Multiple Choice
1. An employment of an agent for the purpose of representation in establishing relations between a principal and third
parties is known as a(n):
a. third party relationship
b. principal relationship
c. agency relationship
d. real relationship
e. representative relationship
2. An employment of an agent for the purpose of representation in establishing relations between a principal and third
parties is known as a:
a. third party relationship
b. principal relationship
c. representative relationship
d. real relationship
e. none of the other choices are correct
3. Through an agency relationship, the agent becomes a representative of the:
a. third party
b. principal
c. customer or supplier of the principal
d. shareholder
e. all of the other choices
4. Through an agency relationship, the agent becomes a representative of the:
a. third party
b. customer or supplier of the principal
c. shareholder
d. all of the other choices
e. none of the other choices
5. An agency relationship normally involves the use of an agent to represent a principal in dealing with which of the
following:
a. shareholders
b. representatives
c. third parties
d. attorneys
e. ratifications
6. An agency is created when an agent agrees to act for, or in place of, the:
a. third party
b. principal
c. shareholder
d. attorney
e. representative
7. An agency is created when an agent agrees to act for, or in place of, the:
a. third party
b. representative
c. shareholder
d. attorney
e. none of the other choices are correct
8. In an agency the principal:
a. provides the agent with authority
b. provides the agent with legal support
c. does not provide the agent with authority
d. is given authority by the agent
e. none of the other choices are correct
9. Which of the following is an advantage to having the ability to use agents:
a. access to the expertise of agents
b. reduced tax burden
c. exemption from income tax
d. creation of many small companies within one larger company
e. easier organization of a company
10. Which of the following is an advantage to having the ability to use agents:
a. expanded business opportunities
b. reduced tax burden
c. exemption from income tax
d. creation of many small companies within one larger company
e. easier organization of a company
11. Which of the following is an advantage to having the ability to use agents:
a. easier organization of a company
b. reduced tax burden
c. exemption from income tax
d. creation of many small companies within one larger company
e. none of the other choices are correct
12. In which of the following situations can an agency relationship be created?
a. X hires Y to buy some property on X’s behalf
b. X makes an oral agreement that Y will work for X’s company as the company‘s general manager
c. X and Y enter into a written agreement that Y will work for X as the general manager of X’s company
d. X hires Y to buy some property on X’s behalf and X makes an oral agreement that Y will work for X’s
company as the company’s general manager
e. X hires Y to buy some property on X’s behalf and X makes an oral agreement that Y will work for X’s
company as the company’s general manager and X and Y enter into a written agreement that Y will work
for X as the general manager of X’s company
13. An agent’s is the power to change the principal’s legal obligations.
a. legal right
b. official power
c. authority
d. responsibility
e. authorization
14. An agent’s is the power to change the principal’s legal obligations.
a. legal right
b. official power
c. authorization
d. responsibility
e. none of the other choices are correct
15. Which of the following is not a category of agents covered in the text:
a. gratuitous agent
b. special agent
c. foreign agent
d. general agent
e. universal agent
16. Which of the following is not a category of agents covered in the text:
a. gratuitous agent
b. special agent
c. universal agent
d. general agent
e. all of the other choices are covered
17. Someone designated to do all acts that can be legally granted to an agent is called a(n):
a. special agent
b. universal agent
c. general agent
d. subagent
e. gratuitous agent
18. Someone designated to do all acts that can be legally granted to an agent is called a:
a. special agent
b. gratuitous agent
c. general agent
d. subagent
e. none of the other choices are correct
19. To carry out their duties, universal agents are typically granted:
a. powers to act by estoppel
b. a general power of attorney
c. authority to cancel contracts anticipatorily
d. all of the other specific choices
e. none of the other choices
20. A person designated by a principal to do all acts that can be legally delegated to an agent is a:
a. universal agent
b. special agent
c. gratuitous agent
d. general agent
e. none of the other choices
21. A person designated by a principal to do all acts that can be legally delegated to an agent is a:
a. personal subagent
b. special agent
c. gratuitous agent
d. general agent
e. none of the other choices
22. A person authorized to execute all regular transactions connected with a business is called a:
a. universal agent
b. special agent
c. gratuitous agent
d. general agent
e. none of the other choices
23. A person authorized to execute all regular transactions connected with a business is called a:
a. universal agent
b. special agent
c. gratuitous agent
d. subagent
e. none of the other choices
24. A manager who runs all aspects of a hotel is most likely what kind of agent:
a. universal agent
b. special agent
c. gratuitous agent
d. general agent
e. none of the other choices
25. A manager who runs all aspects of a hotel is most likely what kind of agent:
a. universal agent
b. special agent
c. gratuitous agent
d. subagent
e. none of the other choices
26. An agency coupled with an interest is created:
a. when the principal provides the agent with a general power-of-attorney
b. by an agent who has paid for the right to exercise authority with regard to a business
c. when a person volunteers her services out of interest in the business
d. when the agent is authorized to delegate any authority to an interested party
e. none of the other choices
27. An agency coupled with an interest is created:
a. when the principal provides the agent with a general power-of-attorney
b. when an agent is hired to work for another agent
c. when a person volunteers her services out of interest in the business
d. when the agent is authorized to delegate any authority to an interested party
e. none of the other choices
28. When an agent pays for the right to have authority for a business, a(n) is created.
a. agency with coupled with an interest
b. agency with permission
c. agency with rights
d. general agency
e. shared agency
29. When an agent pays for the right to have authority for a business, a(n) is created.
a. shared agency
b. agency with permission
c. agency with rights
d. general agency
e. none of the other choices are correct
30. An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):
a. universal agent
b. gratuitous agent
c. agent who has an agency coupled with an interest
d. special agent
e. none of the other choices
31. An agent with authority to represent the principal only for a specific transaction, usually for a limited time is a(n):
a. universal agent
b. gratuitous agent
c. agent who has an agency coupled with an interest
d. one–time agent
e. none of the other choices
32. You hire an agent to sell your house for you. Typically, such an agent receives a fee only if they actually sell the
house. This person is most likely:
a. a universal agent
b. a gratuitous agent
c. an agent who has an agency coupled with an interest
d. a special agent
e. none of the other choices
33. You hire an agent to sell your house for you. Typically, such an agent receives a fee only if they actually sell the
house. This person is most likely:
a. a universal agent
b. a gratuitous agent
c. an agent who has an agency coupled with an interest
d. a general agent
e. none of the other choices
34. A person who volunteers with no expectation of being paid for her services is a(n):
a. exceptional agent
b. gratuitous agent
c. agent who has an agency coupled with an interest
d. one–time agent
e. none of the other choices
35. A person who volunteers with no expectation of being paid for her services is a(n):
a. exceptional agent
b. universal agent
c. agent who has an agency coupled with an interest
d. special agent
e. none of the other choices
36. Carla agrees to try to sell Frank‘s prize dog Spike for him. Carla does this as a favor to Frank because she knows
many professional dog breeders. Carla may be best described as:
a. a universal agent
b. a gratuitous agent
c. an agent who has an agency coupled with an interest
d. a special agent
e. none of the other choices
37. Carla agrees to try to sell Frank‘s prize dog Spike for him. Carla does this as a favor to Frank because she knows
many professional dog breeders. Carla may be best described as:
a. a universal agent
b. a subagent
c. an agent who has an agency coupled with an interest
d. a special agent
e. none of the other choices
38. Persons appointed by an agent delegated some authority are known as:
a. minor agents
b. pseudo-agents
c. subagents
d. delegated agents
e. none of the other choices
39. Persons appointed by an agent delegated some authority are known as:
a. minor agents
b. pseudo-agents c.
principal agents d.
delegated agents
e. none of the other choices
40. Subagents work for the agent and owe duties to:
a. only the agent
b. only the principal
c. both the agent and the principal
d. no one
e. none of the other choices are correct
41. To establish an agency relationship:
a. the procedure in state statutes must be followed
b. there must be a written contract between the parties
c. the principal must file an agency charter with the appropriate state agency
d. all of the other specific choices
e. none of the other choices
42. To establish an agency relationship:
a. the procedure in state statutes must be followed
b. there must be a written contract between the parties
c. the principal and agent must agree to form an agency
d. all of the other specific choices
e. none of the other choices
43. An agency may be established by:
a. operation of the law
b. means of the doctrine of estoppel
c. ratification
d. written agreement
e. any of the other choices
44. An agency may be established by:
a. operation of law
b. oral agreement of the parties
c. written agreement of the parties
d. operation of law or by oral agreement of the parties
e. operation of law or by oral agreement of the parties or by written agreement of the parties
45. Agreement of the parties, ratification of the agent‘s activities by the principal, application of the doctrine of estoppel
and operation of law are all:
a. ways that an agency may be established
b. ways that an agency may be sued
c. unacceptable ways to begin an agency
d. informal and thus non-binding ways of establishing an agency
e. none of the other choices are correct
46. Many states require agencies that will exist for to be established in writing.
a. more than one year
b. less than one year
c. less than five years
d. more than six months
e. none of the other choices are correct
47. Many states require agencies for to be established in writing.
a. sale of boats
b. sale of businesses
c. sale of land
d. sale of livestock
e. sale of books
48. Many states require agencies for to be established in writing.
a. sale of boats
b. sale of businesses
c. sale of books
d. sale of livestock
e. none of the other choices are correct
49. A legal document that establishes some agency relationships is known as:
a. articles of incorporation
b. power of attorney
c. partnership agreement
d. decree of guardianship
e. motion to represent
50. A legal document that establishes some agency relationships is known as:
a. articles of incorporation
b. motion to represent
c. partnership agreement
d. decree of business guardianship
e. none of the other choices
51. Power of attorney:
a. is a document that applies only to attorneys in certain capacities
b. refers to a category of agents
c. is a document that creates an agency
d. exists whenever a person has the right to execute a transaction for another
e. exists whenever an attorney has the right to execute transactions for a client
52. Power of attorney:
a. is a document that applies only to attorneys in certain capacities
b. exists whenever an attorney has the right to execute transactions for a client
c. exists whenever a person has the right to execute a transaction for another
d. is a document that applies only to attorneys in certain capacities and exists whenever an attorney has the
right to execute transactions for a client
e. none of the other choices
53. The legal document that authorizes a person or a company to act as an agent for a principal is called:
a. power of law
b. power of agency
c. power of attorney
d. power of plaintiff
e. power of principal
54. The legal document that authorizes a person or a company to act as an agent for a principal is called:
a. power of law
b. power of agency
c. power of principal
d. power of plaintiff
e. none of the other choices are correct
55. For an agency to be valid in most states:
a. there must be written evidence of its creation
b. the agency must be registered
c. the agent must be subject to the principal‘s control
d. there must be written evidence of its creation and the agent must be subject to the principal’s control
e. the agent must be subject to the principal’s control and the agency must be registered
56. In most states, which agencies must be in writing:
a. all agencies must be in writing
b. only powers of attorney
c. those that are for the sale of land
d. those granting the agent power to enter into contracts
e. none of the other choices need be
57. A principal‘s ratification is:
a. an agent‘s acceptance of responsibility from the principal
b. the principal’s acceptance of responsibility for an agent’s activities
c. the principal’s rejection of responsibility for an agent’s activities
d. the principal’s acceptance of property from an agent
e. an agent‘s acceptance of property from the principal
58. When a principal accepts the consequences of the activities of a person who had previously not been the principal’s
agent, the principal:
a. ratifies the agency
b. reissues the agency
c. delimits the agency
d. cancels the agency
e. exposes the agency
59. When a principal accepts the consequences of the activities of a person who had previously not been the principal’s
agent, the principal:
a. exposes the agency
b. reissues the agency
c. delimits the agency
d. cancels the agency
e. none of the other choices