True/False
Indicate whether the
statement is true or false.
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1.
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Principals have specific and enforceable ethical
duties to third parties, created by the principal-agency relationship.
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2.
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Agents owe fiduciary responsibilities to their
principals.
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3.
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The most common way to create a principal-agency
relationship is by the express agreement of the parties.
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4.
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Agency relationships can be created by operation of
law.
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5.
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There are provisions of the law that create an
agency relationship by estoppel, even when the principal and agent did not intend to create such a
relationship.
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6.
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Independent contractors are normally classified as
agents for their employers.
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7.
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Apparent authority refers to the specific
instructions, rights, and parameters granted to the agent by the principal.
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8.
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A power of attorney is an example of an
agency-principal relationship.
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9.
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An agent must carry out the instructions of the
principal, even if this means violating the law.
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10.
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Agents also have duties to third parties in
addition to their principals.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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11.
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A legally recognized, fiduciary relationship where
one person acts on behalf of another.
a. | Partnership | b. | Limited partnership | c. | Agency | d. | Principality |
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12.
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The person for whom the agent acts—this
person receives the benefit of the agent’s actions.
a. | Fiduciary | b. | Actor | c. | Representative | d. | Principal |
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13.
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The most common way to create an agency
relationship.
a. | By statute | b. | By agreement of the parties | c. | By judicial intervention | d. | By operation of
law |
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14.
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A legal doctrine that prevents a person from
denying facts or suggestions that his or her conduct has suggested.
a. | Estoppel | b. | Denial | c. | Consummation | d. | None of the
above |
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15.
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A Latin phrase that translates as “let the
master respond.” The theory that actions taken by employees and agents contributed to the
employer.
a. | Res ipsa loquitor | b. | Caveat emptor | c. | Quid pro
quo | d. | Respondeat
superior |
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16.
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The authority legally conferred on the agent by the
principal.
a. | Express authority | b. | Actual authority | c. | Inherent
authority | d. | Seminal authority |
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17.
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An agent’s authority to act is not expressed
by the principal but is assumed by both parties.
a. | Implied authority | b. | Stated authority | c. | Overarching
authority | d. | Express authority |
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18.
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Consummation of a prior act that may not have been
authorized but to which the principal agrees to be bound.
a. | Respondeat superior | b. | Nullification | c. | Ratification | d. | Subordination |
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19.
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A person, such as a guardian, who has an obligation
to act with honesty, fair dealing, and trust for another.
a. | Litigator | b. | Ward | c. | Beneficiary | d. | Fiduciary |
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20.
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A critical factor of the contract or negotiations;
one that, if truthfully revealed, might abort the entire transaction.
a. | Fact | b. | Statement | c. | Accusation | d. | Material
fact |
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