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 if the agent refused to do an illegal or unethical act for the principal.

Accepted Answer

A) True 
 B)False

Question 2

Mark, who is 16 years old, appoints Joe, age 21, as his agent to purchase a videotape recorder from VideoWorld. The transaction between Joe and VideoWorld is:

Accepted Answer

A)   void because Mark is a minor.
B)   voidable by VideoWorld 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 D)
F) All of the above

Question 3

Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a purchase amount. A friend needs money for a dress, so Carolyn cashes a check for $50 with no purchase. If the check bounces, Carolyn is:

Accepted Answer

A)   liable because she violated her duty of obedience.
B)   liable because she breached her duty to inform.
C)   not liable since she has apparent authority to take the check.
D)   not liable unless she knew her friend did not have the money in the bank.E) A) and B)
F) None of the above

Question 4

Which of the following will terminate an agency coupled with an interest?

Accepted Answer

A)   The death of the principal
B)   The bankruptcy of the principal
C)   The incapacity of the principal
D)   None of these will terminate such an agency.E) B) and D)
F) B) and C)

Question 5

Which of the following would NOT be considered an agent?

Accepted Answer

A)   A salesman who sells his employer's goods
B)   An independent contractor without authority to act on behalf of the person hiring her
C)   A factory worker hired to operate a machine
D)   A buyer who regularly buys merchandise for a storeE) A) and B)
F) B) and C)

Question 6

All of the following except which one is a duty of an agent?

Accepted Answer

A)   Account for money received on behalf of the principal
B)   Inform the principal of any information relevant to the agency
C)   Refrain from competing with the principal
D)   Refrain from using any information gained while an agentE) B) and C)
F) A) and D)

Question 7

Which of the following may terminate an agency agreement by operation of law?

Accepted Answer

A)   Fulfillment of purpose
B)   Mutual agreement of the parties
C)   Bankruptcy of the principal
D)   Renunciation by the agentE) None of the above
F) B) and C)

Question 8

Whether a person is an employee or an independent contractor makes a difference in whether the principal has obligations under certain federal and state statutes.

Accepted Answer

A) True 
 B)False

Question 9

Amber, who is an agent for Peter, breaches her fiduciary duty to Peter. Amber:

Accepted Answer

A)   is liable to Peter for breach of contract.
B)   is liable to Peter in tort for any losses caused by the breach.
C)   must make restitution for any profits or property received in breach of this duty.
D)   All of these are correct.E) A) and C)
F) None of the above

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

An agent whose compensation depends on his accomplishing a specific result is entitled to the agreed compensation only if the result is achieved within a reasonable time if no time is stated.

Accepted Answer

A) True 
 B)False

Question 12

An agent can never act for two principals.

Accepted Answer

A) True 
 B)False

Question 13

An agent who violates his fiduciary duty loses the right to compensation.

Accepted Answer

A) True 
 B)False

Question 14

The operation of agency involves at least three persons.

Accepted Answer

A) True 
 B)False

Question 15

A minor can act as an agent for an adult.

Accepted Answer

A) True 
 B)False

Question 16

A principal may generally revoke the authority of an agent at any time by notifying the agent.

Accepted Answer

A) True 
 B)False

Question 17

As a general rule, a person may do through an agent whatever business activity he may accomplish personally.

Accepted Answer

A) True 
 B)False

Question 18

Trudy would breach the duty to inform if she failed to tell her principal:

Accepted Answer

A)   a debtor of her principal has become insolvent.
B)   property her principal authorized her to sell at $50,000 could be sold for $53,000.
C)   a customer of her principal has become insolvent.
D)   All of these.E) A) and C)
F) A) and B)

Question 19

Which of the following is NOT a major duty which the agent owes to his principal?

Accepted Answer

A)   Duty to obey instructions.
B)   Duty to act in good faith and with loyalty.
C)   Duty to indemnify.
D)   Duty to exercise care.E) None of the above
F) A) and C)

Question 20

Factors in determining whether a person acting for another is an employee or an independent contractor include the kind of occupation, the skill required, which party supplies the tools, and whether payment is by the job or by time worked.

Accepted Answer

A) True 
 B)False

Exam 19: Relationship of Principal and Agent

Mark, who is 16 years old, appoints Joe, age 21, as his agent to purchase a videotape recorder from VideoWorld. The transaction between Joe and VideoWorld is:

Correct AnswerverifiedShow Answer

An agent whose compensation depends on his accomplishing a specific result is entitled to the agreed compensation only if the result is achieved within a reasonable time if no time is stated.

Correct AnswerverifiedShow Answer

Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a purchase amount. A friend needs money for a dress, so Carolyn cashes a check for $50 with no purchase. If the check bounces, Carolyn is:

Correct AnswerverifiedShow Answer

An agent who violates his fiduciary duty loses the right to compensation.

Correct AnswerverifiedShow Answer

Amber, who is an agent for Peter, breaches her fiduciary duty to Peter. Amber:

Correct AnswerverifiedShow Answer

Which of the following would NOT be considered an agent?

Correct AnswerverifiedShow Answer

An agent can never act for two principals.

Correct AnswerverifiedShow Answer

Which of the following is NOT a major duty which the agent owes to his principal?

Correct AnswerverifiedShow Answer

Whether a person is an employee or an independent contractor makes a difference in whether the principal has obligations under certain federal and state statutes.

Correct AnswerverifiedShow Answer

Which of the following may terminate an agency agreement by operation of law?

Correct AnswerverifiedShow Answer

The operation of agency involves at least three persons.

Correct AnswerverifiedShow Answer

All of the following except which one is a duty of an agent?

Correct AnswerverifiedShow Answer

A minor can act as an agent for an adult.

Correct AnswerverifiedShow Answer

As a general rule, a person may do through an agent whatever business activity he may accomplish personally.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A principal may generally revoke the authority of an agent at any time by notifying the agent.

Correct AnswerverifiedShow Answer

Factors in determining whether a person acting for another is an employee or an independent contractor include the kind of occupation, the skill required, which party supplies the tools, and whether payment is by the job or by time worked.

Correct AnswerverifiedShow Answer

Which of the following will terminate 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 if the agent refused to do an illegal or unethical act for the principal.

Correct AnswerverifiedShow Answer

Trudy would breach the duty to inform if she failed to tell her principal:

Correct AnswerverifiedShow Answer

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