ACCT 324 Chapter 34 Quiz – Flashcards
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Joshua enters into an agreement with Cathy, an interior designer, to redo his house. Once Cathy has completed designing and decorating the house, she no longer has the authority to act on Joshua's behalf. Under the given circumstances, the agency terminated due to:
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fulfillment of purpose. Considering the case, the agency terminated due to fulfillment of purpose. Cathy has fulfilled the purpose of the agreement, which involved designing and decorating the house for Joshua, and thus led to termination of the agency relationship.
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When the principal is disclosed:
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the principal is liable for the agreements made with the third party.
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Which of the following is true of the principal's liability for an independent contractor's actions?
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An individual who hires an independent contractor cannot be held liable for the independent contractor's tortious actions under the doctrine of "respondeat superior."
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A durable power of attorney:
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specifies that the agent's authority is intended to continue beyond the principal's incapacitation.
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Under the doctrine of "respondeat superior," the principal/employer holds _____, which is liability assigned without fault, for any harm the agent/employee causes while working for the principal.
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vicarious liability
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Which of the following statements is true of a actual notice?
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It must be given to third parties who have had business interactions with the agent, and it directly informs them about the termination.
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actual notice
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must be given to third parties who have had business interactions with the agent; it directly informs them, orally or in writing that the agency agreement has terminated. When the agent's authority was granted in writing, actual notice also must be given in writing.
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If the third party is aware of the principal's existence but not his or her identity:
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we classify the principal as a partially disclosed principal or an unidentified principal. If a principal is partially disclosed, the agent and the principal are both considered parties to the contract and each may be liable separately from the other.
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The power of attorney:
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Is a specific form of express authority, usually in writing, granting an agent specific powers. A general power of attorney allows the agent to conduct all business for the principal.
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With a disclosed principal:
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the agent is not liable because he or she is not a party to the transaction. Whether disclosed or partially disclosed, the principal is liable for the agreements made with the third party.
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An individual who hires an independent contractor:
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cannot be held liable for the independent contractor's tortious actions under the doctrine of "respondeat superior." The employer cannot escape liability for an independent contractor's tort if the employer directs the contractor to commit the tort.
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The doctrine of "respondeat superior":
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applies in the context of the principal/employer-agent/employee relationship. The principal/employer holds vicarious liability, which is liability assigned without fault, for any harm the agent/employee causes while working for the principal.
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Constructive notice
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Parties not directly related to an agency agreement may receive constructive notice, which is how the termination of an agency agreement is generally announced. Constructive notice usually consists of publication in a generally circulating newspaper for the area where the agency existed.
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