Q&A Hero

Q: Until the time for performance under a contract expires, the seller has a right to cure.

Q: Which of the following is true of tort liability for principals and agents? A) A principal is responsible for the tortious conduct of an agent regardless of whether the conduct occurs within the scope of the agency. B) A principal is responsible for the tortious conduct of an agent regardless of whether the conduct occurs within the course of the agency. C) An agent is liable for the principal's tortious conduct if he or she participates in it. D) An agent and a principal cannot be held responsible for the same tort.

Q: Under a destination contract, a seller must deliver the goods via a carrier.

Q: Why can't an agent take an opportunity meant for the principal? When is an agent permitted to take such an opportunity? Give an illustration of an agent's violation of his or her duty of loyalty.

Q: Tender must occur at a reasonable hour and in a reasonable manner.

Q: The ________ is a principal's duty to cover the agent for any losses the agent suffers because of the principal's conduct.

Q: General Construction Company (GCC) tells Industrial Supplies, Inc., that it needs an adhesive to do a particular job. Industrial provides a five-gallon bucket of a certain brand. When it does not perform to GCC's speci­fications, GCC sues Industrial, which claims, "We didn"t expressly promise anything." What should GCC argue?

Q: A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time is known as a principal's ________.

Q: Harrison hires an agent to look for a three-bedroom house in Atlanta. Elaine, the agent, finds a three-bedroom house within Harrison's budget but buys it herself without informing Harrison. This is an instance of the agent ________.

Q: Theatrical Supplies Company contracts to sell to Unique Costumes, Inc., seven hundred plastic masks at $1 each to be delivered by October 1. Theatrical knows that Unique will use the masks to make Halloween costumes. Unique usually makes $7,000 profit from the cos­tumes' sale. Theatrical fails to deliver on October 1. Unique attempts to buy substitute masks, but must pay $1.20 for each and take delivery on October 15, cutting Unique's sales in half. Unique sues Theatrical. What is the measure of recovery?

Q: Colby contracts in writing to sell his 2005 Dodge-brand pick-up truck to Efrem for $10,500. Colby agrees to deliver the truck on Friday, and Efrem promises to pay the $10,500 on the following Monday. On Thursday, Efrem tells Colby that he changed his mind and will not buy the truck. Over the weekend, Efrem changes his mind again and tenders $10,500 to Colby on Monday. Colby has not sold the truck to another party but refuses the tender and refuses to deliver. Efrem claims that Colby has breached their contract. Colby contends that Efrem's repudiation released him from his duty to perform under the contract. Who is correct, and why?

Q: Dual agency is permitted if all parties in a transaction agree to it.

Q: Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

Q: Dual agency occurs when an agent acts for two or more different principals in the same transaction.

Q: Quality Computer Company agrees to sell one hundred hard drives to Retail Electronics, Inc. The hard drives, which Retail Electronics ex­pressly requires to have certain amounts of memory, are to be shipped "F.O.B. Retail Electronics distribution center in Memphis, TN." When the drives arrive, Retail Electronics rejects them and informs Quality Computer, claiming that the drives do not conform to Retail Electronics' memory re­quirement. A few hours later, the drives are destroyed in a fire at Retail Electronics' distribution center. Will Quality Computer succeed in a suit against Retail Electronics for the cost of the goods?

Q: An agent does not violate his or her duty of loyalty by serving two parties with the same interest.

Q: A contract between Kwik Import Company in Los Angeles and Macro Retail Corporation in New York does not expressly state which party bears the risk of loss but says only that Kwik is "to ship goods at the seller's expense." At what point does the risk of loss of the goods pass from the seller to the buyer?

Q: If an agent reveals confidential information about a principal to a third party, the principal's course of action is to obtain an injunction against the third party.

Q: Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3 players at $50 a piece, subject to certain specific delivery dates. Unlimited replies with a signed purchase order that reads, "Accept your of­fer for 100 I-appliances at $50 each. Must be delivered to our ware­house." Tune does not respond or deliver the goods. Unlimited files a suit for breach of contract, to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune. Can Unlimited recover? Explain.

Q: If an agent competes with the principal without the principal's permission, the principal may recover profits made by the agent.

Q: Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Q: Undisclosed self-dealing by an agent is not regarded as a violation of the duty of loyalty.

Q: Quik Sales Corporation orders goods from Re Stock Company. Re plans to market the goods to consumers generally. Re identifies the goods. Before they are shipped to Quik, an insurable interest in the goods exists in a. Quik and Re, but not consumers generally. b. Quik only. c. Quik, Re, and consumers generally. d. Re only.

Q: The duty of loyalty is a fiduciary duty owned by an agent not to act adversely to the interests of the principal.

Q: Diners Café orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite the nonconform­ity. The oil is destroyed in a kitchen fire. The loss is suffered by a. Diners and Restaurant Supply, but not Diners's customers. b. Diners, Restaurant Supply, and Diners's customers. c. Diners only. d. Restaurant Supply only.

Q: Unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency.

Q: Any property, money, or other benefit received by the agent in the course of an agency belongs to the principal.

Q: Marine Recreation, Inc., allows Nels to take a Marine Recreation boat for a "test run." Nels tries the boat for a few hours, returns, and buys it. This is a. a bailment. b. a consignment. c. a sale on approval. d. a sale or return.

Q: The legal rule of imputed knowledge means that the principal is assumed to know what the agent knows.

Q: Twyla buys a bicycle from U-Pik-It Bike Store, which agrees to keep the bike for Twyla until she picks it up. Before Twyla gets the bike, a fire destroys the store and the bike. The loss is suffered by a. neither Twyla nor U-Pik-It b. Twyla and U-Pik-It. c. Twyla only. d. U-Pik-It only.

Q: An agent is not liable to the principal for any injuries resulting from a breach of the duty to notify.

Q: With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is a. a bailee. b. a buyer in the ordinary course of business. c. a good faith purchaser for value. d. an F.O.B.

Q: Aromatic Tea Company enters into a contract to sell tea to Savory Stores, Inc.. The contract includes the term "F.O.B. Upriver City," which is Savory's location. This means that the contract is a. a bailment contract. b. a destination contract. c. a shipment contract. d. a transportation contract.

Q: An agent does not owe a duty to notify the principal of important information he learns concerning the agency.

Q: Fits Like A Glove Shoes, Inc., and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term a. C.I.F. b. delivery ex-ship. c. F.A.S. d. F.O.B.

Q: An agent who does not perform his or her express duties or fails to use the standard degree of care, skill, or diligence is liable to the principal for damages.

Q: Lewey's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless the contract states otherwise, this is a. a bill of lading. b. a destination contract. c. a shipment contract. d. a warehouse receipt.

Q: A principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal's conduct.

Q: A principal can authorize an independent contractor to enter into contracts.

Q: Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing, Inc., in Ohio, "F.O.B. New Jersey." The cost of transport­ing the fab­ric to Ohio will be paid by a. Silky Material. b. Tattered Clothing. c. New Jersey. d. Ohio.

Q: If there is no agreement about the amount of compensation, the law implies a promise that a principal will pay the agent the customary fee paid in the industry.

Q: Kip, a representative for Lite-Weight Shipping Company, delivers a bill of lading to Meg, the owner of Capacity Storage Warehouse. A bill of lading is a. an invoice for payment for loading and carting. b. an order to ship goods by carrier to a certain destination. c. a receipt for goods signed by a carrier. d. a receipt issued by a warehouser for goods in a warehouse.

Q: Which of the following is true of dual agency? A) An undisclosed dual agent is allowed to retain compensations of the transaction provided he or she discontinues the dual agency. B) Examples of dual agents are finders and marketing intermediaries. C) Dual agency is permitted if all parties in the transaction agree to it. D) Dual agency is permitted as long as the interests of both principals are similar.

Q: Raw Material, Inc., and Sewn Fabric Corporation enter into a contract for a sale of muslin. The terms do not clearly indicate whether it is a destination or shipment contract. A court would most likely presume that it is a. a bailment contract. b. a destination contract. c. a shipment contract. d. a transportation contract.

Q: If a casting agent works for two Hollywood actors, the agent is liable for ________. A) dual agency B) competing with the principal C) usurping an opportunity D) self-dealing

Q: Home Products Store buys furniture from Relax Furniture, Inc. The parties agree that the furniture will be shipped "F.O.B. Relax's ware­house" to Home Products via Swifty Shipping Corporation. The furniture is lost in transit. The loss is suffered by a. Home Products and Relax Furniture, but not Swifty Shipping. b. Home Products, Relax Furniture, and Swifty Shipping. c. Home Products only. d. Relax Furniture only.

Q: Ashley owns a piece of vacant real estate through which a small river runs. Ashley hires Warren, a licensed real estate broker, to list the property for sale and help sell the property. While inquiring in the neighborhood, Ashley's neighbor Lenny tells Warren that a chemical plant upstream has polluted his property and that Warren should have environmental engineers test the soil on Ashley's property as well. Warren does not tell Ashley about Lenny's suggestion. Warren manages to find a buyer for Ashley's property in Martha. It is later discovered that the property Martha bought from Ashley is also polluted. What important agent's duty has Warren failed to perform? A) duty to indemnify B) duty to account C) duty to reimburse D) duty to notify

Q: Ideal Gadgets, Inc., and Jolly Outlets Corporation enter into a contract for a sale of kitchenware. The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City. Risk of loss passes to Jolly when a. Ideal delivers the goods to Ladle. b. Ideal identifies the goods to the contract. c. Ladle transports the goods to Jolly's warehouse. d. the goods arrive in Metro City.

Q: Which of the following is an instance of misuse of confidential information? A) An agent gives the seller the principal's name and phone number in a fully disclosed transaction. B) A principal gives the contact details of an agent to a third-party without the agent's knowledge. C) An agent withholds critical information from the principal about the agency. D) An agent divulges details of his past employer to the principal.

Q: Which of the following is a course of action for a principal if an agent is found competing with him or her? A) The principal can recover damages from the agent if the competition continues after the agency has ended. B) The principal can recover profits made by the agent in the competing venture. C) The principal has the option of buying the agent's competing venture. D) The principal is not allowed to recover lost sales due to the agent's competing venture.

Q: On behalf of Premier Shipbuilding Corporation (PSC), Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot. Steel Parts separates 1,000 cases from the lot. Title and risk of loss a. remain with Steel Parts until PSC acknowledges tender of delivery. b. remain with Steel Parts until PSC accepts 1,000 cases. c. shift to PSC after it accepts the nuts and inspects them for defects. d. shift to PSC when Steel Parts separates the cases.

Q: Office Equipment Leasing, Inc. (OEL), agrees to lease five computer work­stations to Product Promotion Corporation (PPC). Before any inter­est in the workstations can pass from OEL to PPC, they must be a. in existence and identified as the goods in the contract. b. in existence only. c. identified as the specific goods designated in the contract only. d. none of the choices.

Q: Which of the following statements is true of an agent taking an opportunity? A) An agent can legally take an opportunity to which the principal is entitled. B) A third-party offer to an agent need not be conveyed to the principal. C) An agent cannot appropriate an offer for himself or herself once the principal rejects it. D) A principal is permitted to recover for a usurped opportunity taken by the agent.

Q: EZ Equipment Corporation leases six forklifts to Fresco Refining Company, but as the forklifts are delivered, they are lost in an explosion. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of a. physical possession. b. product liability. c. risk of loss. d. title.

Q: Which of the following is a fiduciary duty owed by an agent not to act adversely to the interests of the principal? A) duty of loyalty B) duty of undertaking C) duty of discharge D) duty of resolution

Q: What is imputed knowledge? A) information collected by a principal prior to engaging in an agency B) information collected by a principal on an agency C) information learned by an agent that is attributed to the principal D) information learned by a principal that is attributed to an agent

Q: Uri sells 100 cases of vitamins to Wanda, but before she takes physical possession, the cases are lost. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of a. physical possession. b. product liability. c. risk of loss. d. title.

Q: Martin, who wants to sell his house, authorizes his concierge, William, to find a potential buyer and finalize a deal above a stipulated price. William contracts Chris, a real estate broker, and intends him to only find a potential buyer and send him or her over to William for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company, to renovate the house. ReNowait completes its work and Martin pays it. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. In this scenario, what role does Chris perform? A) independent contractor B) agent C) principal D) trustee

Q: Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood. If the contract includes a clause that is perceived as grossly unfair to Walt, its enforcement may be challenged under the doc­trine of a. good faith. b. square dealing. c. the mere image rule. d. unconscionability.

Q: Martin, who wants to sell his house, authorizes his concierge, William, to find a potential buyer and finalize a deal above a stipulated price. William contracts Chris, a real estate broker, and intends him to only find a potential buyer and send him or her over to William for the sale. Martin then contracts ReNowait Goodhouses, a home improvement company, to renovate the house. ReNowait completes its work and Martin pays the company. Chris then searches for a suitable buyer and finds one in George. George buys the house and Chris is paid for his services. In this scenario, what role does ReNowait Goodhouses perform? A) agent B) independent contractor C) principal D) trustee

Q: Tasty Pastries, Inc., and other bakers refer to a "baker's dozen" as con­sisting of a collection of thirteen baked goods. This is an example of a. course of dealing. b. course of performance. c. square dealing. d. usage of trade.

Q: Quinn enters into a series of agreements with Reba involving a sale of a Suite Dreams Motel, including the land, building, furnishings, shares of stock in Suite Dreams Company, and a contract with Trudy to create an ad campaign. Reba suspects that Quinn may be misrepresenting the facts. The UCC Statute of Frauds governs a. the sale of any of the property evidenced by a writing. b. the entire deal, including the marketer's services. c. the sale of the furnishings priced at $500 or more. d. the sale of the land and the building.

Q: Ronald, the purchasing manager of Telly's Supermarket in Georgia, was asked to purchase the latest video game console, FunCase, to be kept in the supermarket. Due to a truckers' strike, Ronald had to personally make the trip to the FunCase warehouse in Florida to pick up the console. Ronald paid for the trip himself, went to the warehouse, procured the console, and returned. After he got back, Telly's Supermarket paid Ronald for the personal expenses he incurred in making the trip to Florida. What duty of the principal did Telly's Supermarket satisfy when it paid Ronald for the trip? A) duty to cooperate B) duty to reimburse C) duty to compensate D) duty to indemnify

Q: What is an implied agency?

Q: VuTech Company agrees to sell digital video equipment to Home & Business Stores, Inc., for Home & Business to market to its customers. Their contract will not be en­forceable unless it includes a. a payment term. b. the price of the goods. c. the quantity of the goods. d. the requirements of Home & Business's customers.

Q: A(n)________ is an agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties.

Q: Metro Daily and New City Newsstand enter into a contract under which Metro agrees to deliver a certain quantity of newspapers to New City each day. The contract does not include a price term. In a suit between the par­ties over the price, a court will a. determine a reasonable price. b. impose the lowest market price. c. refuse to enforce the agreement. d. return the parties to the positions they held before the contract.

Q: A power of attorney where a principal confers powers on an agent to act in specified matters on the principal's behalf is referred to as a(n) ________.

Q: Rikki and Sid enter into a sales contract. With respect to the specific contractual provisions set out in the UCC, Rikki and Sid may a. agree to different terms only to a reasonable extent. b. agree to different terms unless they "get caught." c. agree to whatever terms they wish. d. not agree to different terms.

Q: A(n) ________ is a contract a principal and agent enter into that says the principal cannot employ another agent other than the one stated.

Q: Ratification of a contract is a situation in which a principal accepts an agent's unauthorized contract.

Q: Curtis enters into a contract with Drive-Away Lease Company for a three-year lease of a car. This contract is subject to a. Article 2 of the UCC. b. Article 2A of the UCC. c. Article 11 of the UCC. d. the common law only.

Q: An apparent agency is also known as an agency by estoppel.

Q: Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants a. less strict legal standards. b. special business standards. c. stricter ethical standards. d. the same overall standards.

Q: In a dispute over a sale involving a bicycle, Dain argues that as to this deal Elle's Hobby Shop, where Dain bought the bike, is a merchant. A court may determine whether Elle's is a merchant by assessing whether a. it has sold any bikes within the last year. b. it holds itself out by occupation as having knowledge or skill unique to the bike in the transaction. c. its owner enjoys biking. d. it subscribes to Bike, a biweekly trade magazine.

Q: The agent's actions–not the principal's–create an apparent agency.

Q: Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another consumer. Article 2 of the UCC applies to the sales transactions between a. all of the buyers and sellers. b. Rally and SnoSportz only. c. SnoSportz and Tyra only. d. Tyra and Uli only.

Q: A principal is not bound to a contract made by an apparent agency.

Q: Over the course of a year, Retail Marketers, Inc., sells goods from its inventory and one of its warehouses. In exchange, Retail receives checks and other items that substitute for cash, which Retail uses to repay a loan from Savings Bank. Article 2 of the UCC governs a. the checks. b. the payment of the loan. c. the sale of the buildings. d. the sale of the goods.

Q: An agency by ratification occurs when a principal ratifies an authorized act.