Understanding Business and Personal Law

Chapter 19: Agency Relationships and Their Termination

Agency Relationships and Their Termination

1.		When the third party has never given credit but has done a cash business with the agent, notice by publication is sufficient when a notice of termination is given.
			A)	TRUE
			B)	FALSE
2.		The law allows some actual authority to be implied because
			A)	mentioning every single act that the agent is allowed to perform would make the agreement cumbersome.
			B)	agency by estoppel is in place to protect the principal.
			C)	in an agency situation, real power is transferred from the principal to the agent.
			D)	agency relationships can differ from situation to situation.
3.		Agency relationships can only be terminated when the parties have fully carried out their duties.
			A)	TRUE
			B)	FALSE
4.		Agents have rights guaranteed to them by law.
			A)	TRUE
			B)	FALSE
5.		An agent is required by law to disclose the principal for whom the contract is being made.
			A)	TRUE
			B)	FALSE
6.		If agents enter into contracts on behalf of their principals without authority to do so,
			A)	no one is liable for the contract.
			B)	both the principal and the agent are liable for the contract.
			C)	the agent is liable for the contract.
			D)	the principal is still liable for the contract.
7.		The duties owed by the agent to the principal include
			A)	indemnification.
			B)	reimbursement.
			C)	compensation.
			D)	obedience.
8.		An agency relationship may be terminated when
			A)	the agent's objective becomes illegal.
			B)	the principal declares bankruptcy.
			C)	the agent dies.
			D)	all of the above.
9.		Apparent authority is the real power a principal gives to an agent to act in the principal's behalf.
			A)	TRUE
			B)	FALSE
10.		A principal who fails to notify third parties when an agency has ended
			A)	cannot enter into contracts with those third parties for a period of one year.
			B)	may be liable for future acts of the agent.
			C)	is in contempt of court.
			D)	must sign an "impossibility of performance" statement.