Ch. 4 - Law of Agency

Question 1

_____ is the broker’s agency who is authorized to represent and act on the behalf of another person.

Answer 1

An agent

Question 2

The person who hires the agent and delegates to the agent the responsibility of representing their interests.

Answer 2

The principal (a client)

Question 3

The relationship of trust or confidence between the agent and the principal.

Answer 3

Fiduciary

Question 4

The fiduciary relationship between the broker’s agency (referred to as agent) of the principal.

Answer 4

Agency

Question 5

Third party with whom the broker’s agency deals when working on behalf of the principal.

Answer 5

The customer

Question 6

In a _____ agency relationship, the principal empowers the agent to perform any and all actions that may be legally delegated to an agency representative. The instrument of authorization is the power of attorney.

Answer 6

universal

Question 7

In a ____ agency, the principal delegates to the agent ongoing tasks and duties within a particular business or enterprise. Such delegation may include the authority to enter into contracts. A property manager is an example.

Answer 7

general

Question 8

Under a _____ agency agreement, the principal delegates authority to conduct a specific activity, after which the agency relationship terminates. In most cases, the _____ agent may not bind the principal to a contract.

Answer 8

special

Question 9

In most instances, real estate brokerage is based on a _____ agency.

Answer 9

special

Question 10

An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?

Answer 10

Confidentiality

Question 11

_____ is the term used to refer to the business of bringing buyers and sellers together to assist them in the negotiations for the sale of a property.

Answer 11

Brokerage

Question 12

When a client enters into a listing agreement with a brokerage firm, the _____ is the agent of the client.

Answer 12

broker

Question 13

The licensees that are affiliated with the brokerage firm are the ____ of the broker and the _____ of the broker’s clients.

Answer 13

agents, subagents

Question 14

_____ fraud is an intentional misrepresentation of a material fact for the purpose of gaining an unfair or dishonest advantage over another person.

Answer 14

Active

Question 15

_____ fraud is an intentional nondisclosure of a material fact.

Answer 15

Passive

Question 16

________ is the principal federal statute that covers competition and is one of the most important pieces of antitrust legislation.

Answer 16

The Sherman Antitrust Act of 1890

Question 17

Collusion between or among members of a particular trade to maintain prices at a set level.

Answer 17

Price Fixing

Question 18

Agreements between or among members of a particular trade that would prevent other members from fair participation in the trade’s activities.

Answer 18

Group Boycotts

Question 19

Agreements between or among members of a trade to avoid doing business in specific market areas.

Answer 19

Market Allocation

Question 20

Arrangements that require a buyer to purchase additional or unrelated products or services when making a product purchase.

Answer 20

Tie-in Arrangements

Question 21

Under the ______, private individuals are permitted to sue antitrust violators. If the suits are successful, the individuals can recover three times the damages incurred plus court costs and attorneys’ fees.

Answer 21

Clayton Act

Question 22

What’s the penalty for violating the Sherman Antitrust Act?

Answer 22

fined up to $1,000,000 and sentenced to up to 10 years in federal prison for each offense; corporations can be fined up to $100 million for each offense