Q&A Hero

Q: In a principal-agent relationship, the parties agree that the principal will act on behalf and instead of the agent in negotiating and transacting business with third persons.

Q: Through agents, a principal can conduct multiple business operations simultaneously.

Q: A principal has the right to control an agent's conduct in matters entrusted to the agent.

Q: Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a Commodities corporate officer, gives Brenda written authority to buy for the firm as many computers and peripheral devices as necessary. The next day, Dennis calls Brenda and tells her to buy only fifty notebook computers and nothing else. Brenda shows the written authority to E-Products, Inc., and enters into a contract with E-Products to buy sixty notebook computers and a selection of printers, scanners, and extra storage media. E-Products ships the order to Commodities. Is Commodities liable to E-Products under the contract? Is Brenda liable? In each case, if so, why? If not, why not?

Q: Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building. Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials. Meanwhile, Principal hires Skye, a certified public accountant, to work in its cost-accounting division as an employee, with no authority to hire or supervise others. Skye asks Theo, an outside experienced accountant, to advise her on certain accounting procedures but fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to solicit orders for its products in a designated territory. Uma obtains an order from Verity Industries, Inc., which is assured the order will be filled soon. But Uma does not follow through with the paperwork and fails to submit the order to Principal. Verity suffers a loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law. Discuss fully whether an agency relationship was created by Principal with Quality Construction, Skye, or Uma.

Q: Treadwell Tire Manufacturing Company employs Uri as an agent. To terminate Uri's authority, Treadwell must notify a. only third parties who are aware of the agency relationship. b. the public generally. c. Uri and any third parties who are aware of the agency relationship. d. Uri only.

Q: Frida hires Gert, a real estate broker, to act as her agent to sell her house. The house burns down before being sold. The agency agreement is likely a. still in force if Frida gives Gert additional consideration. b. still in force if Gert does not tell prospective customers. c. terminated by mutual consent of the parties. d. terminated by operation of law.

Q: Miklos employs Nathalie to handle a list of financial transactions on Miklos's behalf. This power will terminate on a. any transaction causing a loss to Miklos. b. Miklos's death or incapacity. c. Miklos's sixty-fifth birthday. d. Nathalie's handling of one of each stipulated transaction.

Q: Bayou Development Corporation (BDC) hires Gulfview Brokerage Associates to sell the condominiums in a building at BDC's coastal resort. The agency will terminate a. after the condos have been sold. b. if the prices of the condos must be reduced to sell them. c. once BDC obtains insurance to cover the property. d. when BDC pays Gulfview its first commission.

Q: Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she a. crashed into a car at the airport while off duty. b. hit a pedestrian in a parking lot during a "working" lunch. c. ran over an attendant at Quik's gas station while refueling the truck. d. smashed into a store-front while intoxicated on-duty.

Q: Brad is an employee of Custodial Service, Inc. In deciding whether Brad acts within the scope of his employment when he commits a tort against Didi, a court will not consider whether a. Brad was acting within the scope of the agency. b. Brad was acting within the scope of his employment. c. Custodial authorized the act. d. Custodial was personally at fault.

Q: Joli, acting within the scope of her authority for the Cake Bake Shop, contracts with Valley View Berry Farms to buy an assortment of fruit. Cake Bake is liable on the contract, and Joli is not, if Cake Bake is a. a disclosed principal. b. a partially disclosed principal. c. an undisclosed principal. d. an apparent agent.

Q: Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Company. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party, without telling Kup-a-Koffee's seller who that third party is. Iggy is a. a disclosed principal. b. an implied principal. c. an undisclosed principal. d. a partially disclosed principal.

Q: Bud approves on behalf of Codybut without authorizationa contract with Dik to build a new silo. Cody does not ratify the contract. Later, Dik tries to enforce the deal. This attempt will be a. partly successful. b. partly unsuccessful. c. totally successful. d. totally unsuccessful.

Q: Without authorization, Rolf contracts on behalf of Sari to have Tige paint the interior and exterior of Sari's house. Sari ratifies the contract. Later, Sari tries to rescind the part of the contract relating to the exterior. This attempt will be a. partly successful. b. partly unsuccessful. c. totally successful. d. totally unsuccessful.

Q: Based on Nan's conduct, Odel reasonably believes that Poppy has the authority to act on Nan's behalf even though Poppy does not have the actual authority to do so. In this circumstance, Poppy has a. apparent authority. b. express authority. c. implied authority. d. no authority.

Q: Sonia manages a Tasty Pastry store for United Food Company. To manage the business, Sonia's authority can be implied by a. an inference from the position Sonia occupies. b. any inference a reasonable customer or supplier would make. c. any inference Sonia chooses to make. d. no inference.

Q: Geoff serves in a representative capacity for Huck. To accomplish the objectives of this relationship, Geoff's authority can be implied a. by contradiction. b. by custom. c. by lack of reason. d. under no circumstances.

Q: Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and duties of both parties. This is a. apparent authority. b. equal authority. c. express authority. d. implied authority.

Q: Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal's duty of a. avoidance. b. cooperation. c. indemnification. d. reimbursement.

Q: Rangle contracts with Siena to buy a certain horse for her. Rangle makes a deal with Timberline Stables, the owner of the horse, and makes a down payment. Siena fails to pay the rest of the price. Timberline sues Rangle for breach of contract. His right to hold Siena liable for any damages that he has to pay is the right of a. avoidance. b. cooperation. c. indemnification. d. reimbursement.

Q: Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's a. duty of performance. b. duty of loyalty. c. duty of compensation. d. duty of reimbursement.

Q: Will is an agent for MaryElise. MaryElise gives Will clear instructions to only enter into contracts on Mondays, Wednesdays, or Fridays. Will enters into a contract on MaryElise's behalf on Tuesday. Will has breached a. the duty of performance. b. the duty of loyalty. c. no duty. d. the duty of obedience.

Q: Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, "Buy your carpet here, and I"ll install it for half of what the store would charge." Dita buys the carpet, which Bob installs for half the store's price. Bob keeps the money. Bob has breached a. no duty. b. the duty of loyalty. c. the duty of notification. d. the duty of obedience.

Q: Mackenzie, an agent for Lindsay, signs an agreement with Kirk on Lindsay's behalf but neglects to tell her that the agreement requires the payment of a certain tax. The government prosecutes Lindsay for failing to pay the tax. She is a. liable, because notice to Mackenzie is notice to Lindsay. b. liable, because notice to Kirk is notice to Lindsay. c. not liable, because Mackenzie did not tell Lindsay about the tax. d. not liable, because Kirk did not tell Lindsay about the tax.

Q: Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must a. achieve nothing because the agreement says nothing on the issue. b. attain the level that Rita achieved with her previous employer. c. maintain the level Superior attained before Rita became an agent. d. use reasonable diligence and skill in selling.

Q: Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached a. the duty of performance. b. the duty of loyalty. c. no duty. d. the duty of notification.

Q: Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to affirm the contract. This is a. an agency by agreement. b. an agency by estoppel. c. an agency by ratification. d. not the creation of an agency relationship.

Q: Carol is married to Andy. Carol buys food for their children's lunches and charges the cost to Andy's account. This is a. an agency by operation of law. b. an agency by estoppel. c. an agency by ratification. d. not the creation of an agency relationship.

Q: Gayla asks Jessie to contract with Jessie's high school classmates to babysit for Gayla's new baby. Jessie orally agrees to do so. This is a. an agency by agreement. b. an agency by estoppel. c. an agency by ratification. d. not the creation of an agency relationship.

Q: Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act. They set out the terms in a written document, which they both sign. This is a. an agency by agreement. b. an agency by estoppel. c. an agency by ratification. d. not the creation of an agency relationship.

Q: Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between a. a business and its competitors. b. a government and its governed. c. a parent and a child. d. a principal and an agent.

Q: George and James create an agency relationship to facilitate the sale of illegal narcotics. This agency relationship a. is illegal. b. is legal. c. will be recognized by some states, but not others. d. can exist, but will be subject to sanctions for illegal activity.

Q: Delite Candy Company hires Elton to sell Delite's products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite's employee is a. the amount of Elton's salary. b. the control Delite has over the details of the work. c. the length of the trial period. d. the title that designates Elton's position.

Q: Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is a. an agent. b. an employee. c. an independent contractor. d. a principal.

Q: Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely a. an agent. b. an independent contractor. c. a principal. d. a work for hire.

Q: Clara is a salesperson in The Corner Store. When Carla makes a sale to Jenny, the sale is a. binding on The Corner Store. b. binding on Carla. c. binding on The Corner Store only if the owner of The Corner Store is present when the sale is made. d. not binding on anyone.

Q: KupaJava hires Lola to manage one of KupaJava's seven drive-through coffee stands. KupaJava agrees to pay Lola a salary, plus commission. KupaJava stipulates the standards that should be observed, the goals that should be attained, and the methods that should be used. Lola is most likely KupaJava's a. employee. b. independent contractor. c. principal. d. power of attorney.

Q: Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber. In this relationship, Jackson Lumber is the a. employee. b. independent contractor. c. principal. d. agent.

Q: Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is a. an agent and has the authority. b. an agent but does not have the authority. c. not an agent and does not have the authority. d. not an agent but does have the authority.

Q: When an agency relationship is terminated, the principal has a duty to personally notify third parties who knew of its existence.

Q: An agency can terminate once its purpose is achieved.

Q: A principal is responsible for all intentional torts committed by an agent.

Q: Under the doctrine of respondeat superior, an agent is liable for the principal's negligence.

Q: A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.

Q: Savory Cooking Sauces, Inc., a U.S. business firm, makes and sells distinctively flavored cooking sauces. Although the recipes are secret, the ingredients could be revealed and the sauces could be reconstructed with diligent efforts. What can Savory do to prevent its products from being "decoded" and pirated abroad?

Q: The management of Sport Shoes Corporation, a U.S. firm, wants to expand into foreign investment and employment markets. They are considering either opening their own production facility in a foreign country or entering into a licensing agreement with a foreign firm. What are the advantages and disadvantages of each of these courses of action?

Q: Miranda is a U.S. citizen working in Europe for Tourist Vacations, Inc., a U.S. travel agency. Tourist fires Miranda for reasons that she believes violate U.S. antidiscrimination laws. Those laws apply a. extraterritorially. b. only to signatories of the North American Free Trade Agreement. c. only to members of the World Trade Organization. d. only within U.S. borders.

Q: Real World Sports Corporation (RWSC) is a U.S. firm with a workplace in Switzerland. Generally, RWSC must abide by U.S. anti-discrimination laws in Switzerland a. under any circumstances. b. under no circumstances. c. unless to do so would contravene the cultural norms of Switzerland. d. unless to do so would violate the law of Switzerland.

Q: Sam, or any U.S. citizen, can bring a civil suit in a U.S. court against a foreign entity for a. a tort allegedly committed in the United States only. b. a tort allegedly committed in the United States or overseas. c. a tort allegedly committed overseas only. d. no purpose.

Q: Qang and other foreign citizens allege human rights violations committed overseas by the government of Burma on behalf of Railway Construction Company, a U.S. firm. To seek redress for their injuries in a U.S. court, these citizens can a. allege antitrust injuries under the Sherman Act. b. bring civil suits under the Alien Tort Claims Act. c. file criminal complaints under Title VII of the Civil Rights Act. d. do nothing.

Q: Bango! Business, Inc., a U.S. firm, may have committed, in Chile, acts that would constitute, in the United States, violations of U.S. antitrust laws. These laws apply a. extraterritorially. b. only to signatories of the North American Free Trade Agreement. c. only to members of the World Trade Organization. d. only within U.S. borders.

Q: Two Japanese firmsMikato, Ltd., and Shuzushi, Ltd.enter into a joint venture in an attempt to increase their market share of the U.S. auto market. If the joint venture is not a per se violation of U.S. antitrust laws, a U.S. court could exercise jurisdiction over the firms a. if the joint venture has a substantial effect on U.S. commerce. b. if the joint venture has any effect on U.S. commerce. c. if the joint venture was entered into in the United States. d. under no circumstances.

Q: Bulbous Cordials, Inc., a U.S. firm, enters into an agreement with Columbiana Cacao, S.A., a South American firm, to fix the price of dark chocolate in the U.S. market. If the agreement is a per se violation of U.S. antitrust laws, a U.S. court could exercise jurisdiction over a. Bulbous Cordials and Columbiana Cacao. b. Bulbous Cordials only. c. Columbiana Cacao only. d. neither Bulbous Cordials nor Columbiana Cacao.

Q: Suisse Internationale, a Swiss maker of athletic equipment, enters into a price fixing agreement with Total World Sports, a U.S. wholesaler of Suisse's products. U.S. courts will apply U.S. antitrust laws if a. the agreement was made in Switzerland. b. the agreement was made in the United States. c. the price fixing has a substantial effect on U.S. commerce. d. the Swiss government agrees to be sued in the United States.

Q: Quality Energy Company, a U.S. firm, and Royal Petro, a Dutch firm, enter into a contract that includes an arbitration clause. This clause must provide that the arbitrator will be a. any specified third party. b. the American Arbitration Association. c. the Dutch Arbitration Organization. d. the International Chamber of Commerce.

Q: Telfonix Corporation, a U.S. firm, and Adex, Inc., a British firm, are parties to a contract with a forum-selection clause. The forum specified in the clause a. must be within the geographic boundaries of the United States. b. must be within the geographic boundaries of Britain. c. need not be within the geographic boundaries of either party. d. must be within the geographic boundaries of either the United States or Britain.

Q: Wytex, Inc., a U.S. firm, and Findora Commercial, a Nigerian firm, are parties to a contract that specifies that the official language of the contract is English. This is a. a choice-of-forum clause. b. a choice-of-language clause. c. a choice-of-law clause. d. an arbitration clause.

Q: To obtain a contract with the Chinese government, Bammo Engineering Corporation, a U.S. firm, gives a Chinese official a sport utility vehicle. This may violate a. the act of state doctrine. b. the doctrine of sovereign immunity. c. the Foreign Corrupt Practices Act. d. the principle of comity.

Q: The government of Japan sets a limit on the amount of rice that can be imported from the United States. This is a. a dumping duty. b. an antidumping duty. c. a quota. d. a tariff.

Q: The United States taxes each barrel of imported oil at a flat rate. This is a. an antidumping duty. b. a dumping duty. c. a quota. d. a tariff.

Q: The United States and other members of a certain organization agree to grant normal trade relations status to each other with regard to imports and exports. This organization is a. the Convention on Contracts for the International Sale of Goods. b. the International Export-Import Bank. c. the United Nations. d. the World Trade Organization.

Q: Vieux Carr S.A., a French firm, imports its goods into the United States and offers those goods for sale at "less than fair value." "Fair value" is the price of a. comparable goods in a select "basket" of other countries. b. Vieux Carr's goods in France. c. Vieux Carr's goods in the United States. d. Vieux Carr's goods on the world market.

Q: Senator Brown and other politicians want to restrict the flow of technologically advanced products and data from the United States to other countries. To restrict or encourage exports, Congress can a. do nothing. b. assess antidumping duties. c. impose export taxes. d. set export quotas.

Q: Secure Investments, Inc., a U.S. firm, expands into international markets through a joint venture. In this situation, Secure owns a. all of the operation, and its profits and liabilities. b. all of the operation, and none of its profits and liabilities. c. none of the operation, and none of its profits and liabilities. d. part of the operation, and shares its profits and liabilities.

Q: The U.S. corporation Fun Toys, Inc. sets up a firm in China. The parent company remains in the United States and retains complete ownership of the China branch as well as complete authority and control over all phases of the operation. This is a. a franchise. b. a wholly owned subsidiary. c. a joint venture. d. direct exporting.

Q: KO Marketing Company, a U.S. firm, signs a contract with Librador Corporacion, a Chilean firm, to give Librador the right to use Innovative's animation techniques and characters in product promotions. This is a. a distribution agreement. b. a joint venture. c. direct exporting. d. licensing.

Q: Optima Medico Corporation, a U.S. firm, signs a contract with Pharma Beneficial, Ltd., a Canadian firm, to give Pharma the right to sell Optima's products in Canada. This is a. a distribution agreement. b. a joint venture. c. direct exporting. d. licensing.

Q: WiFi Corporation, a U.S. firm, signs a contract with Bueno Computadores, Ltd., an Argentinean firm, for a shipment and payment for WiFi's goods. This is a. a distribution agreement. b. a joint venture. c. direct exporting. d. licensing.

Q: Wrugged Woolens, Inc., a U.S. corporation, sets up a specialized marketing organization in Scotland by appointing a foreign agent. This is called a. direct exporting. b. indirect exporting. c. a joint venture. d. piracy.

Q: In some cases, foreign states are not immune from the jurisdiction of U.S. courts. These circumstances are governed by the a. Uniform Commercial Code. b. Foreign Sovereign Immunities Act. c. European Union. d. North American Free Trade Agreement.

Q: Metallic Metals, Inc., a U.S. firm, files a suit against a Venezuela government agency. The agency has committed a tort in the United States. Under the Foreign Sovereign Immunities Act a. the Venezuelan government agency is not immune from the jurisdiction of the U.S. courts. b. the Venezuelan government agency is immune from the jurisdiction of the U.S. courts. c. Metallic Metals cannot bring a suit against the Venezuelan agency. d. Metallic Metals must file suit in Venezuela.

Q: Soleful Shoes, Inc. owns property in Somalia. The Somalian government seizes the property. In order for the seizure to be considered an expropriation and not a confiscation, the Somalian government must a. pay just compensation to Soleful Shoes. b. give Soleful Shoes at least thirty days notice of the seizure. c. give Soleful Shoes at least ninety days notice of the seizure. d. notify the U.S. government before the seizure.

Q: U.S. Cars, a U.S. firm, owns property in Argentina. The government of Argentina seizes the property. U.S. Cars claims that this is confiscation. The government of Argentina claims that it is expropriation. The burden of proof lies with a. the U.S. government. b. the government of Argentina. c. U.S. Cars. d. the U.S. Supreme Court.

Q: UniOil, a U.S. firm, owns property in Venezuela. When the government of Venezuela seizes the property, UniOil asks a U.S. court to order the property's return. The court rules that Venezuela is exempt from the court's jurisdiction. This is a. a travesty of justice. b. the act of state doctrine. c. the doctrine of sovereign immunity. d. the principle of comity.

Q: Call Center Corporation, a U.S. firm, owns property in India. The government of India seizes the property for a proper public purpose and pays Call Center just compensation. This is a. confiscation. b. defalcation. c. dumping. d. expropriation.

Q: Sudan seizes the assets of Triage Medical, Inc., a U.S. firm. Triage's recovery from Sudan in a U.S. court may be prevented by a. the act of state doctrine. b. the doctrine of sovereign immunity. c. the Foreign Corrupt Practices Act. d. the principle of comity.

Q: Mountain Mining Company, a U.S. firm, owns property in Bolivia. The government of Bolivia seizes the property for an illegal purpose without paying just compensation. This is a. confiscation. b. defalcation. c. dumping. d. expropriation.

Q: Premier Clothing, Inc., a U.S. firm, obtains a judgment in a U.S. court against Quang Tri, Ltd., a Vietnamese business. Whether the court's judgment will be enforced by a court in Vietnam depends on the Vietnamese court's application of a. the act of state doctrine. b. the doctrine of sovereign immunity. c. the principle of comity. d. the World Trade Organization.

Q: The basis for India to give effect to the laws and court decisions of the United States is primarily a. courtesy and respect. b. fear and intimidation. c. admiration and envy. d. payments of cash and exchanges of property.