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Exam 33: Agency Formation and Duties

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Question 1

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Which of the following is true regarding the status of an agent as a fiduciary?

A) Although the principal is a fiduciary, an agent is not a fiduciary.
B) An agent is a fiduciary only if the principal and agent agreed by written contract that the agent is a fiduciary.
C) An agent is a fiduciary only if the principal and agent agreed by written or oral contract that the agent is a fiduciary.
D) An agent is only a fiduciary to the principal only if a transaction in excess of $10,000 is involved.
E) An agent is a fiduciary to the principal.

F) C) and D)
G) All of the above

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Question 2

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An agent cannot represent both the principal and a third party in an agreement because there could be a ______.

A) Consortium
B) Disagreement
C) Conflict of interest
D) Delineation of interest
E) Absolution

F) A) and D)
G) A) and E)

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Question 3

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Which of the following refers to the right of a principal to sue an agent to recover any amount assessed against the principal for a breach of contract caused by the agent's negligence?

Which of the following may an agent demand if the agent believes that he or she is not being properly compensated?

Agents may have contract remedies available against a principal, but not tort remedies.

A gratuitous agent is one who acts without consideration.

When parties form an agency relationship by making a written or oral agreement, the agency is known as a[n] ____.

Which of the following is the term used to describe the duty and responsibilities of the agent as specified in the agency agreement?

Which of the following is the term used to identify the duty of an agent to perform specified duties with reasonable skill and care?

Which of the following is the term used to describe the duty an agent has to follow the lawful instruction and direction of the principal?

If a principal agrees to hire no other agent for a period of time or until a particular job is done, the principal and agent have entered into a[n] ______ agency contract.

Which of the following types of agency occurs when a principal leads a third party to believe another individual serves as his or her agent, but the principal has actually made no agreement with the so-called agent?

A ______ is a written document, created by a principal, expressing his or her wishes for an agent's authority not to be affected by the principal's subsequent incapacity.

"High Maintenance." Paul, who runs a retail jewelry store, went with Jane, to whom he was engaged to be married, to a wholesale jewelry store. Paul had no express, written agreement with Jane by which she was his agent. The wholesaler jeweler, Pam, asked Paul if Jane was buying for him. Paul did not want to embarrass Jane so he nodded in agreement. A few minutes later Paul whispered to Jane, outside the hearing of the wholesaler, that she should not make any purchases. Paul and Jane had a big disagreement over money that evening, and Jane broke off their engagement. The next day Jane went back to the wholesale jeweler and purchased a string of pearls for $2,000. Jane also purchased a fur jacket for $3,000 from a store, owned by Harry, that was next door to the jewelry store. She told Harry that Paul wanted a fur jacket for a model in his store and that Paul would be glad to pay Harry for the jacket. -Which of the following is the most likely result if Harry sues Paul for the price of the jacket?

According to the text, what is required by the duty of accounting an agent owes to a principal?

An agency relationship may be created only for a lawful purpose.

"Lakeside Property." Ronnie agreed to act as the agent of Sue 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 Ronnie in his duties, Sue disclosed to him confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Rick told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue 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 Sue for reimbursement of the amount he paid Rick. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits which he thought were excessive. -What should Sue seek if she wants possession of the lakeside lot Ronnie purchased?

Agency law is primarily federal law.

An individual who lacks contractual capacity may hire an agent to make contracts on his or her behalf.

Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal?