On-Line Test Bank for West Business Law s1

Interactive Quiz for ALT-12e, Chapter 33

Chapter 33 – Agency Liability and Termination

1. Under the equal dignity rule: a. contracts are voidable by agents. b. if a contract must be in writing to be executed, an agent’s authority must also be in writing. c. if a contract between a principal and an agent lasts for longer than one year, it must be in writing. d. the power of state legislatures to create agencies is equal to that of Congress.

Answers:

a. Incorrect. This is not what the equal dignity rule means. b. Correct. This is what the equal dignity rule means. c. Incorrect. This describes a Statute of Frauds requirement. d. Incorrect. This is not what the equal dignity rule means.

2. When someone gives to another person a power of attorney, this means that: a. the person who is given the power of attorney has implied authority, but not express authority, to act as an agent. b. the person is an undisclosed principal. c. the person is a disclosed principal. d. the person is who is given the power of attorney has express authority to act as an agent.

Answers:

a. Incorrect. The power of attorney gives the party receiving it express authority to act as an agent. b. Incorrect. The power of attorney does not make the party receiving it an undisclosed principal, but rather, an agent. c. Incorrect. The power of attorney does not make the party receiving it a disclosed principal, but rather, an agent. d. Correct. When a power of attorney is conferred on someone, this gives that person express authority to act as the agent of the other party.

3. When a principal causes a third party to reasonably believe an agent has authority to act on the principal’s behalf, even if the agent does not have such authority, this is known as: a. anticipatory breach. b. repudiation by act. 2

c. operation of law. d. apparent authority.

Answers:

a. Incorrect. This is not an anticipatory breach. b. Incorrect. This is not repudiation by act. c. Incorrect. This is not known as operation of law. d. Correct. This defines apparent authority.

4. A principal whose identity is known to a third party at the time a contract is made is: a. a partially dislocated principal. b. a confirmed principal. c. a disclosed principal. d. a major principal.

Answers:

a. Incorrect. The principal is not partially dislocated. b. Incorrect. The principal is not confirmed. c. Correct. The principal in such a situation is a disclosed principal. d. Incorrect. The principal is not major.

5. Letisha buys a piece of pottery from Woodward for her principal, Jemal. If Woodward knows that Letisha is buying the pottery on behalf of someone other than herself but does not know the identity of that person might be, what is Jemal? a. An independent contractor. b. An agent. c. An undisclosed principal. d. A partially disclosed principal.

Answers:

a. Incorrect. Jemal is not working for Letisha; he is her principal. b. Incorrect. Jemal is not an agent; he is a principal. c. Incorrect. Jemal would be an undisclosed principal if Woodward did not know that Letisha was buying for the pottery for someone else. d. Correct. Jemal is a partially disclosed principal because although his identity is unknown to Woodward, Woodward knows that Letisha is acting on behalf of someone else in this transaction.

6. An employee going to and from work is usually considered to be acting: a. outside the scope of employment. b. within the scope of employment. 3

c. within the scope of employment if the agent is on a frolic d. as a borrowed servant.

Answers:

a. Correct. Generally, employees, while they are traveling to and from work, are outside the scope of employment. b. Incorrect. Generally, employees, while they are traveling to and from work, are outside the scope of employment. c. Incorrect. Generally, employees, while they are traveling to and from work, are outside the scope of employment, regardless of whether they were on a frolic. d. Incorrect. This is not the definition of a borrowed servant.

7. The legal doctrine of respondeat superior means that: a. the agent is responsible for the principal’s negligence. b. the principal is responsible for the agent’s torts that are committed in the course and scope of employment. c. the principal is responsible for all torts committed by the agent. d. the principal has a superior duty of caring for the agent.

Answers:

a. Incorrect. The agent is not responsible for the negligence of the principal. b. Correct. Literally, the phrase means “let the master respond” and means that the master/employer is responsible for torts committed by agents in the course and scope of their employment. c. Incorrect. A principal is not responsible for all harms caused by the agent. d. Incorrect. This is not what the doctrine means.

8. In the context of employment relationships, vicarious liability means that an employer may be held liable for an agent’s tort: a. regardless of whether the employer knew about the action or was personally at fault. b. only if the agent’s tort involved abnormally dangerous activities. c. only if the employer knew about the action or was personally at fault. d. regardless of whether the employer was in pari delicto.

Answers:

a. Correct. Vicarious liability is imposed on employers without regard to fault.. 4

b. Incorrect. An employer may be held vicariously liable for the torts of their agents regardless of whether abnormally dangerous activities are involved. c. Incorrect. Vicarious liability is imposed without regard to fault. d. Incorrect. In pari delicto is a Latin phrase meaning “equally at fault”; it has nothing to do with vicarious liability.

9. Jane asks Bob, a house painter, to paint her house. Bob, who is overloaded with work, contracts with Maggie to do the work for him. One afternoon as Maggie is busy painting, Jane walks out of her house and approaches Maggie. As Maggie turns on her ladder to look down at Jane, a one-gallon can of paint falls off the ladder and onto Jane’s head. Jane sustains serious head injuries as a result. In this situation: a. Bob is liable for Jane’s harms because he has a right to control the actions of his employees. b. Bob is liable for Jane’s harms because Maggie is an independent contractor. c. Bob is probably not liable for Jane’s harms. d. Bob is not liable for Jane’s harms based on Jane’s breach of her duty of notification.

Answers:

a. Incorrect. Maggie is not Bob’s employee, but an independent contractor. Thus, Bob is probably not liable for Jane’s injuries. b. Incorrect. Because Maggie is an independent contractor, Bob would not be liable for these harms. c. Correct. Because Maggie is an independent contractor, her negligence in this case would probably not be Bob’s legal responsibility. d. Incorrect. Bob’s lack of liability would not be based on Jane’s breach of a duty of notification. Jane had no such duty.

10. Which of the following IS NOT a method for terminating an agency? a. The purpose is achieved. b. Lapse of time. c. The principal calls for an accounting. d. Operation of law.

Answers:

a. Incorrect. When the purpose for which the agency was created is achieved, the agency may terminate. b. Incorrect. When an agency specifies a time period during which the relationship will exist, the passing of that time works to terminate the agency. 5 c. Correct. An accounting will not terminate an agency, although agents owe principals a duty of accounting. d. Incorrect. Agencies may terminate by operation of law as, for example, when a party dies or when the subject matter of the agency is lost or destroyed.