Question 1

Arthur,who works for Peter,sees what he thinks is a good deal for Peter.Without asking whether he has authority to negotiate the deal,Arthur enters into a contract on Peter's behalf.Peter says later that he isn't interested.Is Peter liable on the contract? Is Arthur liable on the contract? Explain.

Accepted Answer

The answer of Arthur,who works for Peter,sees what he thinks...

Question 2

Charles states he has authority to contract for Wyatt and that he will be personally liable if he does not in fact have the authority to bind Wyatt.Identify the name and effect of Charles's statement.If Charles enters the contract without making such a statement,is there a way the same effect could result?

Accepted Answer

The answer of Charles states he has authority to contract...

Question 3

Paul is a truck driver who owns his own truck and delivers loads to various companies for nine months out of the year.For the hard winter months Paul goes to Key West to "put his feet in the sand." One evening while delivering a load for Emblem Helicopter Parts Co. ,Paul got into a "little scuffle" with a rowdy trucker who was giving Nell,a waitress at the DewDrop Inn Cafe,a hard time.Paul knocked out five of "Rowdy's" teeth.Rowdy is suing Paul and Emblem for his injuries.Discuss whether Rowdy will win against Emblem on the issue of: (a)respondeat superior and (b)unauthorized acts of agents.

Accepted Answer

The answer of Paul is a truck driver who owns...

Question 4

John agreed to build a new house for Ted.Unknown to John,Ted was an agent for Russell Realty.John built the house as agreed.When Ted refused to pay,John became aware that Ted was an agent for Russell.John wants to sue on the contract.Under the Second Restatement,John:
A) must sue Ted,because Ted is the person with whom he dealt.
B) can collect judgments against Ted and Russell.
C) must sue Russell,because Russell is the principal.
D) can sue either Ted or Russell.

Accepted Answer

Under the Second Restatement of Agency, when an agent enters into a contract on behalf of a disclosed or partially disclosed principal, the agent and the principal may both be held liable. Since John was unaware that Ted was acting as an agent for Russell Realty, but later discovered this fact, he has the option to sue either Ted (the agent with whom he directly interacted) or Russell Realty (the principal on whose behalf Ted was acting).

Question 5

Susan is planning to incorporate a new landscaping company,"Evergreen and Growin'." She has held herself out as an agent for Evergreen and has contracted to buy a truck,tools,fertilizer,and seed and also has entered into a lease on behalf of Evergreen for an office.When she fails to get the loan from the bank,she cannot start the business,so she cancels all the contracts.What are the consequences?
A) Susan can cancel all the contracts with no personal liability if she told them she was acting as an agent and expressly warranted that she would not be responsible.
B) Susan may be held personally liable on the contracts because she misrepresented to third parties that she had authority to make contracts on behalf of a non-existent corporation.
C) Since the company never existed,she gave no implied warranty.
D) Susan will be held liable for the contracts only if she ever gets the loan.

Accepted Answer

Susan may be held personally liable on the contracts because she misrepresented to third parties that she had authority to make contracts on behalf of a non-existent corporation. As an individual, she cannot bind a corporation that does not yet exist. She may be held liable for breach of contract and may need to pay damages to the other parties involved. Expressly warranting that she would not be responsible will not protect her from liability in this situation.

Question 6

Bryant,doing business as Fair Realty,employs Chris and Deborah as salespersons.Tammy contracts with Bryant to sell her house because she is aware of the good reputation of Fair Realty's salespersons.In this situation:
A) Chris and Deborah are agents of Tammy and Fair Realty but they have no authority to show Tammy's house to prospective purchasers and to make representations about the house unless Tammy expressly and explicitly grants this authority directly to them.
B) Chris and Deborah are employees/agents of Fair Realty and subagents of Tammy,and they have authority to show Tammy's house to prospective purchasers and to make representations about the house.
C) Bryant cannot appoint subagents because Tammy's appointment of him reflected her confidence in and reliance upon his personal skill,integrity,and other qualifications.
D) Chris and Deborah are subagents of Fair Realty and,as such,have a fiduciary duty only to Fair Realty.

Accepted Answer

Chris and Deborah are employees/agents of Fair Realty, which means they are authorized by Fair Realty to act as subagents of Tammy. As subagents, they have the authority to show Tammy's house to prospective purchasers and make representations about the house. Tammy trusted Fair Realty's reputation and therefore, implicitly trusted the agents who work for it. Therefore, Chris and Deborah owe a fiduciary duty both to Fair Realty and Tammy.

Question 7

Sam is a sales representative for the INC Corporation.Sam has a terrible driving record and has had his driver's license revoked,but nevertheless he continues to drive the company car for his job.One day he drives too fast for conditions,goes through a red light,and strikes a pedestrian.The accident happened despite the fact Sam's supervisor at INC had repeatedly reprimanded him and advised him to drive more cautiously.INC has:
A) no liability,because they did not authorize Sam to drive carelessly.
B) no liability,because Sam's actions were not a tort.
C) liability even though it did not authorize Sam to drive carelessly,because it employed an improper person as its agent.
D) no liability,because it has adequately supervised Sam as its agent.

Accepted Answer

INC can be held liable for the actions of its employee, even if it did not authorize or condone their behavior. Sam's reckless driving and the resulting accident occurred while he was acting in the scope of his employment with INC. Additionally, INC could be found to have employed an improper agent if they knew or should have known about Sam's poor driving record and continued to allow him to drive the company car.

Question 8

Leonard is a traveling salesman for Bighorn,Inc.He calls on Ralphyl,one of his regular accounts,in order to solicit another order.While in the store,Leonard collects a past due account for Bighorn,but he doesn't get another order.It has been a bad day in which Leonard hasn't had any orders.He is so angry about this when he leaves the store that he drives negligently and hits a pedestrian with his car.In this case:
A) Bighorn has no liability for Leonard's negligence,because Leonard is responsible for his own negligent conduct.
B) since he was driving at the time of the negligent conduct,Leonard was no longer within the scope of his employment.
C) Bighorn will be liable for Leonard's negligence under the doctrine of respondeat superior.
D) Leonard is an independent contractor and,therefore,Bighorn will have no liability for his negligence.

Accepted Answer

Bighorn will be liable for Leonard's negligence under the doctrine of respondeat superior, which holds an employer responsible for the negligent acts of their employees committed within the scope of their employment. Even though Leonard did not obtain another order for Bighorn, he was still acting in the course of his employment by collecting a past due account for the company. Therefore, Bighorn will be held liable for Leonard's negligent conduct while he was driving.

Question 9

Southern Furniture Co.hired Chuck to drive a company truck and deliver furniture.Chuck had a spotless driving record and did well on his driving test.Belinda ordered a chair from Southern Furniture Co.and arranged for its delivery on her lunch hour.Belinda was at home when Chuck delivered the chair.After delivering the chair,Chuck brutally assaulted Belinda,causing physical and psychological injuries.Chuck was convicted in the criminal courts.During the trial it was revealed that Chuck had been in a mental institution for the criminally insane for two years because he had assaulted his mother and other women.He also had a lengthy criminal rap sheet involving theft crimes.Belinda sought compensation for her physical and psychological injuries from both Chuck and Southern Furniture Co.in civil court.Discuss the probable outcome of this case with regard to the issues of: (a)respondeat superior and (b)general tort liability of principals for the unauthorized acts of their agents.

Accepted Answer

The answer of Southern Furniture Co.hired Chuck to drive a...

Question 10

If Carol,acting as agent for Steve,signs a contract,she alone will be personally bound by it:
A) if Steve's name or the fact that Carol is an agent is never mentioned and Steve does not carry out the contract.
B) never;as an agent she is only a representative.
C) if she decides to sue.
D) if Steve is discovered by the third party to be the principal and the third party elects to hold him liable for performance.

Accepted Answer

When an agent signs a contract without disclosing the principal's identity or the fact of agency, the agent can be held personally liable if the principal does not fulfill the contract.

Question 11

Which of the following is correct under the Second Restatement with regard to actual notice to a third party of the termination of an agent's authority to act on behalf of the principal?
A) Publication in a newspaper of general circulation in the area is sufficient if the third party is one with whom the agent had previously dealt on credit.
B) If notice is given by mail,it is effective as actual notice upon delivery to the third party.
C) A personal telephone call to the third party will not suffice,because actual notice must be in writing.
D) Actual notice is not required when the agent has been specially accredited to deal with the third party.

Accepted Answer

Actual notice, as defined under the Second Restatement, is considered effective when it is delivered to the third party. This means that if notice of the termination of an agent's authority is given by mail, it becomes effective as actual notice upon its delivery to the third party. This aligns with general principles of notice and communication in agency law, where the focus is on the receipt of the notice by the intended party.

Question 12

Discuss apparent authority and some common ways in which it might arise.

Accepted Answer

The answer of Discuss apparent authority and some common ways...

Quiz 20: Relationship With Third Parties

Arthur,who works for Peter,sees what he thinks is a good deal for Peter.Without asking whether he has authority to negotiate the deal,Arthur enters into a contract on Peter's behalf.Peter says later that he isn't interested.Is Peter liable on the contract? Is Arthur liable on the contract? Explain.

John agreed to build a new house for Ted.Unknown to John,Ted was an agent for Russell Realty.John built the house as agreed.When Ted refused to pay,John became aware that Ted was an agent for Russell.John wants to sue on the contract.Under the Second Restatement,John:

Bryant,doing business as Fair Realty,employs Chris and Deborah as salespersons.Tammy contracts with Bryant to sell her house because she is aware of the good reputation of Fair Realty's salespersons.In this situation:

If Carol,acting as agent for Steve,signs a contract,she alone will be personally bound by it:

Which of the following is correct under the Second Restatement with regard to actual notice to a third party of the termination of an agent's authority to act on behalf of the principal?

Discuss apparent authority and some common ways in which it might arise.