Question 1

Termination of an agency based on race,religion,national origin,and age is generally prohibited by state and federal legislation.

Accepted Answer

A) True 
 B)False

Question 2

An agency can never be oral.

Accepted Answer

A) True 
 B)False

Question 3

When an agreed-on result is obtained by the agent and the principal does not benefit,the agent:

Accepted Answer

A)   will not be paid.
B)   is entitled to be paid.
C)   must return any pay to the principal.
D)   may only recover the expenses incurred, not the actual compensation.

Question 4

In an agency at will,when one party exercises the power to terminate in violation of the right to terminate,the other party:

Accepted Answer

A)   is left without a remedy.
B)   may recover monetary damages in a breach of contract suit.
C)   may recover specific performance only terminating the contract.
D)   can recover only if the relationship was not based on mutual consent.

Question 5

When an agent's duties conflict with the principal's own interests,_____.

Accepted Answer

A)   the agent has breached the duty of loyalty
B)   the agent must disclose these facts to the principal
C)   if the agency is gratuitous, there is no duty of disclosure
D)   the agent must resign immediately

Question 6

A feature which distinguishes commercial agents from distributors and nonagents is that commercial agents:

Accepted Answer

A)   generally maintain their own inventory of goods unlike distributors.
B)   are usually compensated through a straight salary when a sale is completed.
C)   always bear the financial risk of nonpayment by the purchaser.
D)   often possess the authority to contract on behalf of their principals.

Question 7

According to the doctrine of agency at will,_____.

Accepted Answer

A)   each party has the power to terminate the agency even if there is no contractual right to do so
B)   only the principal has the right to terminate the agency at his will
C)   either party can terminate the agency anytime, if there is a contractual right to do so
D)   only the agent can terminate the agency

Question 8

Distributors generally are not agents and,as a result,manufacturers are legally responsible for their contracts,torts,or crimes.

Accepted Answer

A) True 
 B)False

Question 9

One can never serve as the principal for both parties to a transaction.

Accepted Answer

A) True 
 B)False

Question 10

If an agent indulges in commingling,he _____.

Accepted Answer

A)   probably will not be liable for loss to the principal
B)   bears the risk of any loss to the principal
C)   will not be liable for any loss to the principal if the property is not wrongfully used
D)   is breaching the duty to communicate information

Question 11

When an agent breaches a duty owed to the principal,the agent may:

Accepted Answer

A)   not be discharged until the contract has expired.
B)   be discharged without liability in spite of an unexpired contract.
C)   be discharged only if the principal can show actual damage.
D)   not be discharged until contractual damages are paid.

Question 12

To avoid being bound by the acts of the agent after the agency has ended,the principal:

Accepted Answer

A)   should give actual notice to those who have dealt with the former agent.
B)   need not give notice as he has no liability.
C)   should give verbal notice if the termination is due to loss of legal capacity by the principal.
D)   should get the agent to give notice.

Question 13

Which of the following is true of an agent's duty to obey a principal's instructions?

Accepted Answer

A)   An agent may always substitute his or her personal judgment for that of the principal.
B)   An agent has no power to exercise his or her best judgment to further the interests of the principal, if no instruction is given.
C)   An agent will be liable for any loss to the principal caused by failure to follow instructions.
D)   An agent has a duty to ignore the principal's instructions if they seem unwise.

Question 14

Agents breach their duty of loyalty by buying for the principal from themselves even if they charge a fair price.Which of the following common law duties of an agent does this violate?

Accepted Answer

A)   Duty of indemnification
B)   Duty to obey instructions
C)   Duty of loyalty
D)   Duty to account for funds and property

Question 15

When an agent's breach of duty causes harm to the principal,the principal:

Accepted Answer

A)   may deduct the loss from the amount due the agent.
B)   can bring an action in court even if compensation is due the agent.
C)   is liable to compensate the agent, even if the breach is serious.
D)   is liable to show actual damages to avoid having to compensate.

Question 16

An agency relationship arises when the agent acts for his own benefit under the direction of the principal.

Accepted Answer

A) True 
 B)False

Question 17

Independent contractors:

Accepted Answer

A)   are under the control of their employer or principal as to both the objective of their work and the means used to achieve it.
B)   are under the control of their principals as to the result that is to be achieved, but not as to the means used to accomplish that result.
C)   do not maintain their own inventory of goods; instead, they take orders on behalf of their principal.
D)   bring the parties together rather than actually negotiating a contract of sale.

Question 18

What does the agent's duty of loyalty mean?

Accepted Answer

The fiduciary duty of an agent is to act...

Question 19

When agents make advances from their own funds in conducting the principal's business,the principal has:

Accepted Answer

A)   no duty to reimburse the agent because the agent has assumed the burden.
B)   a duty to reimburse the agent for expenses incurred for the principal.
C)   a duty to reimburse the agent even if the agent is not acting within the scope of his/her authority.
D)   no duty to reimburse the agent because the agent commingled fungible goods.

Question 20

The principal has a duty to keep records from which the compensation due the agent can be determined.

Accepted Answer

A) True 
 B)False

Exam 23: The Agency Relationship-Creation, duties, and Termination

An agency relationship arises when the agent acts for his own benefit under the direction of the principal.

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An agency can never be oral.

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To avoid being bound by the acts of the agent after the agency has ended,the principal:

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The principal has a duty to keep records from which the compensation due the agent can be determined.

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When an agent's duties conflict with the principal's own interests,_____.

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In an agency at will,when one party exercises the power to terminate in violation of the right to terminate,the other party:

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One can never serve as the principal for both parties to a transaction.

Correct AnswerverifiedShow Answer

Which of the following is true of an agent's duty to obey a principal's instructions?

Correct AnswerverifiedShow Answer

If an agent indulges in commingling,he _____.

Correct AnswerverifiedShow Answer

A feature which distinguishes commercial agents from distributors and nonagents is that commercial agents:

Correct AnswerverifiedShow Answer

When an agent breaches a duty owed to the principal,the agent may:

Correct AnswerverifiedShow Answer

When an agreed-on result is obtained by the agent and the principal does not benefit,the agent:

Correct AnswerverifiedShow Answer

Distributors generally are not agents and,as a result,manufacturers are legally responsible for their contracts,torts,or crimes.

Correct AnswerverifiedShow Answer

What does the agent's duty of loyalty mean?

Correct AnswerverifiedThe fiduciary duty of an agent is to act...View AnswerShow Answer

Independent contractors:

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Termination of an agency based on race,religion,national origin,and age is generally prohibited by state and federal legislation.

Correct AnswerverifiedShow Answer

When an agent's breach of duty causes harm to the principal,the principal:

Correct AnswerverifiedShow Answer

Agents breach their duty of loyalty by buying for the principal from themselves even if they charge a fair price.Which of the following common law duties of an agent does this violate?

Correct AnswerverifiedShow Answer

When agents make advances from their own funds in conducting the principal's business,the principal has:

Correct AnswerverifiedShow Answer

According to the doctrine of agency at will,_____.

Correct AnswerverifiedShow Answer

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The fiduciary duty of an agent is to act...
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