Independent Purchase Agent

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					                                                      QUIZ 30 (A)
                                  LIABILITY OF PRINCIPALS AND AGENTS
The __ (1) has a duty to be ____ (2) the __ (3) in all agency-related matters. If A breaches this duty, P may have a COA
against A for __ _ _ __ _ __ (4).

The most common types of breaches of this duty are: __-___ (5), __ (6) an opportunity, __ _ _ __ (7), __ _ ___ information
(8), and __ __ (9). Each of these constitutes alternative elements of the PFC for the COA.

If A were to appropriate a business prospect for himself, that might be related to his agency relationship with P, P might be
able to prove the PFC element ___ _ ____ (10) in a COA for __ _ _ __ _ __ (11).

If A were to acquire information critical to his agency relation ship with P, but then misuse or not disclose such information
to P, P might be able to prove the PFC element ___ _ ____ (12) in the same COA as in 99 above.


CHAPTER 30A                       CONTRACT LIABILITY (of A or P) TO THIRD PARTIES (X)
Agency law is an exception to __ (13). This means that In a(n) __ __ (14) agency, A is NOT liable for contracts he signs.
Another way of stating this proposition is that P is v___ (15) liable for A’s actions.

However, A may be contractually liable in a(n) ____ ___ (16) agency or in a(n) _-____ (17) agency.

If X sues A for BREACH OF CONTRACT, A’s defense will be _____ (18).

If X sues P for BREACH OF A CONTRACT signed by A, P’s defense will be __ _ (19), to which X’s will respond ___ (20).

If A lacks the authority (from P) to contract on behalf of P, then X might have a COA against A for __ _ __ __ _ __ (21).
Under such circumstances, P is NOT LIABLE unless he (P) ______ (22) the contract.


CHAPTER 30B                       TORT LIABILITY (of A or P) TO THIRD PARTIES (X)
Under certain circumstances, P is liable for the torts of his agent A based on the common law doctrine of r__ s__ (23),
which in turn is based on the legal theory of v____ l____ (24). This doctrine is known also as l___ w___ f___ (25).

P may be relieved of liability if his agent A is involved in f___ _ d___ (26).

According to the __ _ __ __ (27), P is not liable A’s (or employee’s) torts while on their way to or from work.

Most jurisdictions hold P liable for his agent’s A’s negligence while A is on a ___-___ (28) mission.

Generally, P is not liable for the torts of a(n) ___ ___ (29), nor is P liable for contracts signed by such a person.

P can be held liable to X for n___ s___ (30) if P’s incompetent I. C. injures X.

If T-P (X) sues P for the NEGLIGENCE of P’s employee, P might offer ______ (31) as a defense, to which X’s response
will be ______ (32), which is based on the theory of v_____ (33) liability.

In the case of intentional torts, some jurisdictions have rejected the ___ (34) test as too narrow. These jurisdictions apply
the ___ -___ (35) test instead.

Intentional misrepresentation is also known as ______ (36) or ______ (37).

A P who hires an unqualified or knowingly dangerous person as an I. C. is liable for _____ _____ (38).

Contrary to the general rule, P’s are held STRICTLY LIABLE for ___ ___ ___ (39) assigned to independent contractors.

NAME ALL THE COAs YOU CAN INVOLVING PROJECT 4 – AGENCY LAW
___ (40), ___ (41), ___ (42), ___ (43), ___ (44), ___ (45), ___ (46), ___ (47), ___ (48), ___ (49), ___ (50), ___ (51),

___ (52), ___ (53), ___ (54), ___ (55), ___ (56), ___ (57)

61. Compare and contrast reimbursement and indemnification?
62. Compare and contrast implied authority and incidental authority?
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                                      QUIZ 30B (74)
                           LIABILITY OF PRINCIPALS AND AGENTS


Agent’s Dutiy of LOYALTY
1. An agent acting as a dual agent is always in breach of the duty of loyalty.

2.    A can usurp an opportunity available to P.

3.    Misuse of confidential information is considered to be a breach of the duty of Notification.

4.    All of the following are duties of the A, EXCEPT:
      a. Loyalty.            c. Reimbursement.        e. Accountability.
      b. Notification.       d. Performance.

5.    A competing with P is generally a breach of the duty of:
      a. Performance.     c. Accounting.             e. Obedience.
      b. Loyalty.         d. Indemnification.

6.    Which of the following is NOT one of the common ways to breach the duty of loyalty?
      a. Self-dealing.        c. Usurping an opportunity.
      b. Dual agency.         d. Failing to follow the principal’s instructions.
                  e. Competing with the principal.

7.    The duty of loyalty is generally a duty of:
      a. P only.     b. A only.      c. Both P and A.       d. Neither P nor A.

8.    Which of the following is NOT a duty of A in a P-A relationship.
      a. Loyalty.             c. Accountability.        e. Notification.
      b. Compensation.        d. Performance.

9.    Which of the following DOES NOT belong in the group? Duty of:
      a) Reimbursement b) Cooperation c) Indemnification    d) Loyalty               e) Compensation

10.   Which of the following DOES NOT belong in the group? Duty of:
      a) Reimbursement.     b) Performance. c) Loyalty.  d) Accountability.             e) Notification.

LIABILITY TO X
11. The term “authority” is associated with:
     a) third parties.   b) employee.      c) independent contractor.          d) principal.

Contract Liability to X
12. A generally is NOT liable on contracts made in connection with a fully disclosed agency.
13. An un-disclosed agency exists where X is aware that the party he is dealing with is an agent,
     but does not know the identity of the principal.
14. A has no duty to disclose her agency status to X’s with whom she deals.
15. A can be held liable on any contract negotiated by A on behalf of P.
16. In an undisclosed agency, both P and A are liable on the contract with X.
17. A is contractually liable in which situation?
     a) a fully disclosed agency.        d) the agent is liable in TWO of the above situations.
     b) a partially disclosed agency     e) the agent is liable in ALL of the above situations.
     c) an undisclosed agency.

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18.   P is contractually liable in which situation
      a) a fully disclosed agency.        d) the principle is liable in TWO of the above situations.
      b) a partially disclosed agency     e) the principle is liable in ALL of the above situations.
      c) an undisclosed agency.
19.   Which of the following would constitute a fully disclosed agency?
      a) “Allison Adams, agent”     c) “Peter Perceival, by Allison Adams” e) ALL of the above.
      b) “Allison Adams”            d) TWO of the above.
20.   Which of the following would constitute a partially disclosed agency?
      a) “Allison Adams, agent”     c) “Peter Perceival, by Allison Adams”       e) ANY of the above.
      b) “Allison Adams”            d) TWO of the above.
21.   Which of the following DOES NOT BELONG in the group?
      a) express agency             c) implied agency             e) ALL…belong to the same group
      b) fully disclosed agency     d) apparent agency.
22.   Which of the following represents an increasing degree of connection/relationship to P?
      a) independent contractor; agent; employee. d) agent; employee; independent contractor.
      b) agent; independent contractor; employee. e) employee; independent contractor; agent.
      c) independent contractor; employee; agent.

Contract Liability to X
23. The degree to which A disclosed the agency relationship affects:
     a. The agent’s liability on a contract which the agent negotiates.
     b. The agent’s liability for a tort committed by the agent.
     c. The principal’s liability for a tort committed by the agent.
     d. The principal’s liability on a contract which the agent negotiates.
     e. All of the above.
24.   The degree to which A disclosed the agency relationship affects the contract liability of:
      a. A only.    b. P only.    c. Both A and P.     d. Neither A nor P.
25.   When A negotiates a contract on behalf of P, the liability of P will depend on if:
      a. A was motivated by P’s best interests.
      b. The agency arrangement was fully disclosed.
      c. The agency arrangement was express or implied.
      d. The agent was authorized to enter into this particular transaction.
      e. The agency arrangement was agreed to in writing.
26.   Why is A able to be held liable on a contract when the existence of the agency arrangement
      was not disclosed?
      a. So that the outcome in a contract situation is the same as that for a tort.
      b. To discourage the use of undisclosed agency arrangements.
      c. To offset the fraud frequently present is this situation.
      d. Because the third party could rely on the reputation of only the agent when entering into the
         contract.
      e. To ensure that the principal fulfills its obligations under contracts negotiated by authorized
         agents.
27.   In an agency relationship involving P, A, and X, whether or not the agency relationship has
      been disclosed to X is a crucial issue. This would affect:
      a. The contract liability of the principal to the third party for a tort of the agent.
      b. The tort liability of the principal to the third party for a tort of the agent.
      c. The tort liability of the agent to the third party for the agent’s tort.
      d. Th contract liability of the agent to the third party on a contract made by the agent on the
         principal’s behalf.
      e. The liability of the principal to compensate the agent for the agent’s services.


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28.   Where A has disclosed that she is an agent, but has not disclosed the identity P, who can be
      held liable on an authorized contract entered into by A on P’s behalf?
      a. A only.         c. Both P and A.
      b. P only.         d. Neither P nor A.
                   e. Only A prior to disclosure of P’s identity, and only P thereafter.
29.   If A wishes to avoid liability on contracts he signs on behalf of P, he should make sure that P is:
      a. Undisclosed.                  c. Either partially disclosed or fully disclosed.
      b. Partially disclosed.          d. Fully disclosed.
                   e. The degree of disclosure is irrelevant.

Contract Liability to X
30. Agent enters into a contract with Third Party on behalf of Principal. Agent told Third Party that
     this contract was being entered into on behalf of someone else, but did not identify Principal to
     Third Party. A couple of weeks later, Principal disappears and Third Party wants to hold Agent
     to the contract. Third Party can:
     a. Not recover from Agent because Agent had disclosed the existence of Principal.
     b. Not recover from Agent because Third Party must first try to recover from Principal.
     c. Recover from Agent because Agent had a duty to ensure that Principal performed on the
     contract.
     d. Recover from Agent because Agent did not disclose the identity of Principal.
     e. Recover from Agent because Agent acted on behalf of an undisclosed principal.
31.   Pedro hires Andrea to negotiate the purchase of a sailboat for Pedro. Andrea decides to buy
      from Sally a sailboat meeting Pedro’s specifications. Andrea tells Sally that the purchase is
      really being made by Pedro, and Andrea and Sally sign a written contract, with Andrea signing
      on Pedro’s behalf. Based on all this:
      a. Pedro is not liable on this contract, but Andrea is liable.
      b. Neither Andrea nor Pedro can be held liable on this contract.
      c. Andrea is not liable on this contract. but Pedro is liable.
      d. Either Andrea or Pedro could be held liable on this contract.
32.   John has been hired by Bubbaweiser Beer Company to purchase an airplane. He approaches
      Sam who has a Cessna for sale. John does not mention that he is making this purchase on
      behalf of someone else. He negotiates a deal. Two weeks later, Sam learns that John did not
      negotiate the deal for himself, but was acting as an agent. Bubbaweiser declares bankruptcy
      and cannot buy the plane. John:
      a. Can be held liable on the contract because this was an undisclosed agency.
      b. Can be held liable on the contract because this was a partially disclosed agency.
      c. Can be held liable on the contract simply because he is an agent.
      d. Cannot be held liable on the contract.
      e. Can be held liable on the contract unless he was on a frolic and detour.


Tort Liability to X
33. P’s liability for A’s the tort depends on the degree of disclosure of the agency relationship.
34.   When is A liable for a tort committed by P?
      a. When the agency is undisclosed.
      b. When the tort was committed with the scope of the agency.
      c. When the agent ratifies the action.
      d. When the agent has aided or abetted the principal’s tortious conduct.
      e. Both A and D.

Negligence
35. P is liable for any negligence of A committed during the time that A has agreed to act as agent.

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36.   The rule for whether P is liable for the negligence of A is whether A intended to commit the tort.
37.   P is liable to X for damages resulting from A going on a frolic and detour.
38.   P is liable for the acts of A while on the way to and from work if P supplies a car to A.
39.   P is liable to X for injuries caused by A on the way to work, but NOT on the way from work.
40.   P is liable to X for injuries caused by A when A is on a dual mission.
41.   Whether an agent’s tortious activity is outside the scope of the agency is determined by:
        a) the scope of authority test. c) the respondeat superior rule.          e) TWO of the above.
        b) the coming and going rule. d) ALL of the above.
42.   Respondeat superior pertains to:
      a) employees. b) agents. c) independent contractors.          d) TWO…above.        e) ALL…above.
43.   Respondeat superior pertains to:
      a) contracts. b) torts. c) agency.          d) TWO…above.         e) ALL…above.
44.   The motivation test is applied to:
      a) contracts. b) intentional torts. c) unintentional torts.    d) NONE….      e) ALL …above.
45.   The work-related test is applied to:
      a) contracts. b) intentional torts. c) unintentional torts.    d)NONE…above.         e) ALL…above.
46.   For which types of misrepresentations of A is P liable, assuming that the misrepresentation was
      made within the scope of the agency?
      a. Intentional misrepresentations only.
      b. Innocent misrepresentations only.
      c. Both intentional and innocent misrepresentations.
      d. Neither intentional nor innocent misrepresentations only.
47.   Under which circumstance will P not be responsible for the tort of A?
      a. If A was violating the instructions of the principal in committing the tort.
      b. If the agency agreement between A and P says that he will NOT be responsible for A’s torts.
      c. If the tort was committed outside the scope of the agency arrangement.
      d. If the tort is an unintentional tort.
48.   The significance of a “frolic and detour” is that:
      a. The employee can be liable to an employer if the frolic and detour is not authorized.
      b. It determines if an employee can be liable on a contract made on the employer’s behalf.
      c. It can determine whether someone working for a business is an employee or I.C.
      d. It can determine whether an employer is liable for the negligence tort of an employee.
      e. It can determine whether an employee is liable for torts he commits on the job.
49.   If A negligently injures X while acting within the scope of employment:
      a. A will be liable to X.       c. A will be liable to P.
      b. P will be liable to X.       d. All of the above.
50.   What is the effect on the tort liability of A when it is determined that an intentional tort was
      committed within the scope of the agency?
      a. The agent is released from liability.
      b. The agent will be 50 percent liable, and the principal will be 50 percent liable.
      c. The liability of the agent to the injured party is unaffected.
      d. The agent will be liable only if the principal is unable to pay.
      e. The principal acquires the opportunity to use the contributory negligence defense.
51.   The coming and going rule provides that:
      a. As are not liable for torts that they commit when going to or from work.
      b. P’s are not liable for torts committed by their agents while going to or from work.
      c. Commuting to or from work is considered within the scope of an agency.
      d. Commuting to or from work is considered to be a dual purpose mission.
      e. P is liable for any tort of A that occurs between the time A comes to work and the time A

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      goes home.
52.   Which of the following DOES NOT belong in the group?
      a) frolic and detour doctrine. c) motivation test.
      b) dual-purpose mission.       d) coming and going rule.
53.   Which of the following DOES NOT BELONG in the group?
      a) frolic  b) detour    c) dual-purpose d) respondeat superior
54.   Jane takes her car to Joe’s Garage, leaving it there for repairs. Ted, one of Joe’s employees,
      takes the car for a joy ride, without Joe’s permission. In fact, Joe has a very strict rule that his
      employees cannot drive customers’ cars except to diagnose or test them. Ted crashes into
      another car, driven by Mary. Mary is injured and sues Jane, Ted, and Joe. Which of the
      following is true?
      a. Only Ted is liable.                      c. Jane, Ted, and Joe are all liable.
      b. Only Jane and Ted are liable.            d. Only Ted and Joe are liable.
                      e. Only Joe is liable.
55.   Bob sells real estate in Knoxville for a real estate sales company. One afternoon, he shows a
      client two homes in Knoxville and the client tells Bob that there is a great cabin for sale in
      Gatlinburg, about 40 miles from Knoxville. Bob drops the client off in Knoxville and goes to
      Gatlinburg to check out this property because he wants a place for his family to go on
      weekends. As he is entering Gatlinburg, he accidentally hits and injures a pedestrian. In
      determining whether Bob’s employer can be held liable, a court will:
      a. Apply the work-related test and find the employer liable.
      b. Not find the employer liable under the coming and going rule.
      c. Use the frolic and detour rule to determine the employer’s liability.
      d. Determine the outcome based on the degree of disclosure of the agency relationship.
56.   An employee of Slap-em-up Construction Company negligently drops some materials and
      injures a pedestrian on the sidewalk below. The liability of the employer to the injured
      pedestrian depends on:
      a. If the employee was within the scope of employment when the materials were dropped.
      b. If the agency arrangement was fully disclosed.
      c. The motivation of the employee in dropping the materials.
      d. Whether the employee intended to drop the materials.
      e. None of the above.
57.   Rocky Mountain Mall hired George to be a Santa Claus in the mall. After a tough day of
      demanding kids, he stops at a bar in the mall for a cold beer. Before he knows it, he’s had six
      beers and heads home still wearing his Santa suit. While driving, he injures a pedestrian. The
      injured pedestrian sues the owner of the shopping mall. Which of the following is true?
      a. Because he is still in uniform he would probably be found to be within the scope of
      employment and the mall owner would be liable.
      b. The only way the mall could avoid liability here is to prove that he was on a frolic and detour
      at the time of the accident.
      c. The coming and going rule would probably protect the owner of the mall from liability.
      d. The pedestrian must show that George intended to get drunk in order to recover.
      e. The mall owner would probably be liable because the bar was in the same mall where
      George worked as Santa.

Intentional Torts
58. P is liable for intentional misrepresentation, but NOT for innocent misrepresentation.
59.   Vicarious liability does NOT apply to intentional torts.
60.   P cannot have liability for the intentional torts of A that are used to promote P’s business.
61.   In the CASE Mbank El Paso v. Sanchez, Mbank was found to be strictly liable for the inherently
      dangerous activities of it’s agent, El Paso Recovery Service.
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62.   Intentional misrepresentation occurs when:
      a) P makes untrue statements to A. c) P makes untrue statements to X.
      b) A makes untrue statements to P. d) A makes untrue statements to a X.
                    e) TWO of the above.
63.   The “motivation” test and the “work-related” test are used to determine whether:
      a. An employer is responsible for the intentional tort of an employee.
      b. An employer is responsible for the negligence tort of an employee.
      c. An employee is responsible for the contract entered into on behalf of an employer.
      d. An employee is responsible for the tort he commits while on the job.
64.   Which of the following is true about the tests used to determine whether a principal is
      responsible for the intentional torts of his agent?
      a. The work-related test and motivation test are two names for the same test.
      b. In most states the plaintiff can choose which test to use.
      c. The work-related test will find that the employer is liable in more circumstances than the
      motivation test.
      d. Under either of these tests, the plaintiff must also prove that the agency was fully disclosed
      in order to recover.
65.   Edward is an employee of Huge Corporation who works in one of the company’s stores. One
      day Edward sees one of his ex-girlfriends, who jilted him, in the store. He is still mad at her for
      this, so he goes over and slugs her in the face. She sues Edward and Huge Corporation. If the
      state applies the motivation test, which of the following is true?
      a. Huge and Edward could each be liable for the tort.
      b. Huge, but not Edward, would be liable for the tort.
      c. Edward, but not Huge, would be liable for the tort.
      d. Neither Edward nor Huge would be liable for the tort.
      e. Huge and Edward could each be liable for the tort, but the plaintiff must first seek recovery
      from Edward.
66.   As the Wyoming Tetons are playing the Missouri Ozarks in a baseball game, a fan who is
      sitting near the Tetons’ dugout starts yelling at Micky Macho, one of the relief pitchers, that his
      pink minivan makes him look like a suburban family man. Macho, because he feels insulted,
      picks up a nearby bench and throws it at the fan, who gets injured by this action. The fan then
      sues the Tetons. The fan could recover from the Tetons:
      a. Under the work-related test but not under the motivation test.
      b. Under the motivation test but not under the work-related test.
      c. Under either the motivation or the work-related test.
      d. Under neither the work-related test nor the motivation test.

Kinds of Employment Relationships
67.   The most important factor in deciding whether someone is an employee or an independent
      contractor is the length of time the person has worked for P.
68.   Irregular working hours will make it more likely that someone doing work for another is an
      independent contractor rather than an employee.
69. The crucial factor in determining whether a person is I.C. or an employee is:
      a) how dangerous is the activity.
      b) the degree of skill needed to complete the task.
      c) whether the activity has a lawful purpose.
      d) whether the principal has contractual capacity.
      e) NONE OF THE ABOVE.




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70.   Which of the following is true about determining whether someone working for another is an
      independent contractor or an employee? The classification of the person doing the work
      depends on:
      a. that person’s job title.
      b. whether the parties to the arrangement consider the person doing the work to be an
      employee or independent contractor.
      c. if the person is also an agent.
      d. a number of factors, with no single factor being any more important that the others.
      e. a number of factors, with the degree of control over that person’s work by the person who is
      paying for the work being the most important factor.
71.   Susan Marie works as a receptionist for a computer software company. Susan Marie works
      from 8:00 a.m. to 5:00 p.m. on Monday through Thursday, and from 8:00 a.m. to noon on
      Friday. Susan Marie is paid $15 per hour, and is told how to do her job and what she should be
      working on at any particular time. The software company and Susan Marie have executed an
      “independent contractor agreement” in which the terms of this arrangement are specified.
      Which of the following is true?
      a. Susan Marie would be treated as an employee because she is paid for the work that she
      does.
      b. Susan Marie would be treated as an employee because of the control exercised by the
      software company over her work and because of the manner in which she is paid.
      c. Susan Marie would be treated as an independent contractor because of the terms of the
      express agreement with the software firm.
      d. Susan Marie would be treated as an independent contractor because of the irregular working
      hours of working only part of the day on Fridays.
72.   John is hired at minimum wage in a fast food restaurant. John works at the counter taking
      customer orders, accepting payment, and giving the orders to the customer. John must work in
      accordance with a detailed procedures manual. John is:
      a. An independent contractor, but not an agent.
      b. An employee, but not an agent.
      c. An independent contractor as well as an agent.
      d. An employee as well as an agent.

Liability for Independent Contractor’s Torts
73. P is NOT liable for injuries caused by I.C., even if it is to perform dangerous activities.
74.   In which of the following circumstances can a principal be held liable for the torts of an
      independent contractor.
      a. In no circumstances.
      b. In the same circumstances as the principal would be held liable for the torts of an agent.
      c. When the principal is negligent in selecting the independent contractor.
      d. When the independent contractor is hired to undertake a dangerous activity.
      e. Both C and D.




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                                           ESSAY
Agent’s Duties
81. Anne was hired by Peter to sell a condominium in San Francisco. The asking price for the
    modest two-bedroom unit was $2,300,073. Peter told Anne he would go as low as $2,100,000,
    but no lower, but that she should try to get as high a price as possible. If he couldn’t get that
    much for it, he said he would use it as rental property. A good friend of Anne’s was in the
    market for a two-bedroom condominium in San Francisco. In fact, this friend had come to Anne
    to help her find a place and negotiate for it. Anne’s friend said that she could absolutely not
    spend more than $2,000,074. When Peter hired Anne to sell his condominium, Anne told her
    friend about it and the asking price. Anne told her friend, “Don’t even bother. He won’t go
    below $2,100,000, that is his bottom price.” Anne’s friend accepted that. Anne then proposed
    to her friend that they go in together, with Anne fronting some money through her friend, but not
    having Anne’s name on the contract as purchaser. Before they could work out the details,
    Anne’s friend received a raise and decided to buy the condominium. Anne negotiated a price of
    $2,100,000 on Peter’s behalf. Peter later found out that Anne had told her friend about his
    bottom price, and about the plan for Anne to help buy the house. What claims, if any, does
    Peter have?

Contract Liability to Third Parties
82. Abe is an associate (employee) with that famous Denver law firm, Dewey, Cheatem & How.
     One Thursday Abe and another associate, Gabe, had to go to western Colorado for a client’s
     deposition. The deposition is unexpectedly over in mid-morning and they start driving back to
     Denver. As they approach Vail, Gabe reminds Abe that the partners are in Aspen for two days
     and wouldn’t it be nice to be a partner. Abe says, “If they’re in Aspen, that means they’re not in
     the office in Denver. I hear the slopes calling for a half day of skiing.” They pull off I-70 and are
     skiing by 1:70. By chance, Abe runs into a client from Denver and they ski together and
     discuss the client’s latest legal matters. As Abe is skiing with this client, Abe and the client both
     ski through a beginner ski lesson group as the beginner students practice their snowplow
     technique. Abe and the client each injure one skier. Five claims are filed:
     1. Abe’s victim sues Abe.
     2. Abe’s victim sues the law firm.
     3. The client’s victim sues the client.
     4. The client’s victim sues Abe.
     5. The client’s victim sues the law firm.

      DISCUSS the outcome of each claim, assuming Abe was solely negligent with respect to his
      victim and the client was solely negligent with respect to his victim.

83.   Philip wanted to buy a new car. Philip did not know much about cars, but his 17-year old
      daughter Andrea did becausee she had recently started driving and had drooled over new cars
      since she was 12 in anticipation of the day she would start driving. Andrea said she would go
      out and make the purchase on Philip’s behalf if he would let her have the new car once a week.
      Philip agreed because he figured she’d probably manage to talk him out of any car at least
      once a week. Philip told Andrea, “I don’t want anything fancy. Something like a Ford Pinto
      should be sufficient.”
         “Oh, Dad!” Andrea said, “They quit making Pintos in 1980. You know you don’t want
      anything that small anyway. You even complained about the Taurus being too small.”
         Philip responded, “That’s right, I guess. But, I don’t need anything with all that power
      equipment and fancy stereos. Just get me a good, basic, comfortable car that isn’t too small.”
         “I can do that,” responded Andrea. “I’ll find you the best car for your wants and needs.”
         “It’s a deal,” said Philip.
      Andrea shopped around and ended up at a Pontiac dealer. Throughout the entire experience,
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      she kept thinking that her dad needed a more sporty image. She was tempted to get him a
      Trans Am, but thought this might be too much. Because she knew he wouldn’t be comfortable
      in a small car, she decided on a full-size Bonneville sedan. After explaining to the salesperson
      that this car would be for her father, the salesperson talked Andrea into the sport model, which
      had a more powerful engine, special wheels and suspension.
         Philip was initially upset with this choice, but after Andrea correctly explained that the sport
      model was only about $1,500 extra, and that all Bonnevilles came with power windows and
      such, Philip cooled off and started driving the car. Six weeks later he returned the car to the
      dealer, explaining that his daughter was supposed to buy a basic model and the sport
      suspension on this car rode too roughly.
      1. Can the dealer hold Philip to the contract? Give all reasons why or why not.
      2. Can the dealer hold Andrea to the contract? Give all reasons why or why not.

Negligence Torts
84. Billy owns a bike shop in a coastal California town. His shop sells and repairs bikes. One of his
     employees was repairing a bike with one of those pesky intermittent problems that would never
     occur when the repair technician was around. The customer said that the gears periodically
     would not shift properly. The employee took the bike out for a test ride hoping to replicate the
     problem. The problem did not appear. Because it was approaching noon, the employee
     decided to ride the bike home to have lunch. On the way back to the shop, the employee hit a
     small child and injured her. Discuss the liability of the employee and Billy’s bike shop for the
     injuries to the child.

85.   Pat is the owner of Tarantula Skiwear of Boulder, Colorado. Tarantula is a new company that
      makes top of the line products. Angela is the salesperson whose territory is the state of Utah.
      In an ordinary week, Angela, a Boulder resident, goes to the company office on Monday
      morning, takes care of paperwork, and in the late morning takes off for Utah. She stays in Utah
      until sometime on Friday, the exact time changing from week to week. Sometimes, she will
      stay in Utah for the weekend to ski and save the drive to Boulder and back. More often, she will
      drive part way back to Boulder on Friday evening, stopping to ski at one of the larger Colorado
      resorts, and return to Boulder on Saturday or Sunday. In order to make a sale, Angela must
      often negotiate a discount from the standard wholesale prices.
          Tarantula wants to maintain the exclusivity of their line in Vail, thus the company has a policy
      of selling at full wholesale list in Vail and not negotiating. The salesperson, who covers Vail,
      follows the policy rigidly and, as a result, Tarantula Skiwear is available in only two Vail stores.
      Angela thinks she could make a large sale by only cutting the list price slightly. One Thursday
      she drives from Salt Lake City to Vail. Friday morning she called on a large retail outlet in Vail.
      The owner said they’d love to have the Tarantula line, but just couldn’t pay the full wholesale
      price. Angela takes the owner skiing, with both, of course, wearing Tarantula wear. Angela is
      demonstrating how good Tarantula Skiwear looks at high speed when she skis into someone
      just beginning to snowboard. The snowboarder sues Angela and Tarantula Skiwear. Assuming
      that Angela was, in fact, negligent, can the plaintiff recover from Tarantula? Discuss the likely
      issues to arise and their likely resolution.

Intentional Torts
86. Jerry was employed as a blackjack dealer in a Las Vegas casino. One evening as he dealt, a
      patron became more and more abusive, insulting Jerry, using profanity, and finally making
      personal insults about Jerry’s appearance. Jerry became very angry and hit the patron. The
      patron sued both Jerry and the casino. Discuss the liability of Jerry and the casino, assuming
      that Jerry’s actions were not justified.




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87.   Tim played first base for a minor league baseball team, the Salamanders. During a home
      game, a fan for the visiting team was seated near first base and heckling Tim. The fan said
      that Tim’s mother wore army boots, and that Tim played like he was in Little League. Finally,
      Tim had had enough, and threw his right shoe at the fan, injuring him. An hour after the game
      in a nearby bar, a drunk fan was threatening the Salamanders’ right fielder, also their star hitter.
      Although this person was too drunk to have inflicted injury, Tim punched him a couple of times
      in order to protect his friend and star. Discuss the liability of the Salamanders for these injuries.




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                                           QUIZ 29 (A)
                          AGENCY FORMATION AND TERMINATION

The P-A relationship is governed by a body of ___ ___ (1) known as Agency law.
Give an EXAMPLE of a P-A relationship. ____ (2).
The Restatement (Second) of Agency defines an agency as a f_____ (3) relationship.
A party who employs another person to act on his behalf is called a(n) ____ (4).
A party who agrees to act on behalf of another is called a(n) ____ (5).
Any person who has the __ _ _ (6) can appoint an agent.
Agency contracts created for illegal purposes or are against public policy are ___ (7) and ___ (8).
Broadly, the two kinds of agency are e___ (9) (oral or written) and i___ (10) (imposed by the court),
   such as ___ (11) and ___ _ __ (12).
Agency contracts can be oral unless the __ _ __ (13) stipulates that it MUST be written.
A __ _ __ (14) gives A the power to sign legal documents on behalf of P. This kind of A is called
   a(n) __- _- __ (15), even though he does NOT have to be a lawyer.
Agency by __ (16), also known as __ (17) agency, occurs when P creates the appearance of an
  agency that does NOT exist.
___ (18) occurs when a person misrepresents himself as an A, and P subsequently accepts or
  approves of the unauthorized act.
The ___ (11) has a duty to ____ (19) the ____ (20) for services provided.
The ___ (21) has a duty to ____ (22) the ___ (23) of information relevant information.
The __ (24) has a duty to ___ (25) to the __ (26) for any transactions undertaken on __’s (27) behalf.
The ___ (28) has a duty to ____ (29) ____ (30) for authorized expenses.
The ___ (31) has a duty to ____ (32) according to the obligations of the contract.
The ___ (33) has a duty to ____ (34) ____ (35) for relevant losses suffered.
Information that A becomes aware of that is relevant to the agency relationship is ___ (36) to P.
Even though g___ (37) agents work free of charge, both agents-for-hire and g_____ (38) agents
  have a duty to obey the lawful instructions of the principal.
P may pay a g___ (39) agent voluntarily, but there is no obligation to pay such an agent.
Certain types of agents (e.g., lawyers) may perform their services on a ___-__ (40) basis.
Broadly, the two types of termination are Termination by __ _ _ __ (41) such as ___ (42) and
   Termination _ __ _ _ (43), such as ___ (44).
In terminating a relationship with A, P must give at least ___ (45) notice to any one who knows of the
    agency, but has not dealt with A.
An __ __ _ ___ _ __ (46) is a special type of (irrevocable) agency relationship that is created for
  the benefit of A.
When A TERMINATES an agency relationship, he ___ (99) it, and this type of termination is called
  __ (47).
When P TERMINATES the relationship, it is called _ (48).




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                                                 12
                               CHAPTER 29B (87)
                      AGENCY FORMATION AND TERMINATION


The Nature of Agency
1. A corporation must conduct all of its business affairs through agents.
2.    Agency relationships are necessary to the operation of a partnership.
3.    Generally, in agency situations, P and agent must both have contractual capacity.
4.    A P who lacks contractual capacity can appoint an agent.
5.    Even though someone who lacks contractual capacity may NOT be an A, he/she may be a P.
6.    Agency contracts that are created for illegal purposes are voidable by the innocent party.
7.    An employee is generally NOT an agent.
8.    In obtaining a franchise, a P-A relationship is created between franchisee and franchiser.
9.    I.C. is any person outside of the P-A relationship.
10.   A can also be an I. C.
11.   Which of the following DOES NOT BELONG in the group?
      a) doctor      b) gardening service c) plumber    d) secretary                  e) CPA
12.   The general reference source for agency law is:
      a. Article 4 of the Uniform Commercial Code.          c. The Restatement (Second) of Agency.
      b. United States Supreme Court opinions.              d. The Restatement (Second) of Contracts.
                       e. State constitutions.
13.   Which is true about agency agreements?
      a. A minor may generally be a P.
      b. A minor may generally be an A.
      c. An agency agreement must have consideration on both the P’s and A’s side.
      d. Agents must disclose their agency status to those with whom they are dealing.
14.   Jack hires Frankie, who is 13 years old, to buy a computer on Jack’s behalf. Which of the
      following is true?
      a. This is a valid agency relationship even though Frankie is a minor, and Jack would be bound
          by authorized contracts entered into on Jack’s behalf.
      b. This is a valid agency relationship even though Frankie is a minor, but Jack would be able to
          disaffirm any contracts entered into on Jack’s behalf.
      c. This agency arrangement is not valid because A lacks contractual capacity.
      d. If Frankie buys the computer on Jack’s behalf, Frankie would not be entitled to payment
          under the terms of the agency arrangement because of his lack of capacity.

Kinds of Employment Relationships
15. A welder on an assembly line is both an employee and an A.
16.   In order to be an A, someone working for another must be an employee rather than an I.C.
17.   One characteristic of I.C.’s is that they cannot enter into contracts on behalf of P.
18.   Which represents an increasing degree of connection/relationship with P?
      a) independent contractor; agent; employee. d) agent; employee; independent contractor.
      b) agent; independent contractor; employee. e) employee; independent contractor; agent.
      c) independent contractor; employee; agent.




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19.   Which of the following is true?
      a. All employees are agents, and no independent contractors are agents.
      b. All employees are agents, and some independent contractors are agents.
      c. Some employees are agents, and some independent contractors are agents.
      d. Some employees are agents, and no independent contractors are agents.
      e. No employees are agents, and no independent contractors are agents.
20.   Compared to an employee, an independent contractor is characterized by.
      a. Not being paid as much for the work performed.
      b. A lack of liability for her own actions.
      c. More freedom to do her work in the manner she determines.
      d. Less ability to hire others to assist her.
21.   Which of the following is generally true about a relationship where one party works for another?
      a. A party can simultaneously be an employee and an independent contractor.
      b. A party can simultaneously be an employee and an agent.
      c. A party can simultaneously be an independent contractor and an agent.
      d. Both B and C are true.
      e. A, B, and C are true.


FORMATION
22. Most employees are considered at-will employees.
23.   A POWER OF ATTORNEY requires that A be a licensed attorney.
24.   An agency that is inferred from the conduct of the parties is called an apparent agency.
25.   Incidental authority is a type of apparent agency.
26.   Implied authority can be based on prior dealings between the parties.
27.   In the Howard Johnson Motor Lodge CASE:
      a) OEP was liable, HJ was NOT liable.   c) OEP was liable, HJ was also liable.
      b) OEP was NOT liable, HJ was liable.   d) OEP was NOT liable, HJ was also NOT liable.
                 e) NONE OF THE ABOVE.
28.   An implied agency may be created by all of the following, EXCEPT:
      a) industry custom.                   d) an oral agreement.
      b) prior dealing between the parties. e) ALL OF THE ABOVE create an implied agency.
      c) acts necessary to A’s duties.
29.   P is NOT involved in creating what kind of agency:
      a) an express agency.    c) an apparent agency.     e) ALL of the above can be created by P.
      b) implied agency.       d) agency by ratification.
30.   Another name for apparent agency is agency by:
      a) ratification. b) constructive notice. c) estoppel.   d) agency coupled with an interest.
31.   An express agency requires:
      a. A written agreement between P and A.
      b. An oral or written agreement between P and A.
      c. No agreement if the conduct indicates an implied agreement.
      d. An ongoing arrangement for a reasonable period of time.
32.   An express written agency agreement that is often used to give an agent the power to sign
      legal documents on behalf of P is know as a/an:
      a. Exclusive agency contract.      c. Employer-employee relationship.
      b. Power of attorney.              d. Employer-independent contractor relationship.
33.   An agency arrangement based on the conduct of the two parties is what type of agency?
      a. Express. b. Implied.   c. Inherent.     d. Apparent.

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34.   IMPLIED AUTHORITY can be best described as a situation where:
      a. The P and agent undertake actions in accordance with their earlier agreement that one act
         as agent for the other.
      b. The P has made representations to a third party that someone is to act as her agent.
      c. The agent has made representations to a third party that he is acting as an agent for
         another.
      d. The conduct of two parties indicate that they are acting in a P and A capacity.
      e. Both B and C.
35.   INCIDENTAL AUTHORITY is a kind of:
      a. Express authority.         c. Apparent authority.
      b. Implied authority.         d. Authority by ratification.
                     e. Authorization without authority.
36.   APPARENT AUTHORITY can be best described as a situation where:
      a. The P and A undertake actions in accordance with their earlier agreement that one act as
         agent for the other.
      b. The P has made representations to X that someone is to act as A.
      c. The agent has made representations to a third party that he is acting as an agent for
         another.
      d. The conduct of two parties indicates that they are acting in a P and A capacity.
      e. Both B and C.
37.   An agent negotiates a contract with a third party, for which A did not have express authority.
      Which of the following is true?
      a. P can never be held liable on the contract because A exceeded his authority.
      b. P can be liable on the contract only if A had implied authority to enter into the contract.
      c. P can be liable on the contract only if apparent authority was present.
      d. Either implied or apparent authority might cause P to be liable on the contract.
38.   Which of the following is not one of the common types of agent authority?
      a. Apparent.      b. Implied.    c. Actual.   d. Dependent. e. Agency by ratification.
39.   Where an employer makes use of a job title in an employment situation, which kind of authority
      can arise in the employee based on the job title?
      a. Apparent authority.       c. Inherent authority.     e. Implied authority.
      b. Authority by estoppel.    d. Express authority.
40.   In the context of agency, RATIFICATION refers to:
      a. Reaffirming a contract that one previously agreed to.
      b. Agreeing, after reaching majority, to be bound by a contract entered into as a minor.
      c. Agreeing to be bound to a contract entered into by an agent that exceeded A’s authority at
          the time A entered into it.
      d. Getting the appropriate agency to agree to take steps to reduce an excessively large rodent
          population.
41.   P hires an agent to manage his restaurant. As a result, A hires two people to serve as
      waitstaff. The hiring of the waitstaff is an example of what type of authority?
      a. Implied.    b. Express. c. Apparent.          d. Ratified.   e. No authority.
42.   Bob enlists the help of his son to buy a new car. On the way to test-drive several models, Bob
      tells his son, “I’m leaving this entire decision up to you except that you are not to spend over
      $20,000 on whatever car you decide on.” At the Toyota dealer, Bob tells the salesperson, “I’m
      turning this whole decision over to my son, so deal with him even though it will be my car.”
      Later, the son returns to the dealership and negotiates the purchase of a Toyota Camry for
      $21,500. What type of authority, if any, existed for the son to purchase this car?
      a. Apparent.        b. Implied.     c. Actual.     d. Dependent. e. No authority existed here.



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43.   You have contracted orally with Patty to buy some real estate on her behalf. The only
      limitations are that she wants a vacant lot in a residential area for less than $100,000. If you
      find such a residential lot costing $85,000, what type of authority do you have to enter into this
      transaction on Patty’s behalf?
      a. Express. b. Apparent.           c. Implied.    d. Ratification.
44.   Bob, owner of a small business, goes to Sally to negotiate the purchase of some inventory.
      Bob has Paul with him, who he introduces to Sally as “Paul, my purchasing manager.” A short
      while later, Bob says he must leave and says, “You two can conclude this deal.” Paul signs a
      contract to buy 2,500 units of her product. Paul tells Bob, and Bob then says, “You know you
      weren’t supposed to buy more than 1,000 units!” Assume that Bob, in fact, had instructed Paul,
      prior to meeting with Sally, to not buy more than 1,000 units. Can Sally hold Bob to the
      contract?
      a. No, because Paul did not have authority to buy 2,500 units.
      b. No, but she can hold him to a purchase of 1,000 units.
      c. Yes, because there was implied authority for the transaction.
      d. Yes, because there was apparent authority for the transaction.

Principal’s Duties
45. P has a duty to compensate any A, including a gratuitous A.
46.   P generally owes A the reasonable value of A’s services if the compensation has not been set
      by agreement of P and A.
47.   It is acceptable to pay A on a contingent fee basis such that A is compensated only if A
      successfully accomplishes a certain result, even though A might have put in considerable effort.
48.   P is not required to indemnify A for losses that A suffers on account of P.

49.   What distinguishes the duties of reimbursement and indemnification?
      a. Reimbursement is an agent’s duty and indemnification is a duty of the principal.
      b. Reimbursement is a principal’s duty and indemnification is a duty of the agent.
      c. Reimbursement relates to expected expenditures by the agent, and indemnification relates
         to losses suffered.
      d. Reimbursement relates to third parties and indemnification relates to the principal.
      e. Reimbursement applies only to actions that were within the scope of the agency whereas
         indemnification relates to all actions of the agent.
50.   P’s duty of cooperation requires that:
      a. The principal assist the agent and not interfere with the agent in the performance of her
         duties.
      b. The principal take reasonable steps to accomplish what the principal has agreed to do.
      c. The principal promptly pay any agreed-upon compensation to the agent upon the agent’s
         completion of his duties.
      d. The principal pay the agent for any expenses incurred in connection with the agency
         arrangement.
      e. The principal not hold the agent liable for torts that the agent commits in connection with the
         agency arrangement.
51.   Which of the following is not a duty that P owes to A?
      a. Compensation.                                  c. Obedience.
      b. Reimbursement and indemnification.             d. Cooperation.
                   e. To provide a safe work place.




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52.   The duty of P to indemnify A can best be described as a duty to:
      a. Pay to the agent any loss the agent suffers because of the principal.
      b. Promptly pay the agreed compensation in the agency arrangement.
      c. Give the agent adequate instructions to properly carry out the duties of the agency.
      d. Prevent the agent from having personal responsibility for torts that the agent commits while
      acting within the scope of the agency.
53.   P has a duty of compensation:
      a. In all agency arrangements.
      b. Only in agency arrangements that expressly provide for compensation.
      c. In all agency arrangements except for gratuitous agency arrangements.
      d. To pay the agent prior to the agent performing the duties of the agency.
      e. To pay the agent even where the agent failed to produce the required result under a
         contingent fee arrangement.
54.   A enters into an authorized contract on behalf of P. P breached the contract and A was held to
      be liable due to the breach of P. A can seek to recover from P based on P’s duty of:
      a. Reimbursement.          c. Compensation.           e. Contribution.
      b. Cooperation.            d. Indemnification.
55. Which of the following DOES NOT belong in the group? Duty of:
     a) Reimbursement b) Performance c) Notification  d) Loyalty                e) Accountability
56. Which of the following DOES NOT belong in the group? Duty of:
     a) Compensation. b) Reimbursement. c) Obedience.    d) Cooperation. e) Indemnification.

Agent’s Duties
59. A has a DUTY to notify P of information he learns from X, if that information is important to P.
60.   A lawyer who claims to be a specialist in securities law will be held to the standard of a
      reasonable specialist in securities law.
61.   X can assume that if he tells something to A, the information is forwarded to P.
62.   A owes the duty of accountability to P, but P does not owe this duty to A.
63.   Imputed knowledge is a part of a COA named Breach of Duty of:
      a) compensation b) obedience c) accountability d) reimbursement e) NONE of the above.
64.   Knowledge is imputed from:
      a) A to P.   b) P to A.    c) X to A.         d) A to X.     e) X to P.

65.   A has been hired to buy land for P for use as a factory site. A finds a good parcel for the
      purpose, and proposes it for purchase to P. P declines to purchase the property because it is
      too far from the interstate highway. A then buys this land for himself as an investment. What, if
      anything, has A done wrong?
      a. Usurped an opportunity. c. Engaged in self-dealing
      b. Nothing.                    d. Competed with the principal.
                     e. Misused confidential information.
66.   A principal hires an agent to place advertising in publications to reach certain target audiences.
      The agent places 45 percent of the advertising in a magazine of which he is the owner. The
      principal could probably recover from the agent on the grounds of:
      a. The agent breaching the duty of accountability.
      b. The agent usurping an opportunity.
      c. The agent competing with the principal.
      d. The agent breaching the duty of obedience.
      e. The agent engaging in self-dealing.



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67.   A Boulder manufacturer of computer disk drives has contracted with you for you to be their
      agent in finding customers for their products. You arrange (without the principal’s knowledge) a
      sale of the disk drives to a computer assembly business that you and your sister own. You
      have:
      a. Not violated any of an agent’s duties.
      b. Violated the duty of loyalty by usurping an opportunity.
      c. Violated the duty of loyalty by competing with the principal.
      d. Violated the duty of loyalty by self-dealing.
      e. Violated the duty of loyalty by engaging in a dual agency.
68.   Paul, who collects old cars, hires Andy to find and purchase a 1965 Ford Mustang on his
      behalf. Andy sees a car advertised that might be what Paul is looking for. Andy examines the
      car and falls in love with it. He decides to purchase it himself. Andy has:
      a. Usurped an opportunity.         c. Competed with the principal.
      b. Engaged in self-dealing.        d. Not violated the duty of loyalty.
69.   Paulette appointed Angie to be her agent to purchase a building lot for a warehouse in a large
      city. Angie owns several suitable lots, and a week after the agency arrangement was entered
      into, said to Paulette, “You know, I own a couple of lots that might work and that I might be
      willing to sell.” Angie and Paulette then agree on a price for Paulette to buy one of the lots.
      Angie has:
      a. Not violated any of an agent’s duties.
      b. Violated the duty of loyalty by usurping an opportunity.
      c. Violated the duty of loyalty by competing with the principal.
      d. Violated the duty of loyalty by self-dealing.
      e. Violated the duty of loyalty by engaging in a dual agency.

TERMINATION
70.   A renounces his authority from P, while P revokes his authority to A.
71.   If the agency contract does not specify how long the agency is to last, then it lasts for one year.
72.   Generally, the death or insanity of either the A or P terminates the agency relationship as a
      matter of law.
73.   The bankruptcy of A will generally terminate an agency relationship.
74.   An attempt by P to terminate a six-month fixed duration agency relationship during the second
      month will not be effective in terminating the agency.
75.   The DEATH of which party(ies) will cause an agency to terminate?
      a. P only.     c. Either P or A.
      b. A only.     d. Neither P nor A.
76.   The BANKRUPTCY of which party(ies) will cause an agency to terminate?
      a. P only.   c. Either P or A.
      b. A only.   d. Neither P nor A.
77.   If the law changes such that the actions called for in an agency arrangement become illegal
      after the agency has been carried on legally for some period of time, what is the consequence?
      a. The agency is terminated retroactively and the parties are left where they are.
      b. The agency is terminated retroactively and the parties must each return any consideration
          received from the other.
      c. The agency is terminated effective upon the change in law taking effect.
      d. The agency is not terminated, but P and agent will each become liable for his or her own
          illegal actions.
      e. The agency is not terminated, but P and agent will each become liable for the illegal actions
          of the other.



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78.   In an agency for a fixed term, such as one year, prior to the end of the stated period, A has:
      a. The power, but not the right, to terminate the arrangement.
      b. The right, but not the power, to terminate the arrangement.
      c. Both the power and the right to terminate the arrangement.
      d. Neither the power nor the right to terminate the arrangement.
79.   What is the significance of an agency coupled with an interest?
      a. Only apparent authority can exist.
      b. The agency cannot be terminated unilaterally by the P.
      c. The agent must be compensated for A’s efforts.
      d. The agency cannot be terminated by agreement of P and agent.
      e. Both B and D.
80.   An agency coupled with an interest typically arises in which situation?
      a. The agent is compensated for the performance of the duties.
      b. P would likely suffer a loss if A’s duties are not properly performed.
      c. P gives A authority to sell collateral owned by P in the event that defaults on a loan payable
         to A
      d. The agent is hired to perform personal services on behalf of P.
      e. All of the above.
81.   Which of the following would not terminate an agency by operation of law?
      a. A real estate agent loses his license.        c. P is declared bankrupt.
      b. P hires another agent with similar duties.    d. A lightning bolt kills P.
82.   A P and agent enter into an agency agreement under which A has a fixed 90-day period to sell
      the P’s house. Which of the following will end the agency arrangement prior to the end of the
      90-day period?
      a. Notification by P that the arrangement is over.
      b. Notification by A that the arrangement is over.
      c. Notification by either A or P that the arrangement is over.
      d. Neither A nor P can unilaterally end the arrangement prior to the expiration of the 90-day
         period.
83.   Ms. P and Mr. Agent sign an agency contract under which Agent will sell P’s house for a fee of
      $10,000. Assume that the contract is valid in all respects and that on the third day of the
      contract period, Ms. P tells Mr. Agent that she has changed her mind and doesn’t want him to
      sell the house. The next day Mr. Agent goes to Ms. P with a ready, willing, and able buyer. Ms.
      P:
      a. Must sell to the buyer because the agency is still in existence.
      b. Cannot sell to the buyer because the agency is no longer in existence.
      c. Can recover damages from Mr. Agent because the agency had ended.
      d. Is not obligated to sell to the buyer because her renunciation had terminated the agency
         arrangement.
      e. May sell to the buyer even though the agency arrangement was no longer in existence.
84.   The P hires an agent to manage her boutique. After several months, P fires this agent. To
      avoid liability for any further acts done by this agent, P must give:
      a. Direct notice to all persons who knew of the agency.
      b. Direct notice to those who dealt with A, and no notice to anyone else.
      c. Direct notice to those who dealt with A, but only constructive notice to those who knew of the
         agency, but did not deal with A.
      d. Constructive notice to all persons who knew of the agency, and no notice to anyone else.
      e. No notice of the termination is required in order to avoid liability.
85.   Which of the following DOES NOT BELONG in the group?
      a) express agency            c) attorney-in-fact
      b) general power of attorney d) special power of attorney         e) ALL…in the same group.

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86.   Which of the following DOES NOT BELONG in the group
      a) death b) bankruptcy c) impossibility d) purpose achieved   e) changed circumstances
87.   Which of the following DOES NOT BELONG in the group?
      a) mutual agreement     c) lapse of time     e) occurrence of a specified event
      b) impossibility        d) purpose achieved




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                                           ESSAY
Kinds of Employment Relationships
91. Mary has been hired to write courses for a web-based training organization. Mary works at the
     offices of the organization. Mary is given content guidelines and a contract for each course that
     she writes, and is paid a flat fee upon completion of the course. It can take anywhere from two
     weeks to six weeks to complete a course. The organization wants the contractors to work in
     their offices during the regular 40-hour work week, unless they need to be elsewhere to do
     research. The organization provides a computer to Mary. Mary also is able to use other
     employees at the organization for wordprocessing and editing. Is Mary an employee or an
     independent contractor?
     Mary is probably an independent contractor because of being paid on an irregular basis
     upon the completion of each course. It is not quite clear how much control is exercised
     over how she does her work, but it appears that she has considerable freedom so long
     as she stays within the course guidelines. The requirement to be present during the
     work week and the availability of the computer and other employees would weigh in
     favor of Mary being an employee, but this would probably not overcome the other
     factors.
     [moderate]

Formation of the Agency Relationship

92.   Jan wants to buy a house, but her friend Ann is a much tougher negotiator. They devise a plan
      where Ann will tell the seller of the house that she is Jan’s agent and will make all the decisions
      with respect to any purchase of the house. They also agree that Ann actually will have no such
      authority and that Jan is the only one who will make any decisions relative to purchasing the
      house. They meet with the seller, and Ann says that she is Jan’s agent while Jan says nothing.
      Has an agency been created?
      Although an agent cannot create an apparent agency, Jan’s silence would be treated as
      a representation that Ann’s statements were true, thereby creating apparent authority.
      [moderate]

Termination of an Agency
93. Ann has contracted to be Paul’s agent for the sale of Paul’s home. The contract provides that
     the duration of this agency is 120 days. Within the first week, Ann has found a potential buyer
     and is involved in negotiations. The following week, Paul notifies Ann that he is terminating the
     arrangement, but Ann proceeds to negotiate a sale with the potential buyer. Discuss this
     situation.
     Paul had the power to terminate the agency, thus Ann no longer had any authority and
     the sale contract is not valid. Because Paul did not have the right to terminate the
     agency, Ann could recover damages, most likely the amount of her lost commission.
     The buyer could recover any damages from Ann caused by her falsely indicating that she
     had authority.
     [moderate]

94.   Agnes is an agent for Pepe for maintaining Pepe’s antique car collection, including the sale and
      purchase of antique cars. Agnes has had this position for several years, but recently Agnes
      has developed a cocaine habit. She recently sold one of Pepe’s cars and kept some of the
      money herself to buy some cocaine. Soon thereafter, Agnes was declared bankrupt. The state
      then notified Agnes that she had sold the maximum allowable number of cars in a year without
      getting a dealer’s license. Shortly thereafter, Pepe was on a secluded island and died, which
      no one knew about until two weeks later. Discuss the effect of these events on the existence of
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    the agency.
    Although the actions of Agnes in using the proceeds of the one sale to buy cocaine was
    illegal, the purpose of the agency remained legal. The bankruptcy of Agnes would not
    end the agency. Once the sale of cars required a license, there would be no authority for
    such sales until the license was obtained. The agency ended at the moment of Pepe’s
    death.
[moderate]




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DOCUMENT INFO
Description: Independent Purchase Agent document sample