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Exam 19: Agency Relationships

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Question 1

Multiple Choice

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Farah hires Gil, a real estate broker, to act as her agent to sell her land for $150,000. Before the land is sold at the stated price, oil is discovered beneath it, causing its market value to increase considerably. The agreement between Farah and Gil is likely

A) continued with a proportionate increase in Gil's sales commission.
B) continued until Gil tells prospective buyers of the discovery.
C) terminated by act of the parties.
D) terminated by operation of law.

E) None of the above
F) A) and B)

Correct Answer

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D

Question 2

Multiple Choice

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Vera is a purchasing agent for Wild-Caught Fish Inc., with the authority to buy a sea fisher's catch up to a certain quantity. After the fish is bought, the agency relationship terminates

A) automatically.
B) following notice to all fishers within a reasonable geographic area.
C) following notice to all fishers with whom Vera did business.
D) following published notice.

E) A) and B)
F) None of the above

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Question 3

True/False

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A principal who creates an exclusive agency and then competes with the agent can be held liable for the agent's lost profits or sales.

Erin indicates that she is acting as an agent on behalf of an unidentified client-Flight Services Inc.-when she enters into a contract with Go Airlines. Liability to Go for nonperformance of the contract may be imposed on

Suva is an agent for Tax Accountants, Inc. On the firm's behalf and at its request, Suva pays Uzo for specially coded software. Suva's right to obtain the amount of the payment from Tax Accountants arises under the duty of

In some situations, the courts find an agency relationship where there is no formal agreement.

Aiden hires Buck to manage Aiden's Cattle Ranch. Buck agrees to act on Aiden's behalf, subject to Aiden's control, and Aiden trusts Buck to so act. Their relationship is

Byron, a salesperson at a Carpet & Tile store, tells Dan, a customer, "Buy your flooring here, and I'll install it for less than the store would charge." Dan buys carpeting, which Byron installs for half the store's price. Byron keeps the money. With respect to the store, Byron has breached

Once the agency relationship between a principal and an agent has ended, the agent loses the right to bind the principal.

Diamonds & Gold Inc. hires Esmé to buy gems and precious metals from various sources on its behalf. In this relationship, Diamonds is

A principal may be liable for an agent's or an employee's tort, with the exception of negligence, which is an unintentional tort for which the agent or employee is vicariously liable.

Ira serves in a representative capacity for Jett. Key is injured through Ira's negligence. Jett may be liable to Key if Ira's conduct occurred

In an agency relationship, one party called the principal agrees to represent or act for another called the agent.

A truck driver who drives a company truck on a regular basis is most likely an employee.

Any person can be an agent, regardless of whether he or she has the capacity to contract.

Agency relationships cannot exist outside an employment, so agency law has a narrower reach than employment law.

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to the hosts of banquets and other events. In this capacity, Rosario is

Ben manages a warehouse and its inventory for Coffee Roaster Inc. To operate this part of the business, Ben's authority can be inferred

A property owner who hires a realtor to sell the property thereby enters into an agency relationship with an employee for a limited time.

Ota works at Pumps Inc. She works in the company's engineering department, interacting with third parties only to discuss technical issues. With respect to third parties, Ota is