Question 1

Stone entered into an agreement with Star Alarms Inc, a corporation that sells alarm systems for personal residences, under which he would act as an agent for Star to find customers for Star's alarm systems.In the course of his work for Star, Stone learns quite a bit about alarm systems.A friend offers to sell him an alarm system business for commercial buildings, a segment of the market that Star has never pursued.Stone decides that he would like to buy the business.Which of the following is TRUE? Stone's fiduciary duty requires that he

Accepted Answer

As an agent for Star, Stone owes a fiduciary duty to act in the best interests of Star and avoid any conflicts of interest. If he decides to pursue his friend's alarm system business, it could be seen as competing with Star's business, which would breach his fiduciary duty. Therefore, the best option is for Stone to disclose the opportunity to Star and seek their consent before pursuing it. He should keep the information confidential and not use it for his own benefit unless Star consents to it. This way, Stone can balance the interests of both Star and himself while avoiding any potential conflicts of interest.

Question 2

Satinder is an employee of Bog Systems Inc.She acts as an agent on behalf of the corporation in that she buys office furniture on behalf of the corporation.Which of the following is TRUE?

Accepted Answer

As an employee acting as an agent for the corporation, Satinder has certain employment rights. She cannot be terminated without just cause or reasonable notice or compensation in lieu of notice. Therefore, option B is the correct answer. Options A, C, and D are incorrect as they do not consider employment rights. Option E is incorrect as it is an incomplete answer, as there is a requirement for compensation or notice.

Question 3

Jasmine enters into a contract to provide limousine services to Erin.Later, Jasmine tells Erin that she was acting as an agent on behalf of Big White Limousine Services Ltd.Which of the following is TRUE?

Accepted Answer

Erin can enforce the contract against either Jasmine or Big White Limousine Services Ltd, whichever she chooses. This is because Jasmine disclosed that she was acting as an agent on behalf of Big White, which makes them a disclosed principal in the contract. Therefore, Erin has the option to hold either Jasmine (the agent) or Big White (the disclosed principal) liable for any breaches of the contract.

Question 4

Orton Corp is incorporated under the Canada Business Corporations Act.It carries on a business running tour boats on the Bow River in Calgary.The articles of the corporation provide that Orton Corp may not enter into a lease unless the board of directors approves it.Joe, the president of the corporation, goes to West End Real Estate Inc, tells West End that he has authority to enter into a lease on behalf of the corporation, and signs a lease for some office space for the business.The board of directors never approves the lease.Which of the following is TRUE?

Accepted Answer

The lease is enforceable under the principle of apparent authority. This principle suggests that a third party could reasonably believe that the president has the authority to enter into leases, as this is within the usual authority of someone in that position, despite the specific restrictions in the corporation's articles.

Question 5

Four people, who are not partners, buy and sell a large number of apartment buildings.One of them, Marius, enters into a listing agreement with a real estate agent to sell one building.Marius says that he has authority to bind all four owners to the listing agreement.In fact, none of the others have authorized Marius to enter into the listing agreement, and they have no intention of selling their interests in the building.Which of the following is TRUE?

Accepted Answer

Marius did not have actual or apparent authority to enter into the listing agreement on behalf of the other owners. The real estate agent has a duty to inquire about ownership and authority before entering into the agreement, and a reasonably expected inquiry would reveal the lack of authority. Therefore, the listing agreement is not enforceable. The real estate agent may also have a claim against Marius for misrepresentation or breach of contract, but not for defamation.

Question 6

Petropolis Co, a manufacturer of auto parts, has distributors in most provinces.It wants a distributor in New Brunswick as well.Jacob is negotiating to become the distributor for New Brunswick.Unlike the distributors in the other provinces, Jacob does not want to take responsibility for buying the parts and then reselling them.Instead, he wants to sell the parts as an agent for Petropolis.Which of the following factors would be relevant to Petropolis in deciding how to respond to Jacob's proposal?

Accepted Answer

Petropolis will be concerned about the potential for Jacob to bind Petropolis to unauthorized obligations. As Jacob will be selling the parts as an agent for Petropolis, there is a risk of him making unauthorized commitments to customers. Petropolis will need to ensure that there are clear guidelines in place to prevent such situations.

Question 7

Nora has entered into a joint venture with Scott to sell diet supplements.They have set up a corporation to carry on the business.They are the sole shareholders and directors.Nora is the president.Which of the following are TRUE?

Accepted Answer

The answer of Nora has entered into a joint venture...

Question 8

For several years, Jelena worked as an agent for Vladimir, a hockey player for the St Catharines Blackhawks.Jelena regularly negotiated Vladimir's contracts and agreed to them on his behalf.In August 2009, Vladimir terminated the agency.He had decided that he could negotiate his own contracts.He neglected to tell Jelena or the Blackhawks.In September 2009, Jelena signed a contract on his behalf with the Blackhawks for the 2009-2010 season.Which of the following is TRUE?

Accepted Answer

In the absence of notice to the Blackhawks that Jelena's authority had been terminated, she continued to have apparent authority to act for Vladimir. Therefore, the contract is enforceable.

Question 9

Alannis is an agent but not an employee of Tesky's Inc, a large department store business.She acts as an agent for the corporation in entering contracts with suppliers to buy clothes.While she is on a trip to Toronto to visit a long-time supplier, Tesky's goes bankrupt.The next day, Alannis, while still unaware of the bankruptcy, enters into a contract with the supplier on behalf of Tesky's to buy $20 000 worth of clothes.Which of the following is TRUE?

Accepted Answer

B) The contract is not enforceable against Tesky's because Tesky's bankruptcy terminates the agency relationship. When a principal (in this case, Tesky's Inc) goes bankrupt, the agency relationship is terminated, and the agent (Alannis) loses the authority to enter into contracts on behalf of the principal.

Question 10

Serena was selling her house and she entered into a contract with Jatinder under which he would act as her agent.Armin was interested in buying the house which had a vacant lot next door.Jatinder told Armin that the lot was too small to build on.Armin relied on this representation and bought the house for $200 000.Later the owner of the lot did build a house on it.Jatinder knew that the lot was big enough for a house but had lied to Armin to get him to buy Serena's house.Serena knew nothing about what Jatinder had told Armin.The true value of the house was $175 000.Which of the following are TRUE?

Accepted Answer

Serena is responsible to Armin for the difference between what Armin paid and the true value of the house because Jatinder was acting within the scope of his apparent authority.

Question 11

Which of the following statements regarding a principal's liability for the torts of its agents is TRUE?

Accepted Answer

A principal is responsible for the torts of the agent who is acting in the actual or apparent scope of the agent's duties or authority. This is known as vicarious liability, and it holds the principal responsible for the actions of their agents even if the principal did not authorize or participate in the wrongdoing. However, if the agent was acting outside the scope of their duties or authority, the principal may not be held liable.

Question 12

Silvio began work as an agent for Midnight Skateboards Inc.He is responsible for selling Midnight's skateboards to retail sporting goods stores.In his first month, he worked very hard, visiting dozens of stores, but did not sell any skateboards.Which of the following is TRUE?

Accepted Answer

Silvio is entitled to reasonable remuneration for his work unless his agency contract says he is working only to be paid remuneration based on sales commission. It is possible that his contract specifies that he is only paid based on commission, but in the absence of such a provision, he is entitled to reasonable remuneration for the work he has done.

Question 13

Sureeya sells jewelry at her store premises.Sureeya agreed to sell Janet's ring as her agent.Janet agreed to pay Sureeya a commission of $100 regardless of the sale price.Under their agreement, Sureeya did not have authority to sell the ring without Janet's approval.After Sureeya put the ring up for sale, Talia offered Sureeya $7500 for it.This was far above the regular fair market price of $5000 because the ring would complete a set that Talia had.Sureeya sold the ring to Talia.Which of the following best describes Sureeya's legal position?

Accepted Answer

Sureeya breached her duties to Janet because she did not have authority to sell the ring without Janet's approval, and she did so anyway. Regardless of whether the sale benefited Janet financially or not, Sureeya acted against Janet's explicit instructions, which is a breach of her duties as Janet's agent. The fact that she received a commission from the sale does not excuse her actions.

Question 14

Stein has agreed to act as an agent for Tayman Resources Inc for two years.Under the agreement, Stein is responsible for finding mining claims for Tayman to invest in.During the two-year term, Stein has agreed not to work for anyone else.No other terms have been agreed to in the agency agreement.Which of the following is TRUE?

Accepted Answer

The agency is limited to a two-year term and there are no terms for automatic renewal. Therefore, the agency will terminate at the end of the two-year term unless it is expressly or impliedly extended beyond that term.

Question 15

Carleton Computer Sales Inc carries on a business of buying and selling computers.Tara is negotiating to sell her computer to Carleton but no agreement has been reached between Tara and Carleton.In anticipation of selling it to Carleton, Tara agreed to leave her computer on a display rack at Carleton's store.Carleton sells Tara's computer to Eli for $1000, telling Eli that Carleton owned the computer.Which of the following best describes Tara's legal position based on the law of agency?

Accepted Answer

Tara's actions of leaving her computer on display at Carleton's store can be construed as giving Carleton the authority to sell the computer on her behalf. By doing so, she represented to anyone who may have entered the store that Carleton had the authority to sell the computer. Eli relied on the representation made by Carleton that it owned the computer, and therefore Tara may not be able to get her computer back.

Question 16

I-Jack Inc and Sys/Com Ltd are two large corporations carrying on telecommunications businesses.They want to work together to set up a new business that would develop and sell telephones specifically designed to take advantage of the new Internet services each is offering.Their idea is that the new telephones could be sold with their telecommunications services as a package.Sys/Com will be responsible for the management of the business.This joint venture could be set up as

Accepted Answer

The answer of I-Jack Inc and Sys/Com Ltd are two...

Question 17

Oxford Management Inc is a management consulting firm.It has hired Jerome as its agent to buy new computers for its offices across the country.Jerome owns 10 computers, which are ideal for Oxford's needs.Oxford is a valued client, and he decides to sell the computers to Oxford for a price which is $10 000 less than their market value.As agent for Oxford, he decides to buy the computers for this price from himself.Which of the following is TRUE?

Accepted Answer

While it is generally not appropriate for an agent to buy goods from themselves as it creates a conflict of interest, in this case, Jerome may buy the computers from himself with Oxford's informed consent. As long as Oxford is fully aware of the situation and agrees to the sale at the reduced price, there is no conflict of interest. Therefore, option B is correct. Option A is incorrect as there may be situations where an agent may buy goods from themselves with full disclosure and consent. Option C is incorrect as being personally satisfied that the price is fair is not enough to avoid a conflict of interest. Option D is not relevant to the situation as there is no mention of an alternative supplier. Option E is incorrect as the sale can be carried out with Oxford's informed consent.

Question 18

Nathan and Oliver are fishermen.They agreed that Oliver would take Nathan's fish to the market in Vancouver and sell them on Nathan's behalf along with Oliver's own fish.Oliver took Nathan's fish and his own fish to the market and set up a stall.As it happened, Oliver sold all of his fish and only half of Nathan's fish.Oliver did nothing to try to promote the sale of his fish over Nathan's.He simply put all the fish on a table in two piles and let the customers choose.Which of the following is TRUE?

Accepted Answer

Oliver is not in breach of his fiduciary duty because Nathan knew and impliedly authorized Oliver to sell his own fish along with Nathan's, indicating consent to the arrangement.

Question 19

A strategic alliance includes

Accepted Answer

An arrangement between two technology companies to license their patents to each other is a strategic alliance because it allows both companies to access and use each other's technology, which can lead to new products and services, increased market share, and reduced costs.

Question 20

Digital Technologies Inc entered into an agreement with Gray under which Gray agreed to act as Digital's agent for the purpose of finding new offices for Digital.Gray had never done this kind of work before and Digital knew this.He found offices that he believed would be satisfactory to Digital, and Digital entered into a five-year lease.Unfortunately, it turned out that the offices did not have air-conditioning and so could not be used in the summer, making them completely unsuitable for Digital.Gray had forgotten to ask about air-conditioning.Anyone with experience as a real estate agent would have found out about this problem.Which of the following best describes Gray's legal position?

Accepted Answer

Gray probably breached his duty of care by failing to take reasonable care in performing his responsibilities, but Digital may be denied recovery because Digital knew that Gray had no experience in finding office space. While Gray was acting as a agent, he had a duty of care to act with reasonable care and skill in carrying out his responsibilities. However, Digital knew that Gray had no experience in this area, which may affect their ability to recover damages.

Quiz 19: Agency and Other Methods of Carrying on Business