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Exam 17: Agency Relationships in Business

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Question 21

True/False

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A principal's ratification of an agent's unauthorized act must be express.

A) True
B) False

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Question 22

Multiple Choice

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Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has

A) apparent authority.
B) express authority.
C) implied authority.
D) no authority.

E) None of the above
F) A) and B)

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Question 23

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Spicy Hot Dog Vendors, Inc., grants its agent Teona an exclusive territory in which to sell Spicy Hot Dog products. Spicy Hot Dog cannot compete with Teona in that territory under the principal's duty of

Under the law of agency, notice to the agent is notice to the principal.

Agency relationships only exist between employers and employees.

A principal does not have the right to control an agent's conduct in matters entrusted to the agent.

Vida is a purchasing agent for Wholesome Foods with the authority to buy grain up to a certain quantity. After the grain is bought, the agency relationship terminates

Brenda, a salesperson at a Cabinets & Countertops store, tells D'Antoni, a customer, "Buy your cabinets here, and I'll install them for half of what the store would charge." D'Antoni buys the cabinets, which Brenda installs for half the store's price. Brenda keeps the money. Brenda has breached

Vicarious liability is direct liability.

Quince owns a used-car lot where Ray works as a salesperson. Quince tells Ray not to make any warranties for the cars. To make a sale to Sylvia, however, Ray adds a 50,000-mile warranty. Later, Sylvia sues Quince for breach of warranty. Quince's right to hold Ray liable for any damages arises from the following

An agent's duties to the principal arise from the agency relationship only if the identity of the principal is disclosed to a third party.

Roman is the chief executive officer of Salty Snax Corporation. Roman's responsibilities include decisions on product development, marketing, and other significant business directions. Roman is subject to the approval and oversight of Salty Snax's board of directors. Teri is a Salty Snax manager whose duties include the firm's day-to-day hiring, firing, purchasing, and selling. Umberto is a Salty Snax salesperson, whose daily activities are controlled by Teri. Velma writes sales manuals and promotional materials for Salty Snax's products according to Roman's instructions and subject to Salty Snax's control, but has no dealings with the company's customers or suppliers. Warren writes copy on a contract-per-project basis and is not otherwise subject to Salty Snax's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?

Jerry agrees to act on Joyce's behalf, subject to her control, and Joyce trusts Jerry to so act. They set out the terms in a written document, which they both sign. This is

Limon, an agent for Mindwonder Games LLC, executes an unauthorized contract with NOW Marketing, Inc. The deal is highly advantageous to Mindwonder, and the company ratifies the contract. The contract is

If a principal does not ratify an unauthorized contract, the principal is not bound.

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf.

A familiar example of an agent is a corporate officer.

For an agent's implied authority to be effective, a principal must confirm it in writing.

Baked Bread Company hires Connie to sell the company's products in a certain area. Baked Bread agrees to pay Connie a salary, plus commission, for a trial period. They also agree that Connie can sell using any methods and during any hours that seem appropriate. The key factor in whether Connie is Baked Bread's employee is​

Employment laws apply only to the employer-employee relationship.