Question 1

Darla serves in a representative capacity for Ellen's Botanicals. To accomplish the objectives of this relationship, Darla's authority can be implied by

Accepted Answer

The authority of a representative can be implied by custom, meaning that it is understood and accepted by both parties based on their previous interactions or industry norms. This would allow Darla to act on behalf of Ellen's Botanicals without explicit authorization for certain actions.

Question 2

Suva is an agent for Tax Accountants, Inc. On the firm's behalf and at its request, Suva pays Uzo for specially coded software. Suva's right to obtain the amount of the payment from Tax Accountants arises under the duty of

Accepted Answer

Suva has made a payment on behalf of Tax Accountants and is entitled to reimbursement from Tax Accountants under the duty of reimbursement.

Question 3

Denny, a certified public accountant and an investor, and Ethel, an insurance salesperson and a realtor, may create an agency relationship for

Accepted Answer

According to the law of agency, an agency relationship can be created for any legal purpose between two parties, as long as there is mutual consent and agreement to enter into the relationship. Therefore, Denny and Ethel can create an agency relationship for any legal purpose they choose.

Question 4

Country Club officers ask Devi to contract with Ewan to maintain the club's golf course. Devi orally agrees to do so. The relationship between the club and Devi is an agency by

Accepted Answer

The agency between the club and Devi is formed by agreement, as they have orally agreed to a contractual relationship in which Devi will maintain the club's golf course.

Question 5

Byron, a salesperson at a Carpet & Tile store, tells Dan, a customer, "Buy your flooring here, and I'll install it for less than the store would charge." Dan buys carpeting, which Byron installs for half the store's price. Byron keeps the money. With respect to the store, Byron has breached

Accepted Answer

Byron has breached the duty of loyalty by acting in his own interest rather than the store's, as he diverted business from the store to himself for personal gain.

Question 6

Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

Accepted Answer

Poppy has apparent authority because her conduct led Odel to reasonably believe that she had the authority to act on Nan's behalf, even though she did not actually have that authority. This type of authority is based on the appearances or actions of the agent, rather than any explicit grant of authority.

Question 7

Lucia is married to Marco. Lucia buys food for their children's lunches and charges the cost to Marco's account. This is an agency by

Accepted Answer

The answer of Lucia is married to Marco. Lucia buys...

Question 8

Lorene, an attorney, contracts with Milos to incorporate the client's business. Their contract stipulates the amount of the fee. On completion of the work, the attorney's right to be paid this amount arises from the client's duty of

Accepted Answer

The client's duty of compensation arises upon completion of the attorney's work, as stipulated in their contract. This means that the client is obligated to pay the agreed-upon fee for the attorney's services.

Question 9

Curly Fries Inc. grants its agent Dian an exclusive territory in which to sell its products. The company cannot compete with Dian in that territory under the duty of

Accepted Answer

The duty of cooperation requires the company to work with Dian to help her succeed in her exclusive territory. This includes avoiding any actions that could harm her sales or compete with her in the same territory.

Question 10

Ben manages a warehouse and its inventory for Coffee Roaster Inc. To operate this part of the business, Ben's authority can be inferred

Accepted Answer

The answer of Ben manages a warehouse and its inventory...

Question 11

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

Accepted Answer

Rosario is an independent contractor because she is hired on a per-project basis and is not an employee or agent of the companies or hosts she works for. As an independent contractor, Rosario is responsible for her own taxes, insurance, and expenses.

Question 12

Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached

Accepted Answer

Fred has breached the duty of loyalty as an agent because he had a conflict of interest when he bought the property and sold it to his employer, Energy, for a profit without disclosing his ownership interest in the property. Agents owe a fiduciary duty to act with loyalty and good faith towards the principal, and they cannot engage in self-dealing or competing with the principal without their knowledge and consent.

Question 13

Jon contracts with Kino to buy a certain number of sheep for Kino's Animal Farm. Jon makes a deal with Lila for the sheep, but neither Jon nor Kino pays the price. Lila sues Jon for breach. Jon's right to hold Kino liable for any damages is the right to

Accepted Answer

Indemnification is the right to hold someone else responsible for any damages or losses incurred as a result of the breach of contract. In this case, if Jon is found liable for breaching the contract with Lila, he can hold Kino liable for any damages resulting from the breach.

Question 14

Levon, an agent for Milled Grains LLC, executes an unauthorized contract with National Grocers Inc. The deal is highly advantageous to Milled Grains, and the company ratifies the contract. The contract is

Accepted Answer

The contract is valid because it was later ratified by Milled Grains, meaning that they accepted and approved of the agreement made by Levon despite it being unauthorized at the time it was made.

Question 15

Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached

Accepted Answer

Larry has breached the duty of obedience as he did not follow the clear instructions given by Mary to only enter into contracts on Mondays, Wednesdays, or Fridays.

Question 16

Watercraft Inc. employs Vern as a sales agent for a trial period. At the end of the period, Watercraft and Vern disagree on the amount of the commissions Vern is due for sales that he made. Vern may demand

Accepted Answer

Vern may demand an accounting to determine the correct amount of commissions he is due. This would involve a detailed review of all the sales Vern made during the trial period and the commissions agreed upon. It would help to resolve the disagreement between Watercraft and Vern. This is the best option as it helps in determining the correct amount of commission Vern is owed. Options A, C, and D do not provide a solution to the problem of determining the correct commission owed to Vern.

Question 17

Aiden hires Buck to manage Aiden's Cattle Ranch. Buck agrees to act on Aiden's behalf, subject to Aiden's control, and Aiden trusts Buck to so act. Their relationship is

Accepted Answer

Aiden is the principal who has hired Buck as his agent to manage the cattle ranch. Buck has agreed to act on behalf of Aiden and is subject to Aiden's control, indicating an agency relationship. Therefore, the correct choice is D- a principal and an agent.

Question 18

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

Accepted Answer

The agreement between Romero and Supply Procurement Service establishes express authority, as it clearly outlines the rights and duties of both parties. Apparent authority would refer to a situation where Romero's actions could lead others to mistakenly believe that Supply Procurement Service had authority to act on Romero's behalf, while implied authority would require authority to be implied from the circumstances or relationship between the parties. Equal authority is not a relevant concept in this scenario.

Question 19

Rosa introduces Sal to her friend Trey as "my associate." Sal purports to act as Rosa's agent in a business transaction with Trey. If Rosa is liable for Sal's actions, it will be because their relationship is

Accepted Answer

Rosa may be liable under the concept of agency by estoppel if she has represented Sal as her associate, leading Trey to reasonably believe that Sal has the authority to act on her behalf.

Question 20

Bakery LLC hires Cora to sell the company's products in a certain area. The company agrees to pay Cora a salary, plus commission, for a trial period. They also agree that she can sell using any methods and during any hours that seem appropriate. The key factor in whether Cora is an employee is

Accepted Answer

The key factor in determining whether Cora is an employee or an independent contractor is the degree of control that the employer, Bakery LLC, has over her work. If Bakery LLC has significant control over the details of Cora's work, such as the methods and hours she uses to sell the products, she is more likely to be considered an employee. The amount of salary, length of the trial period, and size of the sales area are not necessarily determinative factors in this analysis.

Quiz 19: Agency Relationships