Question 1

Bankruptcy of either the principal or agent always terminates the agency relationship.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true regarding liability of an agent acting within his or her authority on a contract involving an undisclosed principal?

Accepted Answer

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.F) B) and C)
G) A) and B)

Question 3

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?

Accepted Answer

A)   Specific performance
B)   Specific recoupment
C)   Adequate performance
D)   Reformation
E)   None of theseF) A) and B)
G) A) and C)

Question 4

Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

Accepted Answer

A)   A general power of attorney
B)   A specific power of attorney
C)   A localized power of attorney
D)   A broad power of attorney
E)   A recognized power or attorneyF) C) and D)
G) B) and E)

Question 5

Which of the following typically exists when an employer hires an employee to enter into contracts on behalf of the employer?

Accepted Answer

A)   Principal-agent relationship
B)   Employer-agent relationship
C)   Employer-independent contractor relationship
D)   Avowed relationship
E)   Acknowledged relationshipF) A) and D)
G) A) and E)

Question 6

Which of the following types of agency occurs when a principal leads a third party to believe another individual serves as his or her agent; but, the principal has actually made no agreement with the so-called agent?

Accepted Answer

A)   Expressed agency
B)   Implied agency
C)   Apparent agency
D)   Ratification
E)   EndorsementF) A) and E)
G) B) and E)

Question 7

If an agent breaches duties owed to the principal, the principal can sue the agent; and the principal may be entitled to a variety of contract and tort remedies beyond those stated in the contract between the principal and agent.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the most common form of agency?

Accepted Answer

A)   Expressed agency
B)   Implied agency
C)   Apparent agency
D)   Ratification
E)   EndorsementF) D) and E)
G) A) and B)

Question 9

If a principal agrees to hire no other agent for a period of time or until a particular job is done, the principal and agent have entered into a[n] ______________ agency contract.

Accepted Answer

A)   Limited
B)   Specific
C)   Exact
D)   Identified
E)   ExclusiveF) B) and C)
G) None of the above

Question 10

Which of the following is generally defined as a relationship between a principal and an agent?

Accepted Answer

A)   Agency
B)   Principality
C)   Combination
D)   Employment
E)   AuthorizationF) C) and D)
G) A) and B)

Question 11

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?

Accepted Answer

A)   Duty of action
B)   Duty of contract
C)   Express duty of action
D)   Duty of performance
E)   Duty of obedienceF) C) and E)
G) A) and B)

Question 12

The question of whether a worker is an employee or an independent contractor has important implications in which of the following areas?

Accepted Answer

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 statutesF) A) and B)
G) B) and E)

Question 13

In order to properly provide notice of the termination of an agency relationship, actual notice of agency termination must be given to third parties who have had business interactions with the agent.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is false regarding a principal's duties to an agent?

Accepted Answer

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.F) B) and E)
G) B) and D)

Question 15

The doctrine of ______________ is used in the context of the principal/employer-agent/employee relationship.

Accepted Answer

A)   Superior respondeat
B)   Respondeat superior
C)   Stare decisis
D)   Res superior
E)   Supre superiorF) B) and D)
G) All of the above

Question 16

A durable power of attorney is legally binding after the principal becomes incapacitated.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the term for 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?

Accepted Answer

A)   The equal dignity rule
B)   The required writing rule
C)   The statute of frauds rule
D)   The matching rule
E)   None of these because there is no such ruleF) B) and E)
G) A) and B)

Question 18

What does the Latin phrase respondeat superior mean?

Accepted Answer

A)   Let the superior speak
B)   Let the agent speak
C)   Let the employee speak
D)   Let all speak
E)   Let all be responsibleF) D) and E)
G) A) and B)

Question 19

Which of the following was the result on appeal in Iglesia Cristiana La Casa Del Senor, Inc., Etc. v. L.M., the case in the text involving the issue of whether a church was liable based on the principle of respondeat superior for a sexual assault allegedly committed by a church pastor?

Accepted Answer

A)   That the church was liable to the plaintiff based upon principles of respondeat superior.
B)   That the church was liable based on principles of respondeat superior only if it could be proven that the pastor sexually assaulted more than one person.
C)   That the church was liable based on respondeat superior only if it could be proven that the church had knowledge of at least one sexual assault prior to the plaintiff's but failed to remove the pastor from church assignments.
D)   That the church was not liable based upon principles of respondeat superior.
E)   That the church was not liable based upon principles of respondeat superior only because the pastor was immediately fired when his actions came to light.F) B) and D)
G) B) and E)

Question 20

Which of the following is a person who has a duty to act primarily for another person's benefit?

Accepted Answer

A)   Principal
B)   Employer
C)   Fiduciary
D)   Trustor
E)   BenefitorF) B) and C)
G) B) and E)

Exam 19: Secured Transactions and Bankruptcy

Which of the following is the term for 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?

Correct AnswerverifiedShow Answer

Which of the following is true regarding liability of an agent acting within his or her authority on a contract involving an undisclosed principal?

Correct AnswerverifiedShow Answer

The doctrine of ______________ is used in the context of the principal/employer-agent/employee relationship.

Correct AnswerverifiedShow Answer

Under which of the following does a principal give authority to an agent only for the specific areas or purposes listed in the agency agreement?

Correct AnswerverifiedShow Answer

Bankruptcy of either the principal or agent always terminates the agency relationship.

Correct AnswerverifiedShow Answer

The question of whether a worker is an employee or an independent contractor has important implications in which of the following areas?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following is generally defined as a relationship between a principal and an agent?

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in Iglesia Cristiana La Casa Del Senor, Inc., Etc. v. L.M., the case in the text involving the issue of whether a church was liable based on the principle of respondeat superior for a sexual assault allegedly committed by a church pastor?

Correct AnswerverifiedShow Answer

Which of the following types of agency occurs when a principal leads a third party to believe another individual serves as his or her agent; but, the principal has actually made no agreement with the so-called agent?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

In order to properly provide notice of the termination of an agency relationship, actual notice of agency termination must be given to third parties who have had business interactions with the agent.

Correct AnswerverifiedShow Answer

If an agent breaches duties owed to the principal, the principal can sue the agent; and the principal may be entitled to a variety of contract and tort remedies beyond those stated in the contract between the principal and agent.

Correct AnswerverifiedShow Answer

A durable power of attorney is legally binding after the principal becomes incapacitated.

Correct AnswerverifiedShow Answer

What does the Latin phrase respondeat superior mean?

Correct AnswerverifiedShow Answer

Which of the following is false regarding a principal's duties to an agent?

Correct AnswerverifiedShow Answer

Which of the following is a person who has a duty to act primarily for another person's benefit?

Correct AnswerverifiedShow Answer

Which of the following is the most common form of agency?

Correct AnswerverifiedShow Answer

Which of the following typically exists when an employer hires an employee to enter into contracts on behalf of the employer?

Correct AnswerverifiedShow Answer

If a principal agrees to hire no other agent for a period of time or until a particular job is done, the principal and agent have entered into a[n] ______________ agency contract.

Correct AnswerverifiedShow Answer

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