Business Law Ch. 18 – Flashcards
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A principal has the right to control an agent's conduct in matters entrusted to the agent.
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Through agents, a principal can conduct multiple business operations simultaneously.
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In a principal-agent relationship, the parties agree that the principal will act on behalf and instead of the agent in negotiating and transacting business with third persons.
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Employees who deal with third parties are agents of their employers.
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An employer has no control over an employee's work.
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Real estate brokers are independent contractors.
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An independent contractor is an employee.
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The relationship between a principal and an independent contractor always involves an agency relationship.
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An independent contractor is an employer who controls his or her agent's performance.
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An agency relationship can only be formed with a written agreement.
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A person must have contractual capacity to be an agent.
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An agency relationship created for an illegal purpose is enforceable.
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An agency relationship must be based on an express or implied agreement that the agent will act for principal and that the principal agrees to have the agent so act.
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An agency relationship cannot exist in the absence of a formal agreement.
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A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.
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An agency relationship may occur by operation of law in a family.
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Generally, the agent owes the principal no duties.
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It is basic tenet of agency law that notice to the agent is notice to the principal.
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Remedies of the agent for breach of duty by the principal arise out of contract and tort law.
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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 behalf of the principal.
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If a principal cannot be contacted in an emergency situation, an agent cannot deviate from previously given instructions.
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A principal owes an agent a duty of compensation.
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Authority declared in clear, direct, definite terms is express authority.
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Giving an agent a power of attorney confers implied authority.
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The equal dignity rule requires that a principal and agent treat each other with "equal dignity."
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For an agent's implied authority to be effective, a principal must ratify it.
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if a principal does not ratify an authorized contract, the principal is not bound.
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If a principal ratifies a contract without knowing all of the facts, the principal can rescind the contract.
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If a principal does not ratify an unauthorized contract, the principal is not bound.
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A disclosed principal is a principal whose identity is not known by the third party at the time the contract is made by the agent.
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A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.
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Under the doctrine of respondeat superior, an agent is liable for the principal's negligence.
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A principal is responsible for all intentional torts committed by an agent.
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An agency can terminate once its purpose is achieved.
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When an agency relationship is terminated, the principal has a duty to personally notify third parties who knew of its existence.
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Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is
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an agent and has the authority.
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KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands. KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the standards that should be observed, the goals that should be attained, and the methods that should be used. Lola is most likely KupaJava's
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principal.
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Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely
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an agent.
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Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is
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an independent contractor.
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Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite's employee is
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the control Delite has over the details of the work.
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George and James create an agency relationship to facilitate the sale of illegal narcotics. This agency relationship
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is illegal.
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Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between
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a principal and an agent.
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Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act. They set out the terms in a written document, which they both sign. This is
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an agency by agreement.
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Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby. Jessie orally agrees to do so. This is
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an agency by agreement.
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Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is
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an agency by operation of law.
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Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to affirm the contract. This is
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n agency by ratification.
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Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached
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the duty of performance.
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Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must
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use reasonable diligence and skill in selling.
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Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is
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liable, because notice to Mackenzie is notice to Lindsay.
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Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I'll install it for half of what the store would charge." Dita buys the carpet, which Bob installs for half the store's price. Bob keeps the money. Bob has breached
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the duty of loyalty.
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Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays. Will enters into a contract on MaryElise's behalf on Tuesday. Will has breached
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the duty of obedience.
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Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's
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duty of reimbursement.
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Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to pay the rest of the price. Timberline sues Rangle for breach of contract. His right to hold Siena liable for any damages that he has to pay is the right of
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indemnification.
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Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of
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cooperation.
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Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and duties of both parties. This is
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express authority.
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Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied
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by custom.
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Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by
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an inference from the position Sonia occupies.
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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
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apparent authority.
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Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract relating to the exterior. This attempt will be
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totally unsuccessful.
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Bud approves on behalf of Cody?but without authorization?a contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be
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totally unsuccessful.
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Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Company. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is
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a partially disclosed principal.
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Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the contract, and Joli is not, if Cake Bake is
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a disclosed principal.
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Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not consider whether
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Custodial was personally at fault.
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Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she
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crashed into a car at the airport while off duty.
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Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell the condominiums in a building at BDC's coastal resort. The agency will terminate
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after the condos have been sold.
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Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on
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Miklos's death or incapacity.
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Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house burns down before being sold. The agency agreement is likely
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terminated by operation of law.
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Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Treadwell must notify
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Uri and any third parties who are aware of the agency relationship.
