Question 1

Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that an instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda buys the instrument. Liable for this misrepresentation is​

Accepted Answer

Lena is liable for this misrepresentation as she knowingly provided false information to Nayda to induce her to purchase the instrument.

Question 2

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent​

Accepted Answer

The agency relationship between Orin and Pat terminated when the house was destroyed in a hurricane. The contract between them would have specifically outlined the terms of their relationship, including the conditions under which it would terminate. As the house no longer exists, there is nothing for Pat to sell and therefore, the agency relationship has ended.

Question 3

Olive, an agent for Precision Paving Corporation, enters into an unauthorized contract with Quality Asphalt, Inc., purportedly on Precision's behalf. Precision does not ratify the contract. Liability may be imposed on​

Accepted Answer

Olive acted beyond her authority by entering into the unauthorized contract. As a result, she may be held liable to Quality for misrepresenting her authority. Precision, on the other hand, cannot be held liable because it did not ratify the contract. Quality may also not be held liable because it entered into the contract in good faith, believing that Olive had the authority to act on Precision's behalf.

Question 4

Roman is the chief executive officer of Salty Snax Corporation. Roman's responsibilities include decisions on product development, marketing, and other significant business directions. Roman is subject to the approval and oversight of Salty Snax's board of directors. Teri is a Salty Snax manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Umberto is a Salty Snax salesperson, whose daily activities are controlled by Teri. Velma writes sales manuals and promotional materials for Salty Snax's products according to Roman's instructions and subject to Salty Snax's control, but has no dealings with the company's customers or suppliers. Warren writes copy on a contract-per-project basis and is not otherwise subject to Salty Snax's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?​

Accepted Answer

The answer of Roman is the chief executive officer of...

Question 5

Beth, acting within the scope of her authority for the Cake Bake Shop, contracts with Eden Valley Orchards to buy an assortment of fruit. Cake Bake is liable on the contract, and Beth is not, if Cake Bake is​

Accepted Answer

Cake Bake is a disclosed principal if Eden Valley Orchards is aware that they are contracting with Cake Bake. In this case, Cake Bake is liable on the contract, and Beth is not.

Question 6

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate​

Accepted Answer

The agency agreement between Bayou Development Corporation and Coastal Brokerage Associates will terminate after the condos have been sold, as the purpose of the agency agreement is to sell the condos. The other options do not necessarily lead to termination of the agency agreement.

Question 7

Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of her employment if he​

Accepted Answer

Garry would be considered acting outside the scope of his employment if he was off duty, as in scenario A, where he crashed into a car at the airport while off duty. The other scenarios involve actions taken during work hours or as part of his job duties, even if they involve negligence or misconduct.

Question 8

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify​

Accepted Answer

Reliable Insurance must notify both Stuart and any third parties who are aware of the agency relationship of the termination of Stuart's authority. Notifying only Stuart or only third parties who are aware of the agency relationship may not be enough to legally terminate the agency relationship. The public generally does not need to be notified.

Question 9

Rod is an employee of Savers Bank. In deciding whether Rod acts within the scope of his employment when he commits a tort against Tracy, a court will not consider whether​

Accepted Answer

The answer of Rod is an employee of Savers Bank....

Question 10

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute​

Accepted Answer

Olsen is individually responsible for committing the crime and therefore can be prosecuted by the state. Private Security may not be held liable for Olsen's actions if they were not aware of them and did not condone or encourage them.

Question 11

Becca is a purchasing agent for Cable & Wire Corporation. Doyle, a Cable & Wire corporate officer, gives Becca written authority to buy for the firm as much copper as necessary. The next day, Doyle calls Becca and tells her to buy only a certain quantity of copper and no more. Becca shows the written authority to Earthbound Resources, Inc., and enters into a contract to buy more than the quantity specified by Doyle. Earthbound Resources ships the order to Cable & Wire. Is Cable & Wire liable to Earthbound Resources under the contract? Is Becca liable? In each case, if so, why? If not, why not?​

Accepted Answer

The answer of Becca is a purchasing agent for Cable...

Question 12

Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred​

Accepted Answer

Netanya would be liable for Orla's injuries if Mirena's conduct occurred in the course and scope of her employment. This means that Mirena was acting within the scope of her job duties and responsibilities, and her actions were a foreseeable result of her employment. It does not matter whether the conduct was intentional or accidental, as long as it was within the course and scope of the employment relationship. The other options (A, B, and D) are not relevant to determining liability in this scenario.

Quiz 17: Agency Relationships in Business

Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that an instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda buys the instrument. Liable for this misrepresentation is​

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent​

Olive, an agent for Precision Paving Corporation, enters into an unauthorized contract with Quality Asphalt, Inc., purportedly on Precision's behalf. Precision does not ratify the contract. Liability may be imposed on​

Beth, acting within the scope of her authority for the Cake Bake Shop, contracts with Eden Valley Orchards to buy an assortment of fruit. Cake Bake is liable on the contract, and Beth is not, if Cake Bake is​

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate​

Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of her employment if he​

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify​

Rod is an employee of Savers Bank. In deciding whether Rod acts within the scope of his employment when he commits a tort against Tracy, a court will not consider whether​

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute​

Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred​

Lena is a salesperson for Musical Instruments, Inc. She tells Nayda, a customer, that an instrument has a certain quality when, as Lena knows, it does not. In reliance, Nayda buys the instrument. Liable for this misrepresentation is

Orin hires Pat, a real estate broker, to sell her oceanfront house. The house is destroyed in a hurricane before being sold. Pat is Orin's agent

Olive, an agent for Precision Paving Corporation, enters into an unauthorized contract with Quality Asphalt, Inc., purportedly on Precision's behalf. Precision does not ratify the contract. Liability may be imposed on

Beth, acting within the scope of her authority for the Cake Bake Shop, contracts with Eden Valley Orchards to buy an assortment of fruit. Cake Bake is liable on the contract, and Beth is not, if Cake Bake is

Bayou Development Corporation hires Coastal Brokerage Associates to sell the condominiums in a building at Bayou Development's resort. The agency will terminate

Garry drives a truck as an employee for Heavy Hauling, Inc. Garry would most likely be considered acting outside the scope of her employment if he

Reliable Insurance Company employs Stuart as an agent. To terminate Stuart's authority, Reliable Insurance must notify

Rod is an employee of Savers Bank. In deciding whether Rod acts within the scope of his employment when he commits a tort against Tracy, a court will not consider whether

Private Security Service employs Olsen as an agent. Without Private Security's knowledge but otherwise acting within the scope of employment, Olsen commits a crime. The state can successfully prosecute

Mirena serves in a representative capacity for Netanya. Orla is injured through Mirena's negligence. Netanya may be liable to Orla if Mirena's conduct occurred