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REG > REG: Chapter 5 > Flashcards

REG: Chapter 5 Flashcards

1
Q

Agency Formation

What is a prerequisite for the creation of an agency relationship?

A
  • The principal must have capacity
  • An agreement between the principal and agent on the relationship and subject matter
  • Legality of the subject matter

Consideration is not a prerequisite

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2
Q

Agency Formation

What is a del credere agent?

A
  • A del credere agent is a sales agent who guarantees the customer’s obligation
  • The sales agent is the surety and is liable to the principal if the customer refuses to pay
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3
Q

Agent’s Authority and Duties

What is an agency?

A
  • An agency is an express or implied consensual relationship where the principal and agent agrees that the agent will act on behalf of the agent
  • An example of an agency is an attorney retained to handle the sale of a family home
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4
Q

Agent’s Authority and Duties

When is a principal liable to a third party because an act committed by the agent?

A

When an employee fails to notify the employer of a dangerous condition that results in an injury to the third party

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5
Q

Agent’s Authority and Duties

What is apparent authority?

A
  • Apparent authority occurs from words or conduct from the principal directed to a third party
  • The third party is under the impression that the agent has actual authority
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6
Q

Agent’s Authority and Duties

What is actual authority?

A

The agent receives the right and power to bind the principal to third parties

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7
Q

Agent’s Authority and Duties

When can an agent delegate their duties to a subagent?

A
  • When an emergency occurs and the delegation is necessary to meet the emergency
  • This exception applies to most contractual duties
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8
Q

Agent’s Authority and Duties

What remedies can a principal do when an agent fraudulently breaches a fiduciary duty?

A
  • Terminate the agency
  • Require the agent to hold resources for the benefit of the principal even though the agent does not hold legal title (aka Constructive Trust)
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9
Q

Agent’s Authority and Duties

What is duty of obedience?

A
  • The agent must follow lawful explicit instructions of the principal
  • The agent must act in good faith and in a reasonable manner
  • If the agent cannot reach the principal, the agent may deviate from the instructions to the extent warranted
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10
Q

Principal’s Duties and Liabilities

How can a principal ratifies the contract?

A
  • The principal must have knowledge of all material facts relating to the contract
  • Ratification can occur if the third party did not withdraw prior to the ratification or the situtation did not drastically change the agreement
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11
Q

Principal’s Duties and Liabilities

What is respondeat superior?

A
  • The employer is liable for the torts committed by the employee within the scope and during their employment
  • The principals liability to the third party is for acts of the agent within the scope of the agent’s actual or apparent authority
  • The doctrine does not apply to crimes committed by employees
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12
Q

Principal’s Duties and Liabilities

When can a principal be held criminally liable for the crime of an agent?

A
  • The principal approves or directs the crime
  • The principal participates in the crime
  • Violation of regulatory statute caused the crime
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13
Q

Principal’s Duties and Liabilities

What remedies does an agent have with the principal violates a duty owed to the agent?

A
  • Recovery of future damages
  • Recovery of past damages
  • Withholding future performance

Specific performance is not a remedy

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14
Q

Agency Termination

When there is an agent coupled with an interest, who can terminate the contract before the interest has expired?

A
  • The agent may terminate at any time without liability if there isn’t a specific period that has been established
  • The principal cannot terminate
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15
Q

Agency Termination

What is Agency Coupled with Interest?

A

The agent has a specific, current, beneficial interest in the property that is the subject of the agency

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16
Q

Agency Termination

When does apparent authority of a general agent for a disclosed principal end without notice to the third parties?

A

When the principal or agent dies

17
Q

Agency Termination

When does an agent’s apparent authority end?

A
  • When the third party believes that the agent has actual authority that is unreasonable
  • Operation of law does not end apparent authority
18
Q

Agency Termination

What are terminations by operation of law?

A
  • Death
  • Incapacity
  • Bankruptcy of the principal
19
Q

Employment Tax

How are unemployment taxes classified for an employer?

A

Unemployment taxes are reported by the employer as a deductible business expense

20
Q

Employment Tax

What is the employer’s calculation to determine payroll tax?

A

Federal Income Tax Withheld
(+) Employer’s portion of Social Security Tax Withheld
(+) Employee’s portion of Social Security Tax Withheld
(+) Employer’s portion of Medicare Tax
(+) Employee’s portion of Medicare Tax
(+) Additional Medicare Tax

21
Q

Qualified Health Plans

What is the goal of the Patient Protection and Affordable Care Act?

A
  • Expand Medicaid
  • Create insurance marketplaces
  • Provide insurance subsidies for low and middle-class incomes
  • Allowing nondependent children 26 or younger to be covered under the parent’s policy
  • Requiring certain employers to provide coverage
22
Q

Qualified Health Plans

How is the minimum value for an employer deteremined under the Affordable Care Act?

A
  • The percentage of coverage that will be paid is based on an actuarial value
  • The minimum value allowed for an eligible employer plan is 60%
  • The minimum actuarial value is set by the ACA and will not reduce employer contributions
23
Q

Qualified Health Plans

What is the calculation to determine the penalty fee for an employer who fails to follow the ACA?

A
  • The annual penalty is paid when there are at least 50 full-time employees
  • The penalty is based on $2,880

Annual Penalty = 2,880 x (Total EFTs - First 30 EFTs)

24
Q

Bribery of Foreign Officials

What are PCAOB registrations required to do in accordance with the Foreign Corrupt Practices Act?

A
  • Keep records that reflect the transactions and disposition of assets
  • Applies to all corporations who securities are registered with the SEC
  • Maintain a system of internal accounting controls
25
Q

Bribery of Foreign Officials

What are the aspects of the Foreign Corrupt Practices Act?

A
  • Prohibits bribes to foreign officials to improperly influence official acts
  • An internal control system must be developed, implemented and maintained
  • Subjects to fines and imprisonment for both the corporation and its officers by the Department of Justice
  • Antibribary provisions applies to all domestic corporations engaged in interstate commerce

REG (15 decks)

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