Business Law

Q: In a chain-style business operation, the franchisor provides the franchisee with the formula or necessary ingredient to manufacture a product.

Q: When a person decides to go into business on his or her own and is solely responsible for management and profits a(n) __________________ is formed. A. individual entity B. sole proprietorship C. single entity D. sole entrepreneurship E. single entrepreneurship

Q: Set forth the two key exceptions to the equal dignity rule.

Q: Set forth the rationale behind the doctrine of respondeat superior and discuss whether ethically you believe is an appropriate doctrine for our society.

Q: What is the duty of accounting an agent owes to a principal, and how would an agent satisfy that duty? Specify what actions an agent must take in regards to accounts of a principal.

Q: Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob chooses Sally based on her great reputation for being conscientious and doing good work. Bob knows little about roofing and stays away from all the noise involved. Sally provides her own tools for herself and other workers, sets her own schedule, and charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy, Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their work, provides them with tools and materials, and sets their schedules. Curious about what is going on there, Bob's friend Spencer walks by the house while the roofing is being done. Glen absent-mindedly throws some old shingles off the roof and hits Spencer in the head resulting in him going to the local emergency room and receiving a couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and Sally for his hospital expenses and for pain and suffering. Assuming Glen was negligent, which of the following is the most likely result in a lawsuit against Trudy and Fred brought by Spencer? A. Spencer will win because Trudy and Fred were coworkers with Glen. B. Spencer will win because Trudy and Fred were independent contractors on the same job as Glen. C. Spencer will win only if it can be established that both Sally and Bob are insolvent and unable to pay any judgment. D. Spencer will lose because Trudy and Fred were not negligent and were not employees of Spencer. E. Spencer, Trudy, and Fred must all bear 1/3 of any judgment because they are employees of the same rank.

Q: Discuss why agency is especially important for modern firms doing business in foreign countries.

Q: Set forth the requirements for a finding of agency by ratification and also the requirements needed for ratification to be effective.

Q: Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob chooses Sally based on her great reputation for being conscientious and doing good work. Bob knows little about roofing and stays away from all the noise involved. Sally provides her own tools for herself and other workers, sets her own schedule, and charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy, Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their work, provides them with tools and materials, and sets their schedules. Curious about what is going on there, Bob's friend Spencer walks by the house while the roofing is being done. Glen absent-mindedly throws some old shingles off the roof and hits Spencer in the head resulting in him going to the local emergency room and receiving a couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and Sally for his hospital expenses and for pain and suffering. Which of the following is the most likely characterization of Sally in relation to Bob? A. She is both an employee and an independent contractor. B. She is an employee. C. She is an independent contractor. D. She is an undisclosed principal. E. She is both an employee and a disclosed principal.

Q: Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob chooses Sally based on her great reputation for being conscientious and doing good work. Bob knows little about roofing and stays away from all the noise involved. Sally provides her own tools for herself and other workers, sets her own schedule, and charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy, Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their work, provides them with tools and materials, and sets their schedules. Curious about what is going on there, Bob's friend Spencer walks by the house while the roofing is being done. Glen absent-mindedly throws some old shingles off the roof and hits Spencer in the head resulting in him going to the local emergency room and receiving a couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and Sally for his hospital expenses and for pain and suffering. Which of the following is the most likely characterization of Trudy, Glen, and Fred in relation to Sally? A. They are both employees and independent contractors. B. They are employees. C. They are independent contractors. D. They are undisclosed principals. E. They are both employees and disclosed principals.

Q: Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob chooses Sally based on her great reputation for being conscientious and doing good work. Bob knows little about roofing and stays away from all the noise involved. Sally provides her own tools for herself and other workers, sets her own schedule, and charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy, Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their work, provides them with tools and materials, and sets their schedules. Curious about what is going on there, Bob's friend Spencer walks by the house while the roofing is being done. Glen absent-mindedly throws some old shingles off the roof and hits Spencer in the head resulting in him going to the local emergency room and receiving a couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and Sally for his hospital expenses and for pain and suffering. Assuming Glen was negligent, which of the following is the most likely result in a lawsuit against Sally brought by Spencer? A. Spencer will win because Glen was acting within the scope of his employment; and Sally is, therefore, liable for his negligence. B. Spencer will lose because Glen was not acting within the scope of his employment; and Sally is not, therefore, liable for his negligence. C. Spencer will win because regardless of whether Glen was acting within the scope of his employment, Sally is liable for his negligence. D. Spencer will lose because regardless of whether Glen was acting within the scope of his employment, Sally has no liability. E. Spencer and Sally will split costs on a 50-50 basis.

Q: Roofing Issues. Sally agrees to roof a house for Bob. After doing his research, Bob chooses Sally based on her great reputation for being conscientious and doing good work. Bob knows little about roofing and stays away from all the noise involved. Sally provides her own tools for herself and other workers, sets her own schedule, and charges a flat rate of $10,000 to be paid when the job is completed. Sally hires Trudy, Glen, and Fred to help with the roofing. She pays them an hourly rate, supervises their work, provides them with tools and materials, and sets their schedules. Curious about what is going on there, Bob's friend Spencer walks by the house while the roofing is being done. Glen absent-mindedly throws some old shingles off the roof and hits Spencer in the head resulting in him going to the local emergency room and receiving a couple of stitches in his scalp. Spencer decides to sue all the roofers and also Bob and Sally for his hospital expenses and for pain and suffering. Assuming Glen was negligent, which of the following is the most likely result in a lawsuit against Bob brought by Spencer? A. Spencer will win because as the property owner, Bob is liable for any negligence occurring there. B. Spencer will win because Sally is Bob's employee and Sally, therefore, is liable for the negligent acts of anyone working for her. C. Spencer will win because Sally is an independent contractor for Bob and Sally, therefore, is liable for the negligent acts of anyone working for her. D. Spencer will lose because Glen is an employee of Sally who is an independent contractor for Bob. E. Spencer will win only if it can be established that both Glen and Sally are insolvent and unable to pay any judgment.

Q: The Big Sale. Christy, the owner of ABC department store, needed to hire a number of employees in a hurry because of a planned big summer sale. Bob was hired by Christy to run a cash register and to assist customers with taking large purchases to their cars. Bob encountered a particularly annoying customer, Frank. Frank started complaining the minute he saw Bob. Frank complained about having to wait for Bob to assist him with carrying his television purchase to his car, about the merchandise in the store, and about the quality of the store's employees. Bob tried to control himself while he carted Frank's television to the car. The final straw, however, came when Frank told Bob that he should get the earring out of his ear, cut his hair, and act professionally. Bob threw the television to the ground and punched Frank in the nose. Frank did investigation and discovered that Bob has just been fired from his last three jobs for violent actions against customers. Two of his former employers are willing to testify that if Christy had called them, they would have disclosed Bob's tendencies to her. Bob listed the former employers on his application, but because she was in a hurry to hire employees, Christy did not take the time to check with the former employers. Another problem confronting Christy during the big sale is that Susie, a long-time employee of Christy who had never caused any problem before, negligently dropped a box on the foot of Greg, a customer. Greg had to have an X-ray and is threatening to sue both Christy and Susie. Which of the following is a theory under which Christy may be held directly liable for her own tortuous conduct in regards to Frank's injury? A. Negligent hiring B. Strict liability C. Breach of customer warranty D. Negligent hiring, strict liability, and also breach of customer warranty E. There is no theory under which Christy may be held liable

Q: The Big Sale. Christy, the owner of ABC department store, needed to hire a number of employees in a hurry because of a planned big summer sale. Bob was hired by Christy to run a cash register and to assist customers with taking large purchases to their cars. Bob encountered a particularly annoying customer, Frank. Frank started complaining the minute he saw Bob. Frank complained about having to wait for Bob to assist him with carrying his television purchase to his car, about the merchandise in the store, and about the quality of the store's employees. Bob tried to control himself while he carted Frank's television to the car. The final straw, however, came when Frank told Bob that he should get the earring out of his ear, cut his hair, and act professionally. Bob threw the television to the ground and punched Frank in the nose. Frank did investigation and discovered that Bob has just been fired from his last three jobs for violent actions against customers. Two of his former employers are willing to testify that if Christy had called them, they would have disclosed Bob's tendencies to her. Bob listed the former employers on his application, but because she was in a hurry to hire employees, Christy did not take the time to check with the former employers. Another problem confronting Christy during the big sale is that Susie, a long-time employee of Christy who had never caused any problem before, negligently dropped a box on the foot of Greg, a customer. Greg had to have an X-ray and is threatening to sue both Christy and Susie. Which of the following is true regarding whether Greg has any right of recovery against Susie for his injured foot? A. Greg has no right of recovery against Susie because of her status as an employee. B. Greg has no right of recovery against Susie because she did not intentionally harm him. C. Greg has no right of recovery against Susie because of her status as an employee and also because she did not intentionally harm him. D. Greg has a right of recovery against Susie only if Christy is bankrupt. E. Greg has a right of recovery against Susie.

Q: The Big Sale. Christy, the owner of ABC department store, needed to hire a number of employees in a hurry because of a planned big summer sale. Bob was hired by Christy to run a cash register and to assist customers with taking large purchases to their cars. Bob encountered a particularly annoying customer, Frank. Frank started complaining the minute he saw Bob. Frank complained about having to wait for Bob to assist him with carrying his television purchase to his car, about the merchandise in the store, and about the quality of the store's employees. Bob tried to control himself while he carted Frank's television to the car. The final straw, however, came when Frank told Bob that he should get the earring out of his ear, cut his hair, and act professionally. Bob threw the television to the ground and punched Frank in the nose. Frank did investigation and discovered that Bob has just been fired from his last three jobs for violent actions against customers. Two of his former employers are willing to testify that if Christy had called them, they would have disclosed Bob's tendencies to her. Bob listed the former employers on his application, but because she was in a hurry to hire employees, Christy did not take the time to check with the former employers. Another problem confronting Christy during the big sale is that Susie, a long-time employee of Christy who had never caused any problem before, negligently dropped a box on the foot of Greg, a customer. Greg had to have an X-ray and is threatening to sue both Christy and Susie. Which of the following is true regarding whether Greg has any right of recovery against Christy for his injured foot? A. Greg has no right of recovery against Christy because Susie had not dropped any boxes before, and Christy had no reason to suspect she would injure Greg. B. Greg has a right of recovery against Christy only if Susie is insolvent. C. Greg has a right of recovery against Christy, but only for 50% of his damages. D. Greg has no right of recovery against Christy because he will not be able to establish any wrongdoing on her part in hiring Susie. E. Greg has a right of recovery against Christy.

Q: Nasty Break-Up. Harold wants to purchase a lot next door to Sarah's home that is owned by Sarah. Harold knows Sarah will not sell the lot to him because they dated in the past and had a nasty break-up. Harold agrees with Alice that Alice will purchase the lot from Sarah for him. Alice and Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to Alice for a price within the scope of Alice's authority. Alice tells Sarah nothing about her plan to later transfer the lot to Harold. Before title to the lot is transferred to Alice, Harold tells Alice that he no longer wants the lot. Alice tells Sarah about Harold. Sarah tells Alice that as far as she is concerned, Alice has bought the lot. Sarah says that she plans to move anyway and really does not care whether Alice or Harold ends up with the lot. She just wants her money. Which of the following is true regarding whether Alice is personally bound on the contract with Sarah? A. Alice is not personally bound because she was acting on behalf of Harold. B. Alice is personally bound unless she can establish that Sarah would not have sold her the lot if she had known that Harold was involved. C. Alice is personally bound unless she can establish that Harold has the funds with which to pay Sarah. D. Alice is not personally bound unless Harold has legally filed for bankruptcy. E. Alice is personally bound.

Q: Nasty Break-Up. Harold wants to purchase a lot next door to Sarah's home that is owned by Sarah. Harold knows Sarah will not sell the lot to him because they dated in the past and had a nasty break-up. Harold agrees with Alice that Alice will purchase the lot from Sarah for him. Alice and Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to Alice for a price within the scope of Alice's authority. Alice tells Sarah nothing about her plan to later transfer the lot to Harold. Before title to the lot is transferred to Alice, Harold tells Alice that he no longer wants the lot. Alice tells Sarah about Harold. Sarah tells Alice that as far as she is concerned, Alice has bought the lot. Sarah says that she plans to move anyway and really does not care whether Alice or Harold ends up with the lot. She just wants her money. Which of the following is true regarding whether Harold is liable to Alice for the cost of the lot if Alice pays Sarah the purchase price? A. Harold is liable to Alice for the cost of the lot. B. Harold is liable to Alice for the cost of the lot only if the contract between Harold and Alice expressly stated that he would reimburse her for the cost of the lot. C. Harold is liable to Alice only if she resells the lot and is unable to recover as much as she paid for it. D. Harold is not liable to Alice for the cost of the lot. E. Harold can avoid liability to Alice only if he can establish that unexpected circumstances caused him to refuse to purchase the lot from her.

Q: Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits that he thought were excessive. Which of the following is the most likely result if Sue sues Ronnie for revealing confidential information? A. Sue will lose because Ronnie was no longer her agent when he revealed the information. B. Sue will lose because regardless of whether he was working for her or not, he had no legal duty to keep any information confidential. C. Sue will lose unless she can establish that revealing the information caused her to suffer economic loss. D. Sue will lose unless she can establish that revealing the information caused her to suffer economic loss or to seek psychological counseling. E. Sue will win.

Q: Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits that he thought were excessive. What remedy should Sue seek if she wants possession of the lakeside lot Ronnie purchased? A. A resolute trust B. An actual trust C. A constructive trust D. A defined trust E. An absolute trust

Q: Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits that he thought were excessive. Which of the following is the most likely result if Ronnie sues Sue for the $300 paid to Rick? A. Ronnie will lose. B. Ronnie will win only if he can establish that he had express permission from Sue to assign the duties. C. Ronnie will win only if he can establish that he had either express or implied permission from Sue to assign the duties. D. Ronnie will win only if he can establish that he had express, implied, or assumed permission from Sue to assign the duties. E. Ronnie will lose only if Sue can establish that Rick is incompetent to deal in real estate.

Q: Cheap Principal. Jason, who is very knowledgeable regarding computers, agrees to purchase computers for Nick's business. Jason is retained for that purpose only, he is paid a set rate for the job, and Nick exercised no control over the manner in which Jason did his work. Jason purchased computers on credit from ABC Computers without any mention of Nick. The computers worked well and were not defective in any way. Unfortunately, Nick did not pay ABC Computers on a timely basis. Jason, therefore, paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and also because his name was on the invoice. Jason asked Nick for reimbursement, but Nick refused. Nick claimed that if Jason had only waited, ABC Computers might have agreed to take less. Which of the following likely represents Jason's status in regards to his employment with Nick? A. He was an independent contractor. B. He was an employee. C. He had a special status called employee-contractor, a term used to represent a contractor who is neither an employee nor an independent contractor. D. He was an express contractor. E. He was an implied contractor.

Q: Cheap Principal. Jason, who is very knowledgeable regarding computers, agrees to purchase computers for Nick's business. Jason is retained for that purpose only, he is paid a set rate for the job, and Nick exercised no control over the manner in which Jason did his work. Jason purchased computers on credit from ABC Computers without any mention of Nick. The computers worked well and were not defective in any way. Unfortunately, Nick did not pay ABC Computers on a timely basis. Jason, therefore, paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and also because his name was on the invoice. Jason asked Nick for reimbursement, but Nick refused. Nick claimed that if Jason had only waited, ABC Computers might have agreed to take less. Did Jason have any legal liability to ABC Computers? A. Yes, because he purchased the computers. B. Yes, but only because office equipment is involved. C. No, because his status was as an agent regardless of whether ABC Computers was aware of that fact. D. No, because he was an independent contractor. E. No, because he was an employee.

Q: Cheap Principal. Jason, who is very knowledgeable regarding computers, agrees to purchase computers for Nick's business. Jason is retained for that purpose only, he is paid a set rate for the job, and Nick exercised no control over the manner in which Jason did his work. Jason purchased computers on credit from ABC Computers without any mention of Nick. The computers worked well and were not defective in any way. Unfortunately, Nick did not pay ABC Computers on a timely basis. Jason, therefore, paid ABC Computers out of his own pocket because he wanted to be able to do business with ABC in the future and also because his name was on the invoice. Jason asked Nick for reimbursement, but Nick refused. Nick claimed that if Jason had only waited, ABC Computers might have agreed to take less. Which of the following is true regarding any right of reimbursement Jason is due from Nick? A. Jason is not due any reimbursement because he did not get permission from Jason before paying ABC Computers. B. Jason is only due 50% of whatever he paid because he did not get permission from Jason before paying ABC Computers. C. Jason is not due any reimbursement from Nick unless he can establish that Nick signed a written contract authorizing him to personally pay debts incurred. D. Jason is not due any reimbursement from Nick unless Jason can establish by a preponderance of the evidence that ABC Computers would not have agreed to take a lesser amount. E. Jason is entitled to reimbursement from Nick.

Q: Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits that he thought were excessive. Which of the following is the most likely result if Sue sues Ronnie for purchasing the property from Bruce? A. Sue will lose because Ronnie had the right to act in his own best interest. B. Sue will lose but only because Ronnie was not involved in work duties when he heard about the property. C. Sue will lose because Ronnie had validly assigned all duties to Rick. D. Sue will win. E. Sue will win only if she can establish that she expressly told Ronnie that he could not assign the contractual duties under the contract.

Q: High Maintenance. Paul, who runs a retail jewelry store, went with Jane, to whom he was engaged to be married, to a wholesale jewelry store. Paul had no express, written agreement with Jane by which she was his agent. In fact, Paul had told Jane not to buy anything at the store. The wholesale jeweler, Pam, asked Paul if Jane was buying for him. Paul did not want to embarrass Jane so he nodded in agreement. A few minutes later Paul reminded Jane, outside the hearing of the wholesaler, that she should not make any purchases. Paul and Jane had a big disagreement over money that evening, and Jane broke off their engagement. The next day Jane went back to the wholesale jeweler and purchased a string of pearls for $2,000. Jane also purchased a fur jacket for $3,000 from a store owned by Harry that was next door to the jewelry store. She told Harry that Paul wanted a fur jacket for a model in his store and that Paul would be glad to pay Harry for the jacket. What type of agency, if any, did Jane have to act on behalf of Paul as far as Pam is concerned? A. No type of agency was in effect because no written agreement was in place by which Jane was Paul's agent. B. No type of agency was in effect because, in fact, Jane was not Paul's agent. C. An express agency. D. An implied agency. E. An apparent agency.

Q: High Maintenance. Paul, who runs a retail jewelry store, went with Jane, to whom he was engaged to be married, to a wholesale jewelry store. Paul had no express, written agreement with Jane by which she was his agent. In fact, Paul had told Jane not to buy anything at the store. The wholesale jeweler, Pam, asked Paul if Jane was buying for him. Paul did not want to embarrass Jane so he nodded in agreement. A few minutes later Paul reminded Jane, outside the hearing of the wholesaler, that she should not make any purchases. Paul and Jane had a big disagreement over money that evening, and Jane broke off their engagement. The next day Jane went back to the wholesale jeweler and purchased a string of pearls for $2,000. Jane also purchased a fur jacket for $3,000 from a store owned by Harry that was next door to the jewelry store. She told Harry that Paul wanted a fur jacket for a model in his store and that Paul would be glad to pay Harry for the jacket. Which of the following is the most likely result if Pam, the wholesale jeweler, sues Paul for the price of the pearls? A. Pam will win assuming that she can prove that she reasonably believed, based on Paul's conduct that Jane was acting as his agent. B. Pam will lose because it was her responsibility to ask Paul for written documentation that Jane was his agent. C. Pam will lose unless it can be established that Jane at some time in the past had actual authority to act as Paul's agent. D. Pam will win only if she can show that through reasonable investigative efforts on her part Jane cannot be located. E. Pam will win only if she can show that Jane has no assets with which to pay for the necklace.

Q: High Maintenance. Paul, who runs a retail jewelry store, went with Jane, to whom he was engaged to be married, to a wholesale jewelry store. Paul had no express, written agreement with Jane by which she was his agent. In fact, Paul had told Jane not to buy anything at the store. The wholesale jeweler, Pam, asked Paul if Jane was buying for him. Paul did not want to embarrass Jane so he nodded in agreement. A few minutes later Paul reminded Jane, outside the hearing of the wholesaler, that she should not make any purchases. Paul and Jane had a big disagreement over money that evening, and Jane broke off their engagement. The next day Jane went back to the wholesale jeweler and purchased a string of pearls for $2,000. Jane also purchased a fur jacket for $3,000 from a store owned by Harry that was next door to the jewelry store. She told Harry that Paul wanted a fur jacket for a model in his store and that Paul would be glad to pay Harry for the jacket. Which of the following is the most likely result if Harry sues Paul for the price of the jacket? A. Paul will win because he did nothing to cause Harry to believe that he would pay for the jacket. B. Harry will win because Jane indicated that she had apparent authority to buy the jacket for Paul. C. Harry will win only if he can show that through reasonable investigative efforts on his part Jane cannot be located. D. Harry will win only if he can show that Jane has no assets with which to pay for the necklace. E. Paul will win on an implied agency theory.

Q: An agency agreement created for the agent's benefit, not for the principal's is an _______________. A. agency interest principle B. agency coupled with an interest C. agency benefit interest D. agency compensation principle E. agency entitlement principle

Q: Which of the following results in termination of agency by operation of law? A. Death of either the principal or the agent. B. Adjudicated insanity of the principal or agent. C. Insolvency. D. Death of either the principal or the agent, adjudicated insanity of the principal or agent, and insolvency. E. Death or adjudicated insanity of either the principal or agent, but not insolvency.

Q: Which of the following is false regarding termination of agency based on operation of law? A. Impossibility of performance terminates the agency relationship. B. An agency agreement is terminated whenever the agent, unknown to the principal, acquires an interest against the principal's interest. C. The agency agreement is terminated if the agent breaches the duty of loyalty he or she has to the principal. D. A change in law passed subsequent to the formation of an agency agreement may not terminate the agency agreement. E. If there is an unusual change in circumstances that leads the agent to believe that the principal's instructions do not apply, the agency relationship terminates.

Q: Which of the following is the most typical way in which to provide constructive notice of agency termination? A. By telephone B. By letter C. By posting a notice at the courthouse D. By newspaper publication E. By e-mail

Q: If a manager has business transactions in one of the European Union countries and wants to terminate an agency relationship, he or she would want to have access to knowledge about which of the following? A. Chapter IV of the Agency Relationship Law B. Chapter VII of the Employment Relationship C. Article VI of the European Union Regulations D. Article VII of the European Union Regulations E. Section X of the Agency Regulations

Q: An agency relationship be terminated through ______________________. A. fulfillment of purpose B. occurrence of a specific event C. revocation of authority D. fulfillment of purpose, occurrence of a specific event, and by revocation of authority E. fulfillment of purpose and occurrence of a specific event, but not revocation of authority

Q: Which of the following is false regarding revocation of the authority of an agent and renunciation by an agent? A. At any time, a principal can revoke an agent's authority. B. A principal's revocation of an agent's authority might be a breach of contract entitling the agent to damages. C. An agent can terminate the agency relationship by renouncing the authority given to the agent. D. An agent's renunciation of a contract might be a breach of contract entitling the principal to damages. E. If an agent has breached a fiduciary duty to the principal, the principal can revoke the agent's authority, but the agent may be entitled to damages.

Q: How long does an agent's apparent authority continue once an agency relationship is terminated? A. It ends immediately B. 24 hours C. 7 days D. 30 days E. Until the principal notifies third parties that the agency relationship has ended

Q: Which of the following is true regarding the rights of an employer who is held liable and pays a third party, not because of the employer's negligence, but under the doctrine of respondeat superior based upon negligence of an employee? A. The employer has no right to receive any reimbursement from the negligent employee. B. The employer has a right to recover only 50% of any amounts paid from a negligent employee. C. The employer has a right of indemnification from the negligent employee. D. The employer can recover 100% of any amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute. E. The employer can recover 50% of any amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute.

Q: Which of the following is false regarding the relationship between a principal and an independent contractor? A. An independent contractor is not an employee of the principal. B. The principal does not control the details of the independent contractor's performance. C. An individual who hires an independent contractor cannot be held liable for the independent contractor's tortious actions under the doctrine of respondeat superior. D. A principal is not liable for actions engaged in by the independent contractor, even extremely dangerous ones. E. If an independent contractor commits a crime without the authorization of the principal, the principal is not liable for the agent's crime.

Q: What does the Latin phrase respondeat superior mean? A. Let the superior speak B. Let the agent speak C. Let the employee speak D. Let all speak E. Let all be responsible

Q: The principal-employer may be liable for any harm caused by the agent-employee during the time that the agent-employee is working for the principal under __________. A. vicarious liability B. responsible liability C. comparative liability D. contributory liability E. applied liability

Q: Which of the following is(are) a factor(s) considered by courts in determining whether an act committed by an employee occurred within the course and scope of employment? A. Whether the employer authorized the employee's act. B. Whether the employer provided the tools by which the act occurred. C. Whether the employer knew that the act would involve the commission of a serious crime. D. Whether the employer authorized the employee's act, whether the employer provided the tools by which the act occurred, and also whether the employer knew that the act would involve the commission of a serious crime. E. Whether the employer authorized the employee's act and whether the employer provided the tools by which the act occurred, but not whether the employer knew that the act would involve the commission of a serious crime.

Q: Which of the following is true if an agent has no actual or apparent authority to act on behalf of a principal, but the agent still enters into a contract with a third party? A. The principal is bound only if the principal is a disclosed principal. B. The principal is bound only if the principal is an unidentified principal. C. The principal is bound only if the principal is a partially disclosed principal. D. The principal is bound only if the principal is a disclosed principal or a partially disclosed principal. E. The principal is not bound unless the principal ratifies the contract.

Q: Which of the following is true regarding an agent's liability when the agent commits a tort while acting as an agent for a principal? A. The agent is personally liable only if the agent was on a mission for an unidentified principal. B. The agent is personally liable only if the agent was on a mission for an unidentified principal or a partially disclosed principal. C. The agent is liable regardless of the classification of the principal or the liability of the principal. D. The agent is not liable if the principal is liable. E. The agent is not liable unless the principal is insolvent.

Q: The doctrine of ______ is used in the context of the principal/employer-agent/employee relationship. A. superior respondeat B. respondeat superior C. stare decisis D. res superior E. supre superior

Q: Which of the following is true under the UCC regarding liability of a principal to an agent if the agent enters into a contract that is a negotiable instrument? A. The principal is liable to the same extent as if no negotiable instrument were involved because the negotiable instrument has no effect on the principal's liability. B. The principal cannot be held liable unless the principal's name is on the instrument. C. The principal cannot be held liable unless the agent's signature indicates that it was made in a representative capacity. D. The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity. E. The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity, or the agent has been adjudicated insolvent.

Q: Which of the following is true in situations in which a principal was undisclosed and the third party comes to know of the undisclosed principal's identity, but proceeds to get a judgment against the agent? A. The principal is liable to the third party anyway. B. The principal is liable to the third party only if the agent does not pay. C. The principal is liable to the third party only if the agent files for bankruptcy. D. The principal is released from liability to the third party. E. The principal is released from liability unless a contract for personal service was involved.

Q: Which of the following is true regarding agent liability when a third party gets a judgment against a previously undisclosed principal? A. The agent is freed from liability to the third party. B. The agent remains liable to the third party. C. The agent is freed from liability to the third party unless the principal refuses to pay. D. The agent is freed from liability to the third party unless the principal files for bankruptcy. E. The agent is freed from liability to the third party unless a contract for personal service was involved.

Q: When a principal is classified as a(n) ______ principal, a third party is aware that an agent is making an agreement on behalf of a principal and the third party also knows the identity of the principal. A. acknowledged B. permitted C. disclosed D. revealed E. uncovered

Q: Which of the following is true regarding liability of an agent acting within his or her authority on a contract involving an undisclosed principal? A. The law will likely hold the agent liable for the agreement. B. The law will hold the agent liable for the agreement unless the contract the agent had with the principal expressly provided that the agent would not be held liable in such cases. C. The law will hold the agent liable for the agreement unless the contract the agent had with the principal impliedly or expressly provided that the agent would not be held liable in such cases. D. The law will hold the agent liable for the agreement unless a contract for under $1,000 is involved in which case only the principal would be held liable. E. The law would not hold the agent liable on the agreement.

Q: Which of the following is true regarding liability of a principal to an agent based on a contract an agent makes with a third party that expressly excludes the principal from the contract? A. The principal is liable to the agent because it is unconscionable to exclude a principal from a contract. B. The principal is liable to the agent only if the principal is an unidentified principal. C. The principal is liable to the agent only if the principal is a partially disclosed principal. D. The principal is liable to the agent unless the principal gave the agent authority in writing to make the agreement with the third party. E. The principal is not liable to the agent.

Q: Which of the following type of agency exists when a third party reasonably believes, on the basis of a principal's actions, that an agency relationship exists between the principal and another individual? A. Express B. Implied C. Acknowledged D. Perceived E. Apparent

Q: In which types of agency relationships is the agency relationship inferred from the conduct of the parties? A. Express agency B. Agency by estoppel C. Implied agency D. Both agency by estoppel and implied agency E. None of these

Q: An agent's implied authority is derived from an agent's _____ authority. A. express B. apparent C. perceived D. acknowledged E. temporary

Q: Express authority is often referred to as ______ authority. A. absolute B. inherent C. actual D. noticed E. approved

Q: The rule enforced by most states that when express authority is granted for an agent to enter into a contract legally required to be in writing, the grant of authority also must be in writing is the ______________________. A. equal dignity rule B. required writing rule C. statute of frauds rule D. matching rule E. None of these because there is no such rule

Q: The equal dignity rule is based upon the _____________. A. statute of writings B. statute of frauds C. documentation rule D. enforcement rule E. common rule

Q: An agent may demand _______________, if the agent believes that he or she is not being properly compensated. A. specific performance B. accounting performance C. an accounting D. a contractual documentation E. a contractual audit

Q: When a contract exists and a principal agrees to certain conditions, but fails to perform, which of the following may the agent seek in order to force the principal to perform the contract as stipulated? A. Specific performance B. Specific recoupment C. Adequate performance D. Reformation E. None of these

Q: In noncontractual relationships which of the following may the agent seek in order to force the principal to perform the contract? A. Specific performance B. Specific recoupment C. Adequate performance D. Reformation E. None of these

Q: In an express agency relationship, the agent has ______ authority. A. express B. implied C. apparent D. inherent E. acknowledged

Q: Which of the following is the term used to describe the duty an agent has to follow the lawful instruction and direction of the principal? A. Duty of action B. Duty of contract C. Express duty of action D. Duty of performance E. Duty of obedience

Q: A(n) ______ trust is an equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess. A. resolute B. actual C. constructive D. defined E. absolute

Q: ______________ is the right of a principal to sue an agent to recover any amount assessed against the principal for a breach of contract caused by the agent's negligence. A. Reformation B. Indemnification C. Reimbursement D. Contribution E. Recoupment

Q: An agent's obligation to inform the principal of the agent's actions on the principal's behalf and of all relevant information is a __________________. A. duty of notification B. duty of information C. requirement of conveyance D. constructive notification E. constructive information

Q: Which of the following is the term used to describe the duty agent has to perform responsibilities of the principal as specified in the agency agreement? A. Duty of action B. Duty of contract C. Express duty of action D. Duty of performance E. Duty of obedience

Q: The duty of an agent to perform specified duties with reasonable skill and care is a duty of ___________________________. A. action B. contract C. notification D. performance E. obedience

Q: An agent cannot represent both the principal and a third party in an agreement because there could be a(n) ______. A. consortium B. disagreement C. conflict of interest D. delineation of interest E. absolution

Q: Which of the following is true if there is no agreement between a principal and an agent regarding the amount for which the principal will compensate the agent? A. It will be assumed that the agent agreed to work for free on a gratuitous basis. B. The agent will be allowed to set the price that will be enforced unless it is unconscionable. C. The principal will be allowed to set the price that will be enforced unless it is unconscionable. D. The court will appoint a magistrate to set the price. E. Compensation will be calculated according to the customary fee in the situation.

Q: Which of the following is true regarding the status of an agent as a fiduciary? A. Although the principal is a fiduciary, an agent is not a fiduciary. B. An agent is only a fiduciary if the principal and agent agreed by written contract that the agent would be a fiduciary. C. An agent is only a fiduciary if the principal and agent agreed by written or oral contract that the agent would be a fiduciary. D. An agent is only a fiduciary to the principal if a transaction in excess of $10,000 is involved. E. An agent is a fiduciary to the principal.

Q: In most situations, how many principals may an agent represent in any one agreement? A. One B. Two C. Three D. Four E. Any number

Q: A principal's obligation to pay an agent for his services is a duty ___________. A. to provide safe working conditions B. of reimbursement and indemnification C. of cooperation D. to compensate E. to trust

Q: Which of the following is false regarding a principal's duties to an agent? A. An agent can sue the principal if the principal does not fulfill duties owed to the agent. B. In a successful suit against a principal, an agent is entitled to contract remedies but not tort remedies. C. If the principal has failed to meet duties owed to the agent, the agent can refuse to act on behalf of the principal until the failure is remedied. D. The principal has a duty to compensate an agent for services provided unless the parties have agreed that the agent will act gratuitously. E. The principal has a duty of reimbursement and indemnification to the agent for authorized expenditures.

Q: A person in a position of trust and confidence is known as a(n) ___________. A. agent B. principal C. fiduciary D. independent contractor E. employer

Q: The employer-independent contractor relationship is not subject to __________________. A. workers' compensation B. workplace safety C. employment discrimination D. unemployment statutes E. All of these

Q: Which of the following is true regarding the liability in tort of employers for the actions of employees and independent contractors? A. Employers are generally liable in tort for the actions of their employees, while they are generally not liable for the actions of independent contractors. B. Employers are generally liable in tort for the actions of independent contractors, while they are generally not liable for the actions of employees. C. Employers are not generally liable in tort for the actions of independent contractors or for the actions of employees. D. Employers are generally liable in tort for the actions of independent contractors and also for the actions of employees. E. Employers are generally liable in tort for the actions of independent contractors and the actions of employees, but only if the employer has agreed to be liable in a written contract with the employee or independent contractor.

Q: A worker may be classified as an employee if she _______________________. A. engages in a distinct occupation B. works under the employer's supervision C. receives regular payments according to time D. supplies her own tools E. gets paid when the job is completed

Q: A person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking is a(n) ______________. A. employee B. independent contractor C. authorized contractor D. task-specific contractor E. partial contractor

Q: The question of whether a worker is an employee or an independent contractor has important implications in which of the following areas? A. Workers' compensation B. Workplace safety C. Unemployment statutes D. Workers' compensation, workplace safety, and unemployment statutes E. Workers' compensation and workplace safety, but not unemployment statutes

Q: The employer-employee relationship is subject to ____________________. A. workers' compensation B. workplace safety C. employment discrimination D. unemployment statutes E. All of these

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