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Exam 21: Agency Relationships

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Question 31

True/False

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An agent is authorized to act on behalf of a principal in doing business with third parties.

A) True
B) False

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verified

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Question 32

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If a principal does not ratify an unauthorized contract,the principal is not bound.

A) True
B) False

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Question 33

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Employees who deal with third parties are agents of their employers.

A corporate officer can be an agent for the corporation.

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

An agency relationship may be created for any legal purpose.

A principal is not liable for an agent's fraud unless the agent has the apparent authority to commit torts.

Express authority is authority declared in clear,direct,definite terms.

Jody is an agent for Insta Cross Country Trucking Inc.In the course of Jody's performance for the firm,Jody pays Heck for certain vehicle maintenance and repair services.Jody's right to obtain the amount of those payments from Insta arises under the principal's duty of

In considering the scope of an agent's implied authority,the test is whether the agent reasonably believed that he or she had the authority.

A power of attorney can be given only to an actual attorney.

Elle is an agent for Fine Cosmetics,Inc.Elle owes Fine Cosmetics the duty of

A licensed professional can employ an unlicensed agent to perform professional actions.

Jim agrees to act on Kit's behalf,subject to Kit's control,and Kit trusts Jim to so act.This describes a relationship between

A principal is liable for harm caused to a third party by an agent who commits a tort while acting in the scope of his or her employment.

Before a principal can ratify a contract,the principal must know all of the material facts involved in the deal.

Frida hires Gert,a real estate broker,to act as her agent to sell her house.The house burns down before being sold.The agency agreement is likely

A principal owes an agent a duty of ratification.

Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building.Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials.Meanwhile,Principal hires Skye,a certified public accountant,to work in its cost-accounting division as an employee,with no authority to hire or supervise others.Skye asks Theo,an outside experienced accountant,to advise her on certain accounting procedures but fails to pay Theo for the service.Principal also contracts with Uma,a salesperson,to solicit orders for its products in a designated territory.Uma obtains an order from Verity Industries,Inc. ,which is assured the order will be filled soon.But Uma does not follow through with the paperwork and fails to submit the order to Principal.Verity suffers a loss.Rite Supply,Theo,and Verity Industries claim Principal is liable under agency law.Discuss fully whether an agency relationship was created by Principal with Quality Construction,Skye,or Uma.

Commercial Development Corporation (CDC) hires Delta Construction Company to work at a site as an independent contractor.Whether CDC will be liable for torts committed at the site by Delta depends on