Law 2 Business Law
Chp. 33 Test - Agency - Formation and Duties
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1. In an agency relationship, who is the person being represented by another?

a. agent
b. principal
c. third party
d. none of the above

2. Ann is a sales representative at a Ford dealership. Which of the following are binding to Ford?

a. contracts between Ann and customers
b. representations of facts made by Ann to customers
c. both A and B
d. none of the above

3. Einstein was hired to develop an "atom-slayer" by the Department of Defense. During the two years he worked on the project, he was paid a whopping $85,000 per month. Which of these factors make it more likely Einstein is an independent contractor?

a. his job duty of building an atom-slayer
b. his $85,000 per month salary
c. his two years on the job
d. all of the above

4. Tony is hired to make deliveries. He drives a company pickup truck, and is paid $6 per hour. Which of these factors makes it more likely a court will classify Tony as an employee?

a. He drives the company truck.
b. He is a delivery person.
c. He makes $6 per hour.
d. all of the above

5. Which of the following are definitely agents of Kroger?

a. Mel, who delivers vegetables from his employer to Kroger
b. Ben, who is a checker at a Kroger store
c. Carl, who was hired as an independent contractor to do a marketing study for Kroger
d. all of the above

6. What will the IRS consider in assessing a worker's statue as employee or independent contractor for taxation purposes?

a. the degree of control the business exercises over a worker
b. whether the boss owns the tools of the trade
c. the degree of skill required of the worker
d. all of the above

7. When must an agency agreement be in writing?

a. when the agent will have power of attorney
b. when the agent will enter contracts covered by the statute of frauds
c. both A and B
d. An agency agreement never requires a writing.

8. Which of the following people may be under age 18?

a. principals
b. agents
c. both principals and agents
d. neither principals and agents

9. Which of the following are valid ways to form an agency agreement?

a. in writing
b. orally
c. by conduct
d. all of the above

10. Andy is NOT Tom's agent, when he goes to a hardware store and orders 100 hammers for Tom. The store ships the hammers to Tom, and he is puzzled. However, he needs the hammers for a construction project, and pays for them. Andy is now

a. an agent by operation of law.
b. an agent by estoppel.
c. an agent by ratification.
d. still not an agent.

11. Andy is NOT Tom's agent. One day, as Tom is talking to Arnie, he points to Andy and says, "There's my agent. Set up a deal with him." Andy plays along, and sets up an agreement with Arnie. Andy is now

a. an agent by operation of law.
b. an agent by estoppel.
c. an agent by ratification.
d. still not an agent.
.

12. Bill and Hillary are married. Bill goes to buy groceries, and charges them on Hillary's credit card. What has Bill become, if anything, through his actions?

a. an agent by operation of law
b. an agent by estoppel
c. an agent by ratification
d. still not an agent

13. Bill and Hillary are married. Bill buys a whitewater raft, and charges to Hillary's account. What has Bill become, if anything, through his actions?

a. an agent by operation of law
b. an agent by estoppel
c. an agent by ratification
d. nothing

14. Agents have various responsibilities to their principal. One of them is to use reasonable diligence and skill in performing their work. This falls under the general heading of the duty of

a. performance.
b. accounting.
c. loyalty.
d. obedience.

15. Al is an attorney who represents himself as a divorce specialist. Carl Client hires him based on this representation, and so Al becomes Carl's agent. What duty of performance does Al owe to Carl?

a. act as a reasonable person
b. act as a reasonable attorney
c. act as a reasonable divorce specialist
d. none of the above

16. Mack agrees to be Bill's agent, and agrees not to be paid for his services. Mack is to find a buyer for Bill's farm. He finds a buyer, but does not tell Bill, and the buyer eventually loses interest. What type(s) of lawsuits may Bill bring against Mack?

a. tort
b. breach of contract
c. both A and B
d. none of the above

17. Al Accountant is retained by company A. A is considering merging with company B. Company B calls Al, and expresses a desire to hire him to handle their paperwork in the merger. Can Al take this client?

a. yes, if B knows of the dual representation and consents
b. yes, if A knows of the dual representation and consents
c. yes, if both A and B know of the dual representation and both consent
d. no

18. When can an agent deviate from principal's instructions?

a. any time he reasonably believes he can gain the principal an advantage by doing so
b. in emergency situations
c. when the principal's instructions are ambiguous
d. both B and C

19. Mr. Burns runs a power plant that is old and run down. What responsibilities does he have towards his workers under a principal's duty to provide safe working conditions?

a. duty to reasonably inspect the plant
b. duty to warn employees of dangers
c. both A and B
d. none of the above

20. Paul Principal orders Al Agent to go to St. Louis to sign a contract for him. Rather than drive, Al decides to fly Southwest Airlines. He gets to St. Louis a day early, and decides to spend the day watching a Cardinals-Cubs doubleheader at Busch Stadium. For which of these expenses must Paul reimburse Al?

a. the airfare
b. the baseball tickets
c. both A and B
d. none of the above

21. Carl runs an office of salesmen who work on a 10% commission. Often, when his salesmen are about to close a big deal, he uses information on company files to step in and make the deal himself. This way, he gets to keep all the commissions for himself. Is Carl liable to his staff for this sleazy business practice?

a. yes, for the entire value of the deals
b. yes, for their lost commissions
c. yes, for a reasonable amount
d. no

22. Alan Attorney is hired by Paul Principal. No compensation amount is discussed. After working for a month, Alan demands payment for his services. What amount is due to him?

a. nothing
b. the average of what al bills other clients per month
c. the customary compensation for one month of similar services
d. none of the above

23. Al Agent breaches his agency agreement by failing to carry out Paul Principal's instructions. Although the two have a five-year agreement, Paul wishes to fire Al. Which doctrine, if any, will allow him to do so?

a. a constructive trust
b. avoidance
c. indemnification
d. none of the above

24. Al Agent breaches his agency agreement with Paul Principal by keeping a refund for himself that is due to Paul. What can Paul use to recover this amount?

a. a constructive trust
b. avoidance
c. indemnification
d. none of the above

25. Al works at Bernie's bar as a bouncer. Al beats a customer senseless, and the customer sues Al and wins $10,000. Al wants to recover this amount from Bernie. Which of these will allow him to do so?

a. a constructive trust
b. avoidance
c. indemnification
d. none of the above