Drills 26-50

Question 1

What is it called when an employee’s personal errand involves a significant deviation from the path that otherwise would be taken for the purposes of performing work?

Answer 1

A frolic

Question 2

Under what two areas (or subjects) of law may an agent file a claim against a principal?

Answer 2

An agent might have a claim against the principal founded in contract or tort law.

Question 3

Besides contract and tort law, when else should one be on the lookout for agency issues on the exam?

Answer 3

Partnership and corporations questions. Be prepared to

1. Identify the existence of agency relationships
2. Discuss whether the principal is subject to liability for the agent’s actions
3. Articulate an agent’s fiduciary duty to the principal and if there’s a breach
4. Determine if or when an agency relationship has terminated

Question 4

When does fraudulent concealment apply?

Answer 4

For fraudulent concealment to apply, either the principal or the agent must have notice that the third party would not have dealt with the principal. Mere suspicions or doubts are not enough to give notice.

Question 5

In a partnership, who is the principal and who is the agent?

Answer 5

The partnership can be considered the principal, while partners, employees, and others, such as attorneys, can serve as agents of the partnership.

Question 6

Which type of authority results when the principal’s words or actions cause an agent to reasonably believe in the agent’s authority to act?

Answer 6

Implied authority

Question 7

What are the five types of principals?

Answer 7

1. Individual
2. Master / Employer
3. Entrepreneur
4. Corporation
5. Partnership

Question 8

As between a principal and agent, who owes whom the duty of loyalty?

Answer 8

The agent owes the principal the duty of loyalty, the principal does not owe the agent the duty of loyalty. However, a principal does have a duty to refrain from conduct likely to injure an agent’s business reputation or reasonable self-respect.

Question 9

What is the capacity required to serve as an agent?

Answer 9

Generally, anyone with minimal capacity can serve as agent, including minors, incompetents, and entities.

Question 10

What are the seven types of agents?

Answer 10

1. Individual
2. Servant / Employee
3. Independent contractor
4. Gratuitous agent
5. General and special agents
6. Trustee
7. Subagent

Question 11

What is the term for what happens when a principal affirms a prior act that was done or purported to be done on the principal’s behalf?

Answer 11

Ratification

Question 12

What makes a principal partially disclosed?

Answer 12

A principal is partially disclosed if the third party has notice of the principal’s existence but not the principal’s identity.

Question 13

Implied actual authority allows an agent to take whatever actions are properly necessary to achieve the principal’s objectives, based on the agent’s reasonable understanding of what?

Answer 13

of the manifestations and objectives of the principal.

Question 14

What is the most common method of creating an agency relationship?

Answer 14

By appointment (either oral or written)

Question 15

Label the parties involved:

Seller lists a property with a broker and a Realtor shows the property to prospective buyers.

Answer 15

Seller: Principal

Broker: Agent

Realtor: Subagent

Question 16

Must an agent consent to the agency relationship verbally, in writing, with actions, or by a combination thereof?

Answer 16

An agent does not have to verbally consent, but may manifest assent by performing acts on behalf of the principal.

Question 17

Any individual or _________ that has the legal capacity to possess ________ and incur _____________ can be a principal

Answer 17

entity
rights
obligations

Question 18

What three situations provide the agent with power to bind the principal to a contract?

Answer 18

1. The agent has actual authority (express or implied)
2. The agent has apparent authority, or
3. The principal is estopped from denying the agent’s authority

Question 19

What results when a principal’s manifestation intended for one agent is actually given to another agent in error?

Answer 19

This situation creates express authority to the agent who received the manifestation by mistake.

Note: The same result occurs when a principal’s manifestation concerning the subject matter is incorrect.

Question 20

Which type of authority results when the principal causes a third party to reasonably believe the agent has authority to act?

Answer 20

Apparent authority (also known as the doctrine of “ostensible agency”)

Question 21

What five circumstances would each count as a change in circumstance, ending the agency relationship?

Answer 21

1. A change in a statute relating to the subject matter
2. Insolvency of either party
3. A dramatic change in business conditions
4. The destruction of the subject matter of the agency relationship
5. A disaster (natural or unnatural)

Question 22

What are common crimes that a principal could be vicariously liable for?

Answer 22

Negligence, misrepresentation, false imprisonment, battery

Question 23

Under what negligence theory can a principal be liable to a third party?

Answer 23

A principal who is negligent in selecting, supervising, or otherwise controlling an agent runs the risk of liability attaching to that negligence.

Question 24

What are an agent’s five general rights?

Answer 24

1. To be compensated (if so promised)
2. Allowed to work without interference
3. Reimbursed for losses
4. Provided a safe work environment
5. Indemnified for working on behalf of a principal

Question 25

When should one apply tort law to an agency scenario?

Answer 25

Tort law applies when vicarious liability attaches to a principal for torts or crimes committed by an agent.