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Exam 19: Agency Relationships

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Question 41

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Cropland Farms, LLC, hires Desiree to act as its agent to buy a certain tract of land from Ethan for $1,000 per acre. Cropland Farms does not want Ethan to know that it is the principal or that Desiree is its agent. Cropland Farms wants the land to test genetically modified seed products, and believes that Ethan may not sell the land for that purpose, or may demand a premium price if he knows that Cropland Farms is the buyer. Desiree makes the purchase, signing only her name to the contract as the buyer and not disclosing to Ethan the agency relationship. The transfer of the deed is to occur on June 1. Ethan learns of Cropland Farms' identity on May 15. Can Ethan legally refuse to deed the property on June 1? Explain.

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Generally, no. Although the identity of ...

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Question 42

Multiple Choice

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Nora works at Oil & Gas Inc. She is a sales representative who works with Oil & Gas customers. The company closely supervises its sales reps, and dictates their schedules. With respect to third parties, Nora is

A) an independent contractor.
B) an employee only.
C) an employee and agent.
D) a principal.

E) All of the above
F) A) and B)

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Question 43

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Apparent authority in an agency relationship arises when the principal causes the agent to reasonably believe that he or she has the authority to act.

Larry is an agent for Mary. She gives him clear instructions to enter into contracts on her behalf only on Mondays, Wednesdays, or Fridays. He enters into a contract on her behalf on Tuesday. Larry has breached

Under the principles of agency law, any sale of goods by a salesperson in a store to a customer can be binding on the owner of the store.

A person who cannot legally enter into a certain contract directly can do so indirectly through an agent.

Motor Parts Sales Inc. hires Nolly to work on its shipping dock, accepting deliveries, and dispatching trucks, and dealing with customers and drivers. With respect to Motor Parts, Nolly is most likely

An independent contractor is, by definition, an employee because the person's physical conduct is controlled, or subject to control, by the employer.

Energy Company employs Fred to negotiate the purchase of mineral rights for future mining projects. Fred secretly buys some of the property and sells it to Energy at a profit. Fred has breached

Beryl is a purchasing agent for Cable & Wire Corporation. Doyle, a Cable & Wire corporate officer, gives Beryl written authority to buy for the firm as much copper as necessary. The next day, Doyle calls Beryl and tells her to buy only a certain quantity of copper and no more. Beryl shows the written authority to Earth Resources Inc., and enters into a contract to buy more than the quantity specified by Doyle. Earth Resources ships the order to Cable & Wire. Is Cable & Wire liable to Earth Resources under the contract? Is Beryl liable? In each case, if so, why? If not, why not?

Levon, an agent for Milled Grains LLC, executes an unauthorized contract with National Grocers Inc. The deal is highly advantageous to Milled Grains, and the company ratifies the contract. The contract is

The principal is bound by the agent's unauthorized act, unless the principal negates it.