Generally, an agency relationship is terminated by operation of law in all of the following situations EXCEPT the

Generally, an agency relationship is terminated by operation of law in all of the following situations EXCEPT the

a. Principal's death.
b. Principal's incapacity.
c. Agent's renunciation of the agency.
d. Agent's failure to acquire a necessary business license.


Answer: c

Thorp was a purchasing agent for Ogden, a sole proprietor and had the express authority to place purchase order with Ogden's supplier. Thorp placed an order with Datz, Inc. on Ogden's behalf after Ogden was declared incompetent in a judicial proceeding. Thorp was aware of Ogden's incapacity. Which of the following statement is correct concerning Ogden's liability to Datz?

Thorp was a purchasing agent for Ogden, a sole proprietor and had the express authority to place purchase order with Ogden's supplier. Thorp placed an order with Datz, Inc. on Ogden's behalf after Ogden was declared incompetent in a judicial proceeding. Thorp was aware of Ogden's incapacity. Which of the following statement is correct concerning Ogden's liability to Datz?

a. Ogden will be liable because Datz was NOT informed of Ogden's incapacity.
b. Ogden will be liable because Thorp acted with express authority.
c. Ogden will NOT be liable because Thorp's agency ended when Ogden was declared incompetent.
d. Ogden will NOT be liable because Ogden was a non disclosed principal.


Answer: c

Which of the following rights will a third party be entitled to after validly contracting with an agent representing an undisclosed principal?

Which of the following rights will a third party be entitled to after validly contracting with an agent representing an undisclosed principal?

a. Disclosure of the principal by the agent.
b. Ratification of the contract by the principal.
c. Performance of the contract by the agent.
d. Election to void the contract after disclosure of the principal.


Answer: c

Easy Corp. is a real estate developer and regularly engages real estate brokers to act on its behalf in acquiring parcels of land. The brokers are authorized to enter into such contracts, but are instructed to do so in their own names without disclosing Easy's identity or relationship to the transaction. If a broker enters into a contract with a seller on Easy's behalf,

Easy Corp. is a real estate developer and regularly engages real estate brokers to act on its behalf in acquiring parcels of land. The brokers are authorized to enter into such contracts, but are instructed to do so in their own names without disclosing Easy's identity or relationship to the transaction. If a broker enters into a contract with a seller on Easy's behalf,

a. The broker will have the same actual authority as if Easy's identity has been disclosed.
b. Easy will be bound by the contract because of the broker's apparent authority.
c. Easy will NOT be liable for any negligent act committed by the broker while acting on Easy's behalf.
d. The broker will NOT be personally bound by the contract because the broker has express authority to act.



Answer: a

Which of the following generally may ratify a contract that was agreed to by his/her agent without authority from the principal? Fully disclosed principal / Partially disclosed principal / Undisclosed principal

Which of the following generally may ratify a contract that was agreed to by his/her agent without authority from the principal?
Fully disclosed principal / Partially disclosed principal / Undisclosed principal

a. Yes / Yes / Yes
b. Yes / Yes / No
c. Yes / No / No
d. No/ No / Yes


Answer: b

Ames, claiming to be an agent of Clar Corporation, makes a contract with Trimon in the name of Clar Corporation. Later, Clar Corporation, for the first time, learns what Ames has done and notifies Trimon of the truth that Ames was not an agent of Clar Corporation. Which of the following statement is incorrect?

Ames, claiming to be an agent of Clar Corporation, makes a contract with Trimon in the name of Clar Corporation. Later, Clar Corporation, for the first time, learns what Ames has done and notifies Trimon of the truth that Ames was not an agent of Clar Corporation. Which of the following statement is incorrect?

a. Clar Corporation may ratify this contract if it does so with the entire contract.
b. Trimon may withdraw from the contract before Clar attempts to ratify it.
c. Clar Corporation may ratify this contract by performing under the contract without stating that it is ratifying.
d. Trimon may enforce this contract even if Clar Corporation does not wish to be bound.


Answer: d.

Frost's accountant and business manager has the authority to

Frost's accountant and business manager has the authority to

a. Mortgage Frost's business property.
b. Obtain bank loans for Frost.
c. Insure Frost's property against fire loss.
d. Sell Frost's business.


Answer: c

Pine, an employee of Global Messenger Co., was hired to deliver highly secret corporate documents for Global's client throughout the world. Unknown to Global, Pine carried a concealed pistol. While Pine was making a delivery, he suspected an attempt was being made to steal the package, drew his gun and shot Kent, an innocent passerby. Kent will NOT recover damages from Global if

Pine, an employee of Global Messenger Co., was hired to deliver highly secret corporate documents for Global's client throughout the world. Unknown to Global, Pine carried a concealed pistol. While Pine was making a delivery, he suspected an attempt was being made to steal the package, drew his gun and shot Kent, an innocent passerby. Kent will NOT recover damages from Global if

a. Global discovered that Pine carried a weapon and did nothing about it.
b. Global instructed its messengers NOT to carry weapons.
c. Pine was correct and an attempt was being made to steal the package.
d. Pine's weapon was unlicensed and illegal.


Answer: d

Trent was retained, in writing, to act as Post's agent for the sale of Post's memorabilia collection. Which of the following statements is correct? I. To be an agent, Trent must be at least twenty-one years of age. II. Post would be liable to Trent if the collection was destroyed before Trent found a purchaser.

Trent was retained, in writing, to act as Post's agent for the sale of Post's memorabilia collection. Which of the following statements is correct?
I. To be an agent, Trent must be at least twenty-one years of age.
II. Post would be liable to Trent if the collection was destroyed before Trent found a purchaser.

a. I only.
b. II only.
c. Both and I and II.
d. Neither I nor II.


Answer: d

Generally, a disclosed principal will be liable to third parties for its agents unauthorized misrepresentations if the agent is an Employee / Independent Contractor

Generally, a disclosed principal will be liable to third parties for its agents unauthorized misrepresentations if the agent is an
Employee / Independent Contractor

a. Yes / Yes
b. Yes / No
c. No / Yes
d. No / No


Answer: b

Which of the following statement(s) concerning agency law is (are) true? I. A contract is needed to have an agency relationship. II. The agent owes a fiduciary duty to the principal. III. The principal owes a fiduciary duty to the agent.

Which of the following statement(s) concerning agency law is (are) true?
I. A contract is needed to have an agency relationship.
II. The agent owes a fiduciary duty to the principal.
III. The principal owes a fiduciary duty to the agent.

a. I and II only.
b. I and III only.
c. II only.
d. I, II, and III.


Answer: c