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Exam 32: Agency Formation and Duties

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Question 71

Multiple Choice

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

A) none of the choices.
B) Hana and In-Flight.
C) Hana only.
D) In-Flight only.

E) C) and D)
F) A) and B)

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Question 72

True/False

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An agent impliedly warrants that he or she has the authority to contract on a principal's behalf and therefore cannot be held liable to the third party.

A) True
B) False

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Question 73

Multiple Choice

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Hayes, a real estate broker, offers to sell Invers's property at no charge. Hayes negotiates a sale to Jed, but negligently fails to complete the deal. The broker is most likely liable to the seller for

Because an agent's authority can be implied by custom, it may contradict his or her express authority.

Both parties to an agency relationship have the power and the right to terminate the relationship at any time.

The principal-agent relationship between Medical Clinic LLC and Network Referral Service is not contractual. If Medical, the principal, violates a duty to Network, the agent is entitled to

Giving an agent a power of attorney confers express authority.

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

An agency contract between Trucking Company and United Dispatch does not expressly state that United will use reasonable skill and diligence in performing the work. United fails to meet this standard. The agent is most likely liable for

Irv, an agent for Jin, signs an agreement with Kai on Jin's behalf but neglects to tell Jin that the agreement requires the payment of a certain tax. The government prosecutes Jin for failing to pay the tax. Jin is

Bev indicates that she is acting as an agent on behalf of an unidentified client-Cuisine LLC-when she enters into a contract with Diners Bistro. Cuisine is

An agent can represent two principals in the same transaction, so long as neither is aware of the dual capacity.

If an agent has represented himself or herself as possessing special skills, the agent is expected to use them.

Ruiz agrees to act as Seth's agent to sell Seth's farm while Seth is away from the property. A contract for a sale of real estate must be in writing. The agreement between Ruiz and Seth

Lasers Inc. hires Mal to buy rare earth minerals on its behalf. In this relationship, Lasers is

Sal, an accountant, contracts with Torre to act on Torre's behalf during a tax audit. Their contract does not expressly state that Sal will be paid for the service. Most likely, Torre must pay

Ray is a delivery driver for Sicilian Pasta Company. Ray does exactly what the company tells him. Ray is

Romero employs Supply Procurement Service as an agent under a written agreement that describes the rights and duties of both parties. This is

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

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.