Business Law – Chapter 28

question

Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.
answer

False
question

Dwayne agrees to serve as Walker’s agent in booking spots for Walker’s portable basketball game. Dwayne asks Walker for pictures and size specifications of the game so he can provide potential customers information they need. If Walker does not provide the pictures and size information, he is breaching a duty to Dwayne.
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True
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Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer and contract for the sale of his house in the U.S. The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.
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True
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An agent must obey any and all instructions of the principal.
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False
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Jolene hired Lacy to find a buyer for her house. Adam was interested in buying the house. If both Jolene and Adam agree, Lacy, a real estate agent, may represent both parties.
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True
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You cannot be held liable for the actions of your agents if the agents are violating your instructions.
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False
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The bankruptcy of an agent automatically terminates an agency relationship.
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False
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Generally, either party to an agency relationship has the power to terminate it at any time.
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True
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Victoria is the director of marketing for Big Corporation. Victoria needed to negotiate an out-of-town contract on behalf of Big. Big has a legal duty to reimburse Victoria for the hotel expenses she incurs negotiating the contract.
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True
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John is the trustee of a large testamentary trust. Lori is the sole beneficiary of the trust. Because John is the trustee, he is Lori’s agent.
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False
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Kaiya is a sales representative of TriColor. Kaiya owes a fiduciary duty to TriColor.
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True
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It does not create an agency relationship between Minott Mills and Douthett Co. for Minott Mills to contract to sell 500 yards of fabric to Douthett Co.
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True
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A principal must indemnify an agent for any expenses incurred in carrying out agency responsibilities, but the principal will not be responsible for indemnifying an agent for any unauthorized purchases.
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False
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Esday, Inc. hired Mark to be a financial analyst. Because of the equal dignities rule, the employment contract between Esday and Mark must be in writing.
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False
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As a good neighbor, Lou gratuitously agreed to try to sell Haley’s aquarium while she was on vacation. Since there is no consideration for this agreement, there can be no agency relationship between Lou and Haley.
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False
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An agency relationship can be created:
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A. By the conduct of the parties
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Which of the following persons is an agent?
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D. All of the above
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Can a person work as an agent for two different people with conflicting interests?
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B. Yes, provided the agent discloses to both principals that she is representing both persons and the principals agree to the dual relationship.
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Which of the following is not required of an agency relationship?
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A. Consideration
question

Nathan agrees to act as an agent for Cheyenne. Which of the following is true?
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C. Cheyenne may compete with Na-than in matters within the scope of the agency business.
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Wanting to save the money she would have to pay for a commission, Marsha asks her friend Howard to check on the Internet and see if he can find a five-day cruise to the Bahamas for under $400 and if he does, to book it for her. He agrees, but later tells her he doesn’t have time to check for her. Howard:
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B. is not liable to Marsha because he was a gratuitous agent and had both the power and the right to quit any time he wanted.
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The equal dignities rule relative to agency law applies to an agent:
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D. All of the above
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Janet was employed as a sales representative for Esday, Inc. An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet keep the bracelet?
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B. Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet.
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Mohammad was an employee in the new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months. Estay took great care to keep information concerning the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to leave Estay to direct Ceries’ marketing department. Which statement is correct?
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D. Mohammad cannot share with Ceries the confidential information he knows about Estay’s new product because he has a duty not to disclose confidential information he acquired during the agency.
question

Ron is the business agent for Kansas Sunshine, a rock band. He is also the agent for another popular Midwestern rock group, City Sand. Ron negotiates a deal with a Kansas City promoter to have City Sand play after a professional football game. The promoter was willing to pay $250,000 for both groups to play after the game; however, Ron talked her into booking just City Sand for $175,000. Given his contract with City Sand, Ron made more money under this arrangement. Has Ron violated his fiduciary duty to Kansas Sunshine?
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A. Yes. It appears that Ron put his own interests ahead of his principal’s interests.
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Nikki was an tax accountant with HBR Accounting. Nikki decided to do some tax consulting in the evenings and on weekends. HBR is unaware of Nikki’s consulting work. Which statement is correct?
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D. Nikki has breached a fiduciary duty to HBR since she is competing with HBR.
question

Cameron, editor of the local newspaper, assigned to Jim the writing of a story about pollution of a nearby stream. Although Jim used reasonable care in gathering and checking his information, unknown to Jim, the story contained a defamatory statement about Maureen. Maureen reads the story and sues Jim for libel. Cameron, who read and published the story:
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A. Must indemnify Jim for Maureen’s claim
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An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct:
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C. During both working hours and off-duty time
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Pamela hired Lena to sell her business. Lena:
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C. Can buy the business only with Pamela’s permission
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An agency will be terminated in all but which one of the following situations?
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B. A travel agent files for individual bankruptcy under Chapter 13
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Mrs. O’Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do “anything and everything associated with the sale of real estate, acting as a prudent person.” On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O’Leary had died May 29.
answer

A. The contract is void since the agency terminated May 29.
question

Jim agreed to show Donna’s car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct?
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A. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence.
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Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Tom:
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D. should not hire Elton. Tom has a duty to obey Esday’s instructions only if they are legal and ethical.
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The death of the agent:
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A. Automatically terminates the agency relationship
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If the agent is disloyal to the principal:
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D. All the above are correct
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Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda’s antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct? (1)
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D. All the above are correct
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Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda’s antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct? (2)
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C. Only Tonya can terminate the relationship
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John hired Tim to sell his house. Which statement is correct?
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A. John is Tim’s principal
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In a power coupled with an interest:
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C. The principal has neither the power nor the right to terminate
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HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct?
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C. Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.
question

If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.
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True
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If ambiguity is present as to the principal’s intent, the court will look to the principal’s subjective intent.
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False
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If someone acts without authority, a “principal” can decide later to be bound by the actions as long as the “agent” indicates to the third party that he is acting for a principal, the “principal” knows all the material facts of the transaction, and the “principal” accepts the benefit of at least part of the transaction.
answer

False
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If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job.
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True
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The implied authority of an agent is the same an agent’s apparent authority.
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False
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Respondeat superior means “let the master answer.”
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True
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As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal.
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False
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Erica’s supervisor told her to arrange for a conference room at the Kelly Inn. Erica has express authority to contract for the room.
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True
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An act is not “within the scope of employment” if it is expressly forbidden, even if it is of the same general nature as an authorized act.
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False
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The issue in apparent authority is what the principal has done to make the third party believe that the agent actually has authority.
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True
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An employer is generally liable for the intentional wrongful acts of his or her employees.
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False
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If a principal accepts the benefits of a whole unauthorized contract, the principal is deemed to have ratified the contract and is bound as if the act had been originally authorized.
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True
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If estoppel applies, the principal would be prevented from asserting that no agency relationship existed.
answer

True
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Maylin has the authority to delegate her tasks as agent for Brian unless he has expressly restricted her from doing so.
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False
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An agent is always liable for his or her own torts committed within the scope of the agency relationship.
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True
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Jenny is a salesperson in a hardware store. As such, she:
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D. All the above are correct
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The doctrine of estoppel would most often apply in situations of:
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B. Apparent authority
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Express authority can be created by:
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D. All the above
question

Thomas, the manager of an apartment complex, rented an apartment to Donna. A few weeks later, Donna complained that the hot water did not work. Thomas hired Hometown Plumbers to fix the hot water, but the job was not successful. A few days later Donna moved out since she had no hot water. She sued the landlord and Thomas for breach of contract.
answer

B. The landlord is liable, but not Thomas
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In the Dickinson v. Charter Oaks case, the court found:
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C. a reasonable inference could be made that Carol Dickinson know-ingly permitted her husband to act as having apparent authority.
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Circus Pizza contracted with Art to run its birthday parties. Art’s responsibilities included supervising the children and organizing the games. Circus did not investigate Art’s background, which included a history of assaulting children. Art assaulted a 7-year-old girl in the restaurant’s kitchen during a birthday party. Circus Pizza:
answer

C. may be held liable on the basis of negligent hiring.
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Kirk is bound by the acts of his agent, Tyra, if:
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D. All of the above
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Paula appointed Al to be her agent via a contract in writing that spelled out the scope of Al’s authority. The contract provided that Al was not to disclose that he was acting on behalf of Paula. In entering into a contract for Paula, Al did not disclose to the third party that he was acting as an agent. In this case, the principal was:
answer

C. Undisclosed
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When a principal is partially disclosed:
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A. the agent and principal will be jointly and severally liable on the contract.
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If an employer and employee are jointly and severally liable, the third party:
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D. Can collect the full award from either the employee or employer
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Mike worked for Frank’s Pizza as a driver. His duties consisted of making deliveries along a designated route. One day Mike decided to see his girlfriend, Jackie, who lived 50 miles out of his pizza route. While driving to his girlfriend’s, Mike injured a pedestrian, Chuck. The accident was caused because of Mike’s negligent operation of the delivery truck. Chuck is now suing both Mike and Frank’s for personal injuries. Under the circumstances:
answer

D. Frank’s is probably not liable be-cause Mike’s excursion was not within the scope of his employment.
question

Factors influencing whether a servant is acting within the scope of employment include all but which of the following?
answer

D. All of the answer choices are factors in determining if an act is “within the scope of employment.”
question

Rosa was authorized to purchase computer equipment for her company, Zebra Toy Company. Her employer required her to obtain written approval from the vice president if she wanted to buy more than $100,000 of equipment. One day Rosa purchased $225,000 of computer equipment from Computer Sales Company, without written approval. Which of the following is correct?
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C. Zebra Toy must honor the contract if Computer Sales reasonably believed Rosa had the authority to purchase the equipment.
question

Rosa was authorized to purchase computer equipment for her company, Zebra Toy Company. Her employer required her to obtain written approval from the vice president if she wanted to buy more than $100,000 of equipment. One day Rosa purchased $225,000 of computer equipment from Computer Sales Company, without written approval. If Zebra Toy Company purchases the equipment:
answer

A. it will be doing what it had to do, since Rosa had the apparent authority to buy the equipment.
question

Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri’s car. If Rick is an employee, who is liable to Terri?
answer

B. The landlord and Rick
question

Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri’s car. If Rick is an independent contractor, who is liable to Terri?
answer

D. Only Rick
question

Judy was the manager of an apartment complex. She hired Rick to mow the lawns. One afternoon while Rick is mowing the lawn, his negligence caused damage to Terri’s car. If Judy had been negligent in hiring Rick, who is liable to Terri?
answer

A. The landlord, Judy, and Rick
question

Joan agrees to try to negotiate the purchase of an acre of land for a prospective office building on behalf of Cheryl, who does not want to be identified to the seller. Joan tells the seller, “My friend is interested in purchasing this land.” If the seller contracts with Joan, Cheryl is:
answer

A. an unidentified principal, and in case of a breach of contract Joan and Cheryl are jointly and severally liable.
question

The doctrine of respondeat superior:
answer

B. applies to employees but not inde-pendent contractors.
question

Jackie is an employee for Hardware Store, Inc. When attempting to open a can of bright orange paint, she accidentally spills paint on Maggie, a customer in the store. Maggie claims that her $800 business suit is ruined. The legal liability here can best be described as:
answer

C. Both the store and Jackie are liable to Maggie.
question

Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can:
answer

C. Hold Chance but not the company liable
question

Which of the following statements is correct?
answer

A. An employer is liable for the intentional misconduct of his employee if that employee was motivated, at least in part, by a desire to serve the employer.
question

While at work one evening, Joe was confronted by Tim. Tim had come into the store and accused Joe of trying to steal his girlfriend. Joe told Tim he was crazy but Tim persisted in yelling at Joe. Joe, now angered, stepped around the cash register and hit Tim in the jaw. Tim was seriously injured and sued Joe and his employer for his damages.
answer

C. Joe, but not his employer, is probably liable to Tim.
question

Renee works for a restaurant. One Saturday morning, she and several other employees participate in a “fun run” to benefit a charitable cause. She is not paid for this activity but she and her co-workers wear clothing bearing the company’s name. While running through a street, Renee accidentally trips a fellow runner. The runner claims that both Renee and her company are liable for his injuries. Most likely:
answer

A. the court would consider whether Renee was acting within the scope of her employment during the fun run.
question

An employer can be liable for:
answer

D. All the above

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