Question 1

The duty of obedience owed by an agent to a principal is not breached and will not result in liability to the principal by an agent's refusal to do an illegal or tortious act for the principal.

Accepted Answer

A) True 
 B)False

Question 2

An agency contract appointing the agent for a period of more than one year must be in writing.

Accepted Answer

A) True 
 B)False

Question 3

Since the agency relationship is created by agreement, the agency relationship may be terminated at any time by mutual agreement of the principal and the agent.

Accepted Answer

A) True 
 B)False

Question 4

By the operation of law, the occurrence of certain events will automatically terminate an agency relationship.

Accepted Answer

A) True 
 B)False

Question 5

Authority conferred upon an agent for a specified time does not continue after the specified time.

Accepted Answer

A) True 
 B)False

Question 6

An agent will not be authorized to act for a principal unless he receives some consideration for the task.

Accepted Answer

A) True 
 B)False

Question 7

When the agency terminates, the agent's duty of confidentiality continues.

Accepted Answer

A) True 
 B)False

Question 8

Mark (age 16)  appoints Joe (age 21)  as his agent to purchase a digital camcorder from Electronic World. The transaction is:

Accepted Answer

A)   void because Mark is a minor.
B)   voidable by Electronic World because Mark is a minor.
C)   voidable by Mark because he is a minor.
D)   not voidable because Joe is not a minor.E) A) and B)
F) C) and D)

Question 9

The Third Restatement specifies that an agency is automatically terminated when the principal goes bankrupt.

Accepted Answer

A) True 
 B)False

Question 10

A principal owes to any agent the same duties under tort law that the principal owes to all parties.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is correct with regard to the capacity of an agent?

Accepted Answer

A)   The incapacity of the agent disqualifies him from making a contract that is binding on his principal.
B)   No mental capacity is necessary for an agent.
C)   If an incompetent person who is not under guardianship appoints an agent, contracts made by that agent are voidable.
D)   A young child or a person under guardianship has the capacity to act as an agent.E) C) and D)
F) B) and D)

Question 12

An agency agreement must always be in writing.

Accepted Answer

A) True 
 B)False

Question 13

The Restatement's definition of a power given as security includes, but is more extensive than, the rule regarding an agency coupled with an interest.

Accepted Answer

A) True 
 B)False

Question 14

All independent contractors are agents, but not all agents are independent contractors.

Accepted Answer

A) True 
 B)False

Question 15

If an agent receives a gift from a third person with whom he is dealing on behalf of the principal, he can keep it without notifying the principal.

Accepted Answer

A) True 
 B)False

Question 16

Because the authority given to an agent by a principal is strictly personal, an individual agent's death terminates the agent's actual authority.

Accepted Answer

A) True 
 B)False

Question 17

A principal has no duty to compensate his or her agent if:

Accepted Answer

A)   the agent breached the duty of obedience.
B)   the agent breached the duty of loyalty.
C)   it is a gratuitous agency.
D)   All these are correct.E) A) and D)
F) C) and D)

Question 18

The negligence of an agent who is an employee in conducting the business of the principal exposes the principal to tort liability for injury and loss suffered by third persons.

Accepted Answer

A) True 
 B)False

Question 19

Jones, an agent of Rossi, is authorized to sell Rossi's ownership of wheat on the commodities market on Monday. On Monday, however, the market opens with the lowest prices for wheat in two decades. Jones must go ahead and sell Rossi's wheat on Monday.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following agents would not have authority to contract with third parties on behalf of the principal?

Accepted Answer

A)   A salesman who sells his employer's goods.
B)   A manager who hires employees for the store owner.
C)   A factory worker hired to operate a machine.
D)   A buyer who regularly buys merchandise for a store.
E)   All agents have authority to contract with third parties on behalf of their principals.F) B) and E)
G) A) and E)

Exam 28: Relationship of Principal and Agent

Which of the following agents would not have authority to contract with third parties on behalf of the principal?

Correct AnswerverifiedShow Answer

Which of the following is correct with regard to the capacity of an agent?

Correct AnswerverifiedShow Answer

If an agent receives a gift from a third person with whom he is dealing on behalf of the principal, he can keep it without notifying the principal.

Correct AnswerverifiedShow Answer

The negligence of an agent who is an employee in conducting the business of the principal exposes the principal to tort liability for injury and loss suffered by third persons.

Correct AnswerverifiedShow Answer

A principal owes to any agent the same duties under tort law that the principal owes to all parties.

Correct AnswerverifiedShow Answer

By the operation of law, the occurrence of certain events will automatically terminate an agency relationship.

Correct AnswerverifiedShow Answer

Since the agency relationship is created by agreement, the agency relationship may be terminated at any time by mutual agreement of the principal and the agent.

Correct AnswerverifiedShow Answer

The Restatement's definition of a power given as security includes, but is more extensive than, the rule regarding an agency coupled with an interest.

Correct AnswerverifiedShow Answer

The duty of obedience owed by an agent to a principal is not breached and will not result in liability to the principal by an agent's refusal to do an illegal or tortious act for the principal.

Correct AnswerverifiedShow Answer

An agency contract appointing the agent for a period of more than one year must be in writing.

Correct AnswerverifiedShow Answer

Because the authority given to an agent by a principal is strictly personal, an individual agent's death terminates the agent's actual authority.

Correct AnswerverifiedShow Answer

All independent contractors are agents, but not all agents are independent contractors.

Correct AnswerverifiedShow Answer

An agent will not be authorized to act for a principal unless he receives some consideration for the task.

Correct AnswerverifiedShow Answer

The Third Restatement specifies that an agency is automatically terminated when the principal goes bankrupt.

Correct AnswerverifiedShow Answer

When the agency terminates, the agent's duty of confidentiality continues.

Correct AnswerverifiedShow Answer

An agency agreement must always be in writing.

Correct AnswerverifiedShow Answer

Mark (age 16) appoints Joe (age 21) as his agent to purchase a digital camcorder from Electronic World. The transaction is:

Correct AnswerverifiedShow Answer

Authority conferred upon an agent for a specified time does not continue after the specified time.

Correct AnswerverifiedShow Answer

Jones, an agent of Rossi, is authorized to sell Rossi's ownership of wheat on the commodities market on Monday. On Monday, however, the market opens with the lowest prices for wheat in two decades. Jones must go ahead and sell Rossi's wheat on Monday.

Correct AnswerverifiedShow Answer

A principal has no duty to compensate his or her agent if:

Correct AnswerverifiedShow Answer

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