ch 24 and 25

An agent who comingles the principal’s funds with his or her own violates the duty to account
what is the status of an agency agreement when a principal files for Chapter 7 bankruptcy?
The agency terminates by operation of law when the court grants the order for relief.
An agent who represents both the buyer and the seller in the purchase of a business is acting as a dual agent.
In a multiple listing agreement, real estate is listed with several brokers who divide the commission on the sale.
Which of the following would not terminate an agency by operation of law?
The death of the principal
The death of the agent
The destruction of the goods that the agent was hired to sell
-All of the above terminate an agency by operation of law.-
Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in pottery making. He has an arrangement with K&M, a large equipment maker, to sell K&M’s kilns in both his own name and in K&M’s name and to receive payments from customers. Mike’s relationship with K&M is that of a ________________.
Special agent



The last semester of his senior year, Marc had an unpaid internship in the sales department of a local TV station. When Marc left, he took a copy of the station’s client list with him, reasoning that it would prove useful in the future when he graduated and got a permanent job at some other company in sales. Has Marc violated any agency duties?
Yes, Marc violated a duty to protect confidential information
Jim was called to active duty in the military. Knowing that he would be out of the country for a year or more, he gave his sister Peg authority to pay bills in his name, access his bank accounts, buy and sell stock in his brokerage accounts, and incur expenses to maintain his house and car and boat. Because Peg is not compensated for the activities she is performing on her brother’s behalf, she owes him
Peg owes Jim all the duties of an agent to a principal.
Whether or not a principal has, through his actions, ratified a contract is a question of _________to be decided by the _________.
fact and jury
Alan is the general manger of a restaurant. Although not mentioned in his employment contract, as part of carrying out his management duties he has the authority to buy supplies, hire employees, put ads on the radio, engage a cleaning service, pay bills, etc. These duties are expressions of his _____________authority.
Actual implied
An employee who commits a tort while acting in the scope of his or her employment
Is entitled to be indemnified by the principal if the tort was committed by following the principal’s instructions.
Has joint and several liability with the principal to the injured party.
=both b and c-
If a principal ratifies the unauthorized act of an agent, he releases the agent from any liability for the unauthorized act.
Which of the following is not a factor in determining if a servant was acting within the scope of his employment?
Was the servant disobeying the instructions of the master when the tort was committed?
To ratify a contract, the principal must have been disclosed at the time the contract was formed
Rhonda Realtor was hired to find Client an undeveloped lot that met the following requirements: the lot must be in the mountains, on a pristine lake, consist of at least 10 acres, and be available for no more than $500,000. Rhonda found a property that met all these requirements for only $425,000. Enchanted, she bought the property for herself. She did not tell Client about her find and is still diligently seeking another property that meets Client’s needs. Which, if any, agency duties has Rhonda violated?
Duty of loyalty
Duty to inform
Duty to obey instructions
-All of the above-
Ruth had a contract to sell a vacation home she owned in North Carolina. Rather than make the trip from Oregon for the closing, she gave her brother Ian, who lived in North Carolina, the authority to represent her at the closing and to sign all the necessary papers. The notarized document that confers this authority on Ian is a (n) __________________; and Ian is a (n) _____________.
General power of attorney——————-Attorney in fact

Special power of attorney——————–Attorney in fact
General power of attorney——————-Attorney at law

A person who enters into a contract with an independent contractor is called a proprietor.
A principal is obligated to pay any judgments against an agent who incurred liability to a third party while carrying out the principal’s orders. This duty to hold the agent “harmless” is the duty to___________.
In determining the rights and duties of the parties to an agency relationship, the courts look to
case law
An agent will not be indemnified for injuries caused to third parties if the agent’s negligence caused the injury.
If an agent gets a monthly advance against future commissions, the advances are treated as a minimum salary and need not be returned if the commissions on sales are not earned.
When a third party knows that an agent is acting on behalf of a principal, but dies not know the identity of the principal, the principal is________________.
partially disclosed
Which legal principal always imposes punitive damages on a master if the wrongful conduct of the servant justifies punitive damages ?
Vicarious liability rule
A proprietor will be liable for damages caused by an independent contractor if the work the independent contractor was hired to do was
Inherently dangerous to the community.
A duty that the proprietor could not delegate
-All of the above-
In some states, a parent-owner is liable for any damages caused by a family member operating the vehicle. This is the __________doctrine.
family car
An employer cannot be held liable under respondeat superior for the negligence of a person who is working under the employer’s control and direction, but who is not being paid.
Raines Realty, a property management firm, hired Al Agent to manage an office complex. One of Al’s duties was to collect the rents. Raines fired Al for negligence, but did not notify the tenants before the next rent payment was due. Al collected the rents as usual and left town with the money. Are the tenants required to pay that month’s rent again to Raines?
Yes, because third parties have a duty to verify that agents are acting within the scope of their authority.
Yes, because a payment to Al stopped being a payment to Raines when Al’s actual authority to accept payments ended.

No, because Al still had apparent authority to collect the rents until Raines told the tenants otherwise.

Which legal rule will not impose punitive damages on a master for the torts of his servants unless the master himself took some part in the wrongful action?
Durham rule
Complicity rule
Transferred liability rule
Pat hired Mike to manage his deli, but the agency agreement did not state how much Mike is to be paid. In this situation,
A court will read in a reasonable salary based on comparable positions in the business community.
When a principal files for Chapter 7 bankruptcy, all agency appointments end when the court grants an order of relief.
In a multiple listing agreement, real estate is listed with several brokers who divide the commission on the sale.
Neda, an attorney, has engaged in the following representations this past year. Which one is least likely to violate her duty of loyalty to her clients?
Neda represented both the buyer and the seller in the purchase of a business.
Neda represented both spouses in their property settlement following the divorce.
Neda represented a local restaurant, which she patronizes frequently, in an employment discrimination suit.
Agency agreements must always be in writing.
If the principal dies, the agency agreement terminates by operation of law.
An agent is a fiduciary of the principal.
Which of the following is not a duty of the principal to the agent?
the duty to obey instructions
A plaintiff who sues the employer and the employee in joint and several liability is limited to only one recovery.
Which of the following is not an element of ratification?
The principal was fully disclosed at the time the contract was formed.
The principal is aware of all of the terms of the agreement
The third party has not withdrawn from the contract
All of the above are requirements for ratification
To ratify a contract, the principal must have been disclosed at the time the contract was formed
A principal may ratify a contract by accepting the benefits of the contract.
Officers of corporations have unlimited actual authority to sell the real property and intangible assets of the corporation.
A proprietor will be liable for the torts of an independent contractor if the duties that the contractor is hired to perform are inherently dangerous to the public.
An agent whose agency appointment has terminated has implied authority to continue to conduct the principal’s business until third parties are notified of the termination.

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