Question 1

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 2

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 important to note that an agency contract may specify the criteria for remuneration, but by default, an agent is entitled to reasonable compensation for their work.

Question 3

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

Nora is an agent of the joint venture with the authority which would be usual for a president to have.

Question 4

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 5

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 not to use or disclose confidential information for his own benefit. However, if Stone wishes to pursue a business opportunity that is outside the scope of his agency with Star, he may do so, but he must first disclose the opportunity to Star and give Star the opportunity to pursue it. If Star rejects the opportunity, Stone may then pursue it, but he must keep Star's information confidential and not use it for his own benefit unless he obtains Star's consent. This choice is the best option as it balances Stone's personal self-interest with his fiduciary duty to Star.

Question 6

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

Since Jasmine disclosed that she was acting as an agent on behalf of Big White Limousine Services Ltd, Erin can enforce the contract against either Jasmine or Big White, whichever she chooses. However, if Erin chooses to enforce the contract against Jasmine, Jasmine may have the right to seek indemnification from Big White for any damages she incurs.

Question 7

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

Jerome can buy the computers for Oxford from himself if Oxford consents to the sale. As long as Oxford consents to the sale and is aware of the relationship between Jerome and the seller, there is no conflict of interest. However, Jerome must ensure that the price he charges Oxford is fair and reflects the market value of the computers.

Question 8

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

Accepted Answer

A principal is generally responsible for the torts of its agents if the agent was acting within the actual or apparent scope of their authority or duties, regardless of whether the principal specifically authorized the activity. The principal's liability for the agent's torts may also depend on the nature of the agency relationship and whether the agent was an employee, independent contractor, or other type of agent.

Question 9

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

Jelena had apparent authority to act on Vladimir's behalf prior to his termination of her agency. In the absence of notice to the Blackhawks that Jelena's authority had been terminated, they had the right to assume that she still had the authority to sign the contract. Therefore, the contract is enforceable.

Question 10

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. Gray had a responsibility to take reasonable care in finding suitable offices for Digital, but he failed to do so by forgetting to ask about air-conditioning. However, since Digital was aware that Gray had no experience in finding office space, they may have to bear some responsibility for their decision to enter into the lease without explicitly stating their requirement for air-conditioning.

Question 11

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 only for a specific two-year term and there are no provisions for automatic renewal or extension. Therefore, the agency will terminate at the end of the two-year term if it is not expressly or impliedly extended beyond that term.

Question 12

Petropolis Co is a manufacturer of auto parts and is looking for distributors in New Brunswick.They already have distributors in the other provinces.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 would be concerned about the potential for Jacob to bind Petropolis to unauthorized obligations if he is acting as an agent rather than a distributor. As an agent, Jacob may have more authority to make agreements on behalf of Petropolis without their knowledge or consent, so Petropolis would need to carefully consider the risks involved.

Question 13

A strategic alliance includes

Accepted Answer

The answer of A strategic alliance includes
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Question 14

Sureeya sells jewellery 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

As an agent for Janet, Sureeya had a duty to follow Janet's instructions and not sell the ring without her approval. By selling the ring to Talia without Janet's permission, Sureeya breached her duties to Janet. The fact that Talia offered a higher price does not excuse Sureeya's breach of her duty as an agent. Janet entrusted Sureeya with the ring, and Sureeya failed to act solely in Janet's best interests. Therefore, Sureeya breached her duties to Janet.

Question 15

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 16

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

By leaving her computer on display at Carleton's store, Tara may have given the impression that Carleton had authority to sell her computer. This is known as apparent authority, where an agent's actions or representations lead a third party to reasonably believe that the agent has authority to act on behalf of the principal. Therefore, Tara may not be able to get her computer back. Eli also may have a valid claim to the computer because of his reasonable reliance on Carleton's representation that it owned the computer.

Question 17

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 answer of Orton Corp is incorporated under the Canada...

Question 18

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 fact that the other owners have not authorized Marius and have no intention of selling their interests in the building means that Marius did not have actual authority. Additionally, the circumstances do not give rise to apparent authority, as the real estate agent would reasonably have inquired as to who owned the property and in what capacity, and would have been alerted to the lack of authority. Therefore, the listing agreement is not enforceable against the other owners.

Question 19

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, Satinder can only be terminated by Bog with just cause or with reasonable notice or compensation in lieu of notice. The fact that Satinder is an agent of the corporation does not change the employment relationship or the legal protections afforded to employees. However, if Bog goes bankrupt, Satinder's employment may be terminated automatically due to the circumstances of the corporation's finances.

Question 20

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...

Quiz 20: Agency and Other Methods of Carrying on Business