reasona#ly #elie$ed

that he or she had the authority.

True

False

ANS: T

%. Apparent authority exists if a principal causes a third party to #elie$e reasona#ly that an aent has authority

to act.

True

False

ANS: T

&. If a principal does not ratify an unauthorized contract, the principal is not #ound.

True

False

ANS: T

'. A principal "hose identity is (no"n #y a third party "ith "hom an aent contracts on the principal!s #ehalfis an apparent principal.

True

False

ANS: F

). If an aent acts "ithin the scope of his or her authority, an undisclosed principal is lia#le to a third party for

contracts made #y the aent.

True

False

ANS: T

*. +nder the doctrine of respondeat superior , an aent is lia#le for the principal!s nelience.

TrueFalse

ANS: F

. A principal is lia#le for harm caused to a third party #y an aent "ho commits a tort "hile actin in the

scope of his or her employment.

True

False

1



ANS: T

-. enerally, a principal is not lia#le for an aent!s crime simply #ecause it "as committed "hile the aent "as

actin "ithin the scope of employment.

True

False

ANS: T

1/. An aency can terminate once its purpose is achie$ed.

True

False

ANS: T

MULT!LE CH"CE:

1. 0ory employs aily eli$ery Aency as an aent under a "ritten areement that descri#es the rihts and

duties of #oth parties. This is

a. apparent authority.

#. eual authority.c. express authority.

d. implied authority.

ANS: 0 3The terms and conditions 4 authority are expressly defined.5

2. Trey, an aent for +no 6usic 0orporation, executes an unauthori7ed contract "ith 8ariety 9ecordin, Inc.,

that is hihly ad$antaeous to +no. 8ariety "ithdra"s from the deal #efore +no ratifies the contract. The

contract is

a. $alid.

#. $aria#le.

c. $oid.

d. $oida#le.ANS: 0 3It is $oid since 8ariety "ithdre" #efore +no ratified the unauthori7ed contract. ther"ise, if

8ariety ratified the contract it "ould #e $alid ;contracts do not ha$e to #e fair.5

%. Elin, an aent for First 0redit 0orporation 3F05, enters into an unauthori7ed contract "ith reat

Expectations, Inc. 3E5, purportedly on F0!s #ehalf. This contract "ill #e enforcea#le if it is ratified #y

a. any third party.

#. Elin.

c. F0.

d. E.

ANS: 0 3The (ey term is <ratification=.5

&. E7ra is an aent for Fresh Food 0orporation. E7ra ma(es an innocent misrepresentation "hen enterin into a

contract on #ehalf of Fresh "ith ala rocery Stores, Inc. ala

a. is estopped from performin the contract.

#. may rescind the contract.

c. must perform the contract.

d. must ratify the contract.

ANS: > 3The contract is $oida#le #ased upon the innocent misrepresentation5

2



'. Fa# Auto Sales, Inc., employs 9 0ollection 0ompany as a collection aent. ?hile repossessin a car

from @adi, one of Fa#!s customers, 9 causes an accident in "hich @adi is inured. @adi can reco$er

from

a. Fa# only.

#. Fa# or 9.

c. 9 only.

d. @adi!s insurance company only.

ANS: > 3octrine of respondeat superior applies5

). 0ommercial e$elopment 0orporation 3005 hires elta 0onstruction 0ompany to "or( at a site as an

independent contractor. ?hether 00 "ill #e lia#le for torts committed at the site #y elta depends on

a. "hat elta #id for the o#.

#. "hether the facts indicate that 00 had control of eltaBs "or(.

c. "hich party o#tained insurance to co$er tort lia#ility.

d. "ho is payin elta.

ANS: > 3The (ey is controlC "ere "aes, taxes "ithheld #y 00D5

*. Security Armored 0ar 0orporation employs Theo as a salesman. ?ithout Security!s (no"lede #ut

other"ise actin "ithin the scope of employment, Theo commits a crime. The state can successfully

prosecute

a. neither Security nor Theo.

#. Security only.

c. Security or Theo.d. Theo only.

ANS: 3enerally, an employeeaentBs criminal acts do not ma(e the principal lia#le5

. 0li$e is a purchasin aent for ou#le 9anch "ith the authority to #uy cattle at a certain auction. After

the cattle are #ouht, the aency relationship terminates

a. automatically. #. follo"in notice to all actual cattle sellers.

c. follo"in notice to all potential cattle sellers.

d. follo"in pu#lished notice in a local ne"spaper.

ANS: A 3The aency is no" complete5

-. Frida hires ert, a real estate #ro(er, to act as her aent to sell her house. The house #urns do"n #efore

#ein sold. The aency areement is li(ely

a. still in force if Frida i$es ert additional consideration.

#. still in force if ert does not tell prospecti$e customers.

c. terminated #y mutual consent of the parties.d. terminated #y operation of la".

ANS: 3estruction of the su#ect matter5

3

agency formation and duties liability to third party and termination

Documents