Agency

Question 1

Which of the following would not have capacity to create an agency relationship?
	A.  	An unincorporated association.
	B.  	A corporation.
	C.  	An individual.
	D.  	A government agency.

Answer 1

A - An unincorporated association does not have capacity, because it is not an individual or an entity and therefore has no contractual capacity.

Question 2

Orr gives North power of attorney. In general, the power of attorney
A. Will be valid only if North is a licensed attorney at law.
B. May continue in existence after Orr’s death.
C. May limit North’s authority to specific transactions.
D. Must be signed by both Orr and North.

Answer 2

C - In general, power of attorney is the power to handle some or all of a person’s affairs, depending on what a person wishes to grant. One may grant to another the power to do a few things, or the power to do everything.

Question 3

Ogden Corp. hires Thorp as a sales representative for nine months at a salary of $3,000 per month, plus 4% of sales.

Which of the following statements is correct?
A. Thorp is obligated to act solely in Ogden’s interest in matters concerning Ogden’s business.
B. The agreement between Ogden and Thorp formed an agency coupled with an interest.
C. Ogden does not have the power to dismiss Thorp during the nine-month period without cause.
D. The agreement between Ogden and Thorp is not enforceable, unless it is in writing and signed by Thorp.

Answer 3

A - Thorp is an agent, as he has been hired to act on Ogden’s behalf by representing it. A primary duty of an agent is one of loyalty - an agent must act in his principal’s interests and not his own when participating in matters affecting the principal’s business.