Q&A Hero

Q: An agency coupled with an interest is terminated if: A. the principal revokes agency. B. the principal tenders his obligation. C. the principal loses capacity. D. the agent dies.

Q: An agent's apparent authority ends when: A. the principal revokes authority. B. the third party receives notice of the termination of agency. C. the principal loses capacity or dies. D. the agent's actual authority, both express and implied, ends.

Q: Earl is Hall's agent for a real estate transaction. Which of the following will terminate the agency relationship by act of the parties? A. Earl revokes his agency. B. Hall announces that he is filing for bankruptcy. C. Hall dies, but Earl is not informed. D. Notice of the death of Hall placed in a newspaper.

Q: Which of the following is true of revocation and renunciation? A. Revocation is conducted by the agent and renunciation by the principal. B. Both result in the termination of agency. C. A party cannot revoke or renounce if doing so violates the agency agreement. D. No, because there is no contract in writing.

Q: Andrea hired Jack to be the sales agent for her paintings. However, in a month's time, she terminated the agency with Jack. Harold, a customer who had dealt with Jack earlier, was not aware of the termination. Harold approached Jack to buy a painting and wrote him a check of $5,000, the advance payment for the painting which Jack promised would be delivered in two weeks. When Jack did not contact Harold later, Harold demanded that Andrea honor the contract, since Jack sold the picture as her agent. Which of the following is true of this situation? A. Since Jack had apparent authority, Andrea is liable to honor his contract with Harold. B. Harold's duty was to contact Andrea. His failure to do this removes her liability to honor the contract. C. Jack had express authority as Andrea's agent, which is not terminated with the termination of their agency. D. As Andrea terminated the agency with Jack in violation of his rights, Jack has the direct authority to sell her paintings.

Q: Which of the following is true of termination of agency by operation of law? A. The principal's permanent loss of capacity ends the agency only if the agent is given notice. B. The bankruptcy of the agent automatically terminates the agency relationship. C. Termination by the death of the principal is effective only when the agent has notice of the principal's death. D. The death of an individual agent does not terminate the agency relationship if the principal is not an individual.

Q: Which of the following agreements will result in the formation of an agency coupled with an interest? A. Borrower shall pledge securities to a lender, authorizing the lender to sell the securities and apply the proceeds to the loan in the event of default. B. Employee is hired for a period of two years at $40,000 per annum plus 2% of net sales. C. Broker is to receive a 5% sales commission out of the proceeds of the sale of a parcel of land. D. Attorney is to receive 25% of the plaintiff's recovery for personal injuries.

Q: Termination of the agency relationship at the option of the agent is known as _____. A. revocation B. renunciation C. falsification D. liquidation

Q: Termination of the agency relationship at the option of the principal is known as _____. A. revocation B. renunciation C. falsification D. liquidation

Q: Which of the following terminates an agency relationship through operation of law? A. A specified result has been accomplished. B. There is mutual agreement between principal and agent to terminate the relationship. C. The principal dies. D. The principal revokes the agency.

Q: What is the principal's duty when his agent makes express or implied authorized expenditure while acting on his behalf? A. Duty to compensate B. Duty to take care C. Duty of accounts D. Duty to reimburse

Q: Which of the following is true of a principal's duty of indemnity? A. The principal does not have to indemnify the agent for authorized payments made on the principal's behalf as the payments were undertaken in the course of the agent's work. B. The principal must indemnify the agent for tort damages resulting from authorized conduct that the agent did not believe was tortious. C. The principal is required to indemnify an agent even for losses resulting from the agent's negligence. D. The principal is required to indemnify an agent for losses resulting from unauthorized acts so long as the principal did not benefit from such behavior.

Q: Which of the following is a principal's duty to his agent? A. Duty of confidentiality B. Duty not to receive a material benefit C. Duty of segregation D. Duty to reimburse

Q: Under the theory of agency law, the agent is required to follow whose instructions? A. The principal B. The subagent C. The incorporator D. The organizer

Q: Which of the following would result in the termination of agency by act of the parties? A. The principal suffers a permanent loss of capacity. B. A specified result has been accomplished. C. The agent declares personal bankruptcy. D. The agent loses capacity or dies.

Q: Which of the following is true of the duty of agents to the principal? A. The duty not to use or disclose confidential information terminates after the agency ends. B. When conducting the principal's business, an agent can deal with himself. C. Except for compensation, an agent should not profit from acting on behalf of the principal. D. A gratuitous agent does not have the same fiduciary duty as a paid agent.

Q: Which of the following best represents an agent's duty of segregation? A. The agent not dealing with the principal's property so that it appears to be the agent's. B. The agent should not profit or receive any other benefit from acting on behalf of the principal. C. The agent has a duty to act within her actual authority and to obey the principal's reasonable instructions. D. The agent may not use or communicate confidential information of the principal for the agent's own purpose.

Q: When an agent suffers losses in conducting the principal's business, the principal's obligation is to _____ the agent. A. indemnify B. renounce C. reimburse D. compensate

Q: A principal need not compensate his agent if: A. there was no agreement on the amount of compensation the agent was to receive. B. the agent has committed a breach of a fiduciary duty. C. there is no market price for the agent's services. D. the agent is a special agent.

Q: In agency law the term independent contractor' is referred to as what? A. Nonemployee agent B. Employee C. Incorporator D. Organizer

Q: Which of the following is true of a subagent's duties to a principal? A. A subagent does not owe the agent any of the duties that agents owe their principals. B. A subagent who knows of the original principal's existence also owes that principal all the duties agents owe their principals. C. The agent who appoints the subagent is not liable to the original principal when he/she is harmed by the subagent's conduct. D. A subagent owes the original principal for duties arising solely from the original principal's contract with the agent.

Q: In a situation in which there is a conflict of interest between an agent who is authorized to make a certain transaction for a principal and the principal, the agent is allowed to: A. engage in self-dealing transactions if the principal and the third party are unaware of the transactions. B. compete with the principal regarding the agency business. C. act as agent for both parties to a transaction without disclosing the double role to both principals. D. act as a middleman and serve both parties to a transaction without notifying either principal.

Q: An agent who accepts a bribe to purchase goods for a principal from a seller who is a personal friend breaches his _____ duty by taking the money, since it is the agent's duty to work only for the best interests of the principal. A. fiduciary B. statutory C. indemnity D. gratuitous

Q: Which of the following is true of subagents? A. They must be appointed by the principal, though they report to the agent. B. They are considered to be agents of the agent, but not of the principal himself. C. Subagents do not have the authority to bind a principal, but can bind the agent. D. For a subagency to exist, an agent must have the authority to make the subagent his agent.

Q: Which of the following is true of an agent who has the authority to appoint a subagent? A. An agent becomes a principal with respect to the subagent. B. An agent is able to appoint a subagent without the principal's knowledge. C. An agent has the authority to appoint a subagent when the situation involves a nondelegable duty. D. An agent has the authority to appoint a subagent when the co-agent demands such an appointment.

Q: In the United States agency law is primarily governed by what type of law? A. Federal law B. State law C. International law D. Religious law

Q: Which of the following factors is most likely to distinguish employees from independent contractors? A. Whether or not consideration is given by the principal for the agent's performance B. The principal's right to control the manner and means of the agent's performance C. Whether the agent has authority to bind the principal by his actions D. The agent's personal liability for illegal actions taken on behalf of the principal

Q: Which of the following is most likely to be classed as an independent contractor rather than an employee? A. An assembly line worker B. A lawyer who works as in-house counsel for a corporation C. A franchisee of a fast-food chain D. The president of a corporation

Q: Ahmed hired Shlomo to act as his sales agent in his jewelry store. Ahmed authorized Shlomo actual express authority to sell items of jewelry up to $1,000 without checking with him; however, if the price was over $1,000, Shlomo was to check with Ahmed before making a sale. One day, a customer wanted to buy a necklace for $1,500 and Shlomo sold it to her without first checking with Ahmed. When Ahmed learned of this, he was upset because the price was a mistake; it should have been marked at $3,000. Ahmed wants the customer to return the necklace. Is the customer required to return the necklace in this case? A. Yes, because Shlomo did not have express authority to sell that item. B. Yes, because Shlomo did not have implied authority to sell that item. C. No, because Shlomo did have apparent authority to sell that item. D. No, because Shlomo did have implied authority to sell that item.

Q: Which of the following is true of general agents and special agents? A. General agents have the power to bind the principal by their actions, while special agents do not. B. A general agent is employed to conduct a series of transactions, while a special agent is employed to conduct a small, simple group of transactions. C. Special agents are gratuitous agents, i.e., they are not paid by the principal, while general agents receive consideration for their services. D. General agents can appoint subagents to carry out the principal's tasks, while special agents cannot.

Q: An agent who receives no compensation for his services is known as: A. an independent contractor. B. a special agent. C. a gratuitous agent. D. a servant.

Q: Which of the following is true of apparent authority? A. It arises when an agent falsely claims to be acting under the authority of a principal. B. It requires express authorization, in words or writing, from the principal. C. It arises when the principal leads a third party to believe that an agent is authorized. D. It requires that the agent receive consideration from the principal, i.e., the agent is not a gratuitous agent.

Q: In which of the following cases does apparent authority arise? A. When a principal causes a third party to believe that the agent is authorized to act in a certain way. B. When a principal's manifest consent is communicated directly to the agent. C. When a person falsely represents himself as an agent of a principal to a third party. D. When an agent reasonably believes that the principal wants him to act in a certain way.

Q: Which of the following must exist in order for a person to possess apparent authority? A. The principal's payment of consideration to the agent B. The agent's consent to the agency relationship C. A third party's belief that agency exists D. The principal's written authorization to the agent

Q: _____ refers to a two-party relationship in which one party is authorized to act on behalf of, and under the control of, the other party. A. Bailment B. Agency C. Estoppel D. Abatement

Q: Which of the following is true of a person's capacity to be a principal or agent? A. To be an agent, a person must have the ability to make his won contracts, independent of the principal. B. Any duty that a principal has the capacity to perform can be delegated to an authorized agent. C. A principal must have the capacity to do the acts for which the agent has been retained. D. To be an agent, a person must have the capacity to perform non-delegable obligations for the principal.

Q: Which of the following tasks can an agent perform on behalf of a principal? A. Signing a will B. Making statements under oath C. Voting in public elections D. Making a contract

Q: _____ is actual authority that the principal has manifested to the agent using very specific or detailed language. A. Implied authority B. Primary authority C. Express authority D. Apparent authority

Q: An agency coupled with an interest cannot be terminated by the principal's revocation of the agency.

Q: An agent filing for bankruptcy automatically terminates the agency relationship.

Q: The termination of an agency terminates the agent's express authority, but not his implied authority.

Q: The principal's death automatically terminates an agent's apparent authority.

Q: A principal who instructs an agent to perform an unethical act will have no recourse against an agent who refuses to perform.

Q: The law of Agency generally calls for the principal to indemnify the agent against financial loss while carrying out his/her duties.

Q: Termination of agency by the principal it is known as renunciation and termination by agent it is known as revocation.

Q: The principal's death automatically terminates an existing agency.

Q: The term independent contractor' is defined in the Restatements on Contracts (Third).

Q: If Tom Smith works in the in counsel depart of Supermart Corporation then he will be considered an employee not a nonemployee agent.

Q: A gratuitous agent has the same fiduciary duty as a paid agent.

Q: The agent's duty not to use or disclose confidential information about the principal's business continues after the agency ends.

Q: The legal relations between agent and subagent closely parallel the legal relations between principal and agent. TRUE

Q: A subagent is an agent of an agent.

Q: Authority is an agent's ability to handle the legal issue of a principal.

Q: The agency relationship may be formed even if the parties do not subjectively intend to create it.

Q: A principal is always liable for the acts of his agent.

Q: Joe is the personnel manager for the BFG Corporation. Joe hires employees for BFG. Joe hires Suzy as a management trainee. Suzy is BFG's subagent.

Q: Because they serve for free, gratuitous agents have no authority to bind their principals.

Q: The time period within which a customer must report unauthorized customer signatures to the bank to get his account recredited is: A. fourteen days. B. six months. C. one year. D. three years.

Q: Which of the following is true of check collection? A. Checks and other drafts collected through the banking system usually have two partiesthe drawer and the drawee bank. B. If the payee deposits the check at a bank other than the drawee bank, the latter will take a series of steps necessary to reflect the deposit as a credit to the payee's account. C. If the payee deposits the check at the same bank as the drawee bank, the depositary bank will make the ledger entry showing the deposit as a credit to the payee's account. D. If the drawee and depositary banks are in the same town or county, the depositary bank will indorse the check and deliver it to the drawee bank for payment.

Q: Checks and other drafts collected through the banking system usually have all of the following EXCEPT: A. bank. B. payee. C. drawer. D. employee.

Q: Under the Expedited Funds Availability Act, customers can draw upon checks deposited in their checking account within: A. the second business day following deposit, if the drawee bank is in the same Federal Reserve check-processing region as the depositary bank. B. one week following deposit, if the drawee bank is in a different Federal Reserve check-processing region than the depositary bank. C. three days after the deposit, in the case of checks drawn on the U.S. Treasury. D. five days of deposit in the case of cashier's checks.

Q: Agency is a two-party relationship in which the agent is authorized to act on behalf of the principal.

Q: Prof. Bob DeSlob writes a check on his Big Bank checking account for $1 payable to "Department of Business Law Coffee Club" to pay for his weekly membership and gives it to his colleague Carol. Bob does not place a decimal point after the "1" nor does he complete the line ending in "dollars." Carol, knowing that Bob can well afford it, prints in block letters the words "One Hundred" on the line ending in "dollars." Carol then gives the check to Dot, the Department secretary who is in charge of the Coffee Club. Dot presents the check to Big Bank for payment, and Big Bank charges $100 from Bob's account. Which of the following statements is most accurate? A. Bob's account must be recredited $99. B. Bob's account must be recredited $100. C. Bob contributed to the alteration and may be barred from claiming forgery. D. Bob had a duty to place a stop-payment order on the check.

Q: Tom wrote a check to Mary for $10. Tom was careful and not negligent in the way he wrote the check. Nevertheless, Mary cleverly altered the check to read $1,000. Tom's bank cashed this check and deducted that amount from his account. Which of the following is correct? A. Tom is liable on this check, but only for $10. B. Tom is liable on this check for $1,000. C. Tom is liable on this check for nothing. D. Tom must reimburse the bank for any losses it suffers related to this check.

Q: Jane wrote a check for $10. She wrote this check in a careless and negligent manner, making alteration easy. Ben altered this check to read $1,000. His alteration was crude and obvious to anyone paying attention. Ben cashed the check at Jane's bank. The bank was negligent in accepting this check, but it deducted $1,000 from Jane's account. Jane sued the bank, and the jury determined that Jane's negligence contributes 50 percent to the loss and the bank's negligence contributes 50 percent. How much is Jane entitled to recover from her bank? A. Nothing, because she was negligent. B. Half the loss. C. The entire loss. D. The entire loss plus her court costs.

Q: Which of the following statements is true concerning multiple forgeries and alterations? A. A customer cannot hold the bank responsible for paying, in good faith, any altered checks after he/she receives the statement of account. B. A bank will be held liable for honoring altered checks which were presented to the bank multiple times. C. A customer bears the responsibility for any forgeries and subsequent forgeries that take place, even if he/she has notified the bank. D. A bank will be held liable even if it proves that it suffered a loss due to the customer's failure to examine his/her statement and notify the bank.

Q: Which of the following is true in case of death or incompetence of a customer? A. A bank cannot pay checks of a deceased customer until it has notice of the customer's death. B. If a bank knows of a customer's death, it can pay checks written by the customer prior to his/her death, for a period of 30 days. C. The deceased person's heirs or other persons claiming an interest in the account can order the bank to stop payment. D. A bank can declare checks signed by the customer while he/she was alive, as null and void.

Q: What section of the UCC mandates that a bank signature must appear on a certified check? A. 1-103 B. 3-409 C. 3-223 D. 6-105

Q: Which of the following is most true regarding checks whose amount has been altered? A. The bank may not pay such checks as altered in all cases. B. The bank may pay such checks as altered where the alteration is due to the customer's negligence and the alteration is not obvious. C. The bank must pay such checks as originally drawn. D. The bank cannot ever pay such checks.

Q: In case a check is altered so skillfully that a bank is unable to detect the alteration, which of the following stands true? A. The bank should honor only those checks for which it receives a notice from the drawer. B. The bank is allowed to charge to the account the amount for which the check originally was written. C. The bank will be liable to recredit the drawer's account for negligence. D. The bank will hold the drawer responsible for contributing to the alteration of the check.

Q: A check on which one bank is the drawer and another bank is a drawee is a: A. cashier's check. B. antedated check. C. certified check. D. teller's check.

Q: Which of the following do a certified check and a cashier's check have in common? A. The bank is primarily liable on each. B. The bank is secondarily liable on each. C. Both are drawn by the bank on itself. D. Technically, the bank is not liable to a holder of either kind of check.

Q: Mendel had his car repaired by Harry's Garage (HG). He paid by check drawn on ABZ Bank when he collected his car. On the drive home, Mendel realized that the repair had not been made. He immediately called ABZ on his cell phone and told the bank to stop payment on the check. Three days later, HG negotiated the check to Amy, a holder in due course. When Amy went to cash the check, ABZ Bank refused to honor it. What is Mendel's liability on this check? A. Mendel is not liable to anyone because he stopped the check in time. B. Mendel is liable to Amy because the stop payment order was made through a phone call. C. Mendel is not liable to Amy because she took the check from HG. D. Mendel is liable to Amy because he is the drawer of the check.

Q: In which of the following cases will a drawer and any persons who previously indorsed the check be discharged of their liability on the check? A. By certification of a check. B. By drawing a cashier's check. C. By drawing a teller's check. D. By death or incompetence after signing a check.

Q: A check on which one bank is both the drawer and the drawee is called a: A. certified check. B. cashier's check. C. teller's check. D. uncertified check.

Q: Which of the following is most true about stop-payment orders? A. Their validity is only for 14 days. B. Their validity is only for six months. C. They must give the bank 14 days to act on the order. D. They can be oral or written.

Q: Which of the following defeats a bank's liability for failing to observe a stop-payment order? A. That the order was oral rather than written. B. That the bank was not given 14 days to obey the order. C. That the bank paid a person against whom the customer did not have a defense. D. That the bank has the customer sign a disclaimer holding the bank harmless for its failure to exercise ordinary care and good faith regarding its handling of stop-payment orders.

Q: Shawn purchases a computer from Adelaide Electronics, and writes them a check of $1,000. However, after Shawn brought the computer home, it abruptly stopped working due to a virus attack. Shawn calls his bank ordering a stop-payment on the check. Adelaide Electronics gave the check to Jack Enterprises, their creditor. Shawn's bank honored the check when Jack presented it. Which of the following is true in this case? A. The bank is liable to recredit Shawn's account, since the bank did not follow Shawn's instructions. B. Shawn will be able to show that he sustained losses since the bank honored the check to Jack. C. The bank is not liable to recredit Shawn's account, since Shawn did not send the stop-payment order well in advance. D. Shawn cannot have his account recredited because he will not be able to show that he sustained any loss.

Q: Abyss handed over a $500 check to Howard Brothers for building him a terrace garden. The next day, Abyss notices that one part of the garden has not been finished. He calls his bank to order a stop-payment on the check. When Howard Brothers presents the check next week, the bank honors it. Which of the following is true in this case? A. Since Abyss did not give the bank enough time to process a stop-payment order, the bank is not liable for this loss. B. The bank is liable to recredit Abyss's account, since Abyss has suffered a loss by the bank's payment. C. Abyss will not be able to show that he sustained any losses, hence cannot have his account recredited. D. The bank is not liable for honoring any checks in good faith that are signed by the drawer-depositor.

Q: Edith purchases what is represented to be a new DVD player from Big Al's Electronic Emporium, by giving Al a check for $200 drawn on Big Bank. Edith then discovers that the DVD player is a used model and calls Big Bank to place a stop-payment order on the check. Big Al negotiates the check to John who qualifies as a holder in due course. John presents the check to Big Bank the next day, and Big Bank pays the check. Which of the following statements is most accurate? A. For recourse, Edith would have to pursue Big Al on her misrepresentation claim. B. Edith may use her personal defense of misrepresentation to have her account recredited by Big Bank. C. Edith may pursue both Big Bank and John for the amount taken from her account. D. If Big Bank had refused to pay the check, John would have had no recourse against Edith.