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Exam 33: Agency Formation and Duties

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Question 41

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All employees are agents of their employers, and all agents are employees.

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Question 42

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List the requirements for agency by ratification, and then list the requirements that must be met for ratification to be effective.

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The requirements for agency by ratificat...

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Question 43

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Agency by implied authority cannot conflict with any ________.

Discuss why agency is especially important for modern firms doing business in foreign countries.

[Cheap Principal] Paolo, who is very knowledgeable regarding computers, agrees to purchase computers for Joe's business. Paolo is retained for that purpose only, he is paid a set rate for the job, and Joe exercised no control over the manner in which Paolo did his work. Paolo purchased computers from AAA Computers without any mention of Joe. The computers worked well and were not defective in any way. Unfortunately, Joe did not pay AAA Computers on a timely basis. Paolo, therefore, paid AAA Computers out of his own pocket because he wanted to be able to do business with AAA Computers in the future and also because his name was on the invoice. Paolo asked Joe for reimbursement, but Joe refused. Joe claimed that if Paolo had only waited, AAA Computers might have agreed to take less. -Did Paolo have any legal liability to AAA Computers?

________ is allowed by a principal when an agent breaches an agency contract, which allows the principal to nullify at his or her discretion any contract the agent negotiated.

An agency relationship exists when an agent is authorized to act for and on behalf of the principal, who hires an agent to represent him or her.

Agency law is a blend of both state and federal laws.

An expressed agency is the most common type of agency but it does not give the agent the authority to contract on behalf of the principal.

Which of the following is not one of the criteria listed in the text as indicative of whether a worker is an employee or an independent contractor?

Philip accompanied his boss Roger to a party where several of his boss's clients were present. Philip was discussing a contract with Salisa that he knew his Roger wanted to close the deal on. Philip started discussing the contract with Salisa. Roger was within earshot and nodded at Philip and Salisa as they were discussing the deal but did not know the details being discussed. Salisa takes Roger's nod as a sign that Philip has the authority to contract. Salisa later signed a contract, but for a much different amount than Roger wanted. Roger would like to rescind the contract on the theory that Philip had not authority to enter into the agreement. Can Roger do so?

If there is no agreement between a principal and an agent regarding the amount for which the principal will compensate the agent, which of the following statements is true?

In an agency relationship, both parties must agree to their roles as principal and agent.

A principal may not enact a power of attorney after becoming incompetent.

When determining whether or not a person is an employee or an independent contractor for purposes of agency law, what is the most important factor?

________ have a duty to act primarily for another person's benefit.

[Lakeside Property] Kumar agreed to act as the agent of Melanie in finding a piece of lakeside property for her at a good price, and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Kumar in his duties, Melanie disclosed to him confidential information about her finances and debts. Kumar decided that he needed help and paid Rick $300 to look for property for Melanie. Rick told Kumar about a great deal on a piece of lakeside property that Phil had for sale. In fact, the deal was so good that Kumar purchased the property for himself. When Melanie found out about the property Kumar bought for himself, she complained to Kumar. He defended himself on the basis that he was not actually working for Melanie when he found out about the deal. At the time, he was playing golf with Phil. He also told Melanie that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Melanie for reimbursement of the amount he paid Rick. Melanie fired Kumar threatening to sue him. Kumar told Melanie that he would counterclaim for the $300 owed to Rick. After he was fired, Kumar disclosed to a number of parties information regarding Melanie's spending habits which he thought were excessive. -If Melanie sues Kumar for purchasing the property from Phil instead of offering it to her, which of the following is the most likely result?

[Lakeside Property] Kumar agreed to act as the agent of Melanie in finding a piece of lakeside property for her at a good price, and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Kumar in his duties, Melanie disclosed to him confidential information about her finances and debts. Kumar decided that he needed help and paid Rick $300 to look for property for Melanie. Rick told Kumar about a great deal on a piece of lakeside property that Phil had for sale. In fact, the deal was so good that Kumar purchased the property for himself. When Melanie found out about the property Kumar bought for himself, she complained to Kumar. He defended himself on the basis that he was not actually working for Melanie when he found out about the deal. At the time, he was playing golf with Phil. He also told Melanie that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Melanie for reimbursement of the amount he paid Rick. Melanie fired Kumar threatening to sue him. Kumar told Melanie that he would counterclaim for the $300 owed to Rick. After he was fired, Kumar disclosed to a number of parties information regarding Melanie's spending habits which he thought were excessive. -If Melanie sues Kumar for revealing confidential information, which of the following is the most likely result?

Not all ________ are ________ because they cannot enter into contracts on behalf of the principal unless the principal authorizes them to do so. Examples include building contractors, doctors, stockbrokers, and lawyers.

A person who contracts with another to do something for the other person, but is not controlled by the other, nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking, is referred to as which of the following?