Reference no: EM131625033

1. An agent's duty of loyalty requires the agent to:
a. use reasonable care and skill in performing work.
b. live up to the standards of performance expected of an independent contractor.
c. follow all reasonable and lawful instructions of a principal.
d. avoid conflicts of interest while acting on behalf of a principal.

2. Which of the following statements is true of a partially disclosed principal?
a. It refers to a person whose identity is not known to a third party, though the third party does know that an agent represents a principal.
b. When a principal is partially disclosed, an agent does not have the authority to act.
c. When a principal is partially disclosed, an agent has the authority to act, but the principal is not liable.
d. It refers to a person whose identity is known only to a third party and an agent at the time of the agreement.

3. Which of the following occurs if both a principal and an agent cannot agree on the compensation?
a. The principal is no longer bound by the duty of compensation.
b. Compensation will be calculated on the basis of what is reasonable or customary.
c. Compensation will be calculated according to government wage rates.
d. Compensation will be determined by the full faith and credit clause of the U. S. Constitution.

4. Matthew is a truck driver for Arcturaes Inc. He transports the supplies from a vendor to the company and returns the company truck to Arcturaes. He is not authorized to make any stops while transporting goods. After collecting the goods from the vendor, Matthew stops at a pub where he makes defamatory statements about a third party. Which of the following statements is true of this scenario?
a. Both Matthew and Arcturaes are liable as Arcturaes is a disclosed principal.
b. Both Matthew and Arcturaes are liable as Matthew committed the tort within the scope of his employment.
c. Arcturaes is not liable as Matthew was in an unauthorized location according to company rules.
d. If both Arcturaes and Matthew are found to be jointly and severally liable, Matthew would have to pay most of the damages based on the "deep pocket" concept.

5. Which of the following is a condition for an agency by ratification to be effective?
a. A principal must give prior authorization to an agent.
b. A principal should lead a third party to believe that an individual is his or her agent.
c. The existence of a principal must be clear to a third party at the time of an agent's unauthorized act.
d. An agent must carry an authorization letter that establishes that he or she is the principal's agent.

6. Which of the following statements is true of an exclusive agency contract?
a. It does not permit an agent to work for a different principal for the duration of the agreement.
b. It occurs when an unauthorized agent commits a principal to an agreement which the principal later accepts.
c. An agent can recover monetary damages, court costs, and attorney's fees if a principal fails to live up to this agreement.
d. An agent has the authority to make decisions concerning a principal's medical care in the event of a serious illness that renders the principal mentally incompetent.

7. Which of the following statements is true of the duty of loyalty?
a. It requires agents to live up to the standards of performance expected of people in their occupation.
b. It assigns an agent the duty to follow all reasonable and lawful instructions of a principal.
c. It requires agents to keep accurate books that can be viewed by principals.
d. It mandates that an agent act on behalf of one principal only to avoid conflicts of interest.

8. Which of the following statements is true about the power of attorney?
a. For business purposes, an agent's authority is determined by customs, circumstances, and the facts of a situation rather than a written or oral agreement.
b. It permits a principal to deny that someone is the principal's agent after leading a third party to believe that the person is an agent.
c. It is formed when an unauthorized act of an agent is accepted by a principal.
d. It gives an agent the authority to sign legal documents on behalf of a principal.

9. The duty of performance requires agents to:
a. keep books accurately.
b. exercise reasonable care and skill in performing their work.
c. communicate all material information to a principal.
d. follow all the instructions of a principal.

10. Which of the following statements is true of the duty of reimbursement and indemnification?
a. It bars agents from claiming expenses arising out of negligence or unlawful activities.
b. It requires a principal to compensate an agent for services rendered even in the absence of a written agreement.
c. It mandates that a principal should pay a contingency fee to an agent upon conclusion of the business transaction.
d. It forbids a principal from interfering with the reasonable conduct of an agent as agreed upon in a contract.

11. Arthur enters into a written contract with James that requires James to sell Arthur's farm. Arthur then hires Katherine to sell his farm without terminating the contract with James. Which of the following statements is true of this scenario?
a. James can sue Arthur for monetary damages only if their contract was an exclusive agency contract.
b. James can sue Arthur for breach of contract on the grounds of duty of cooperation and ask for specific performance.
c. Arthur has the authority to enter into a contract with Katherine without terminating the contract with James.
d. If James has not completed the duties assigned to him in the contract, Arthur need not compensate James for his services.