1. The presence of a master–servant relationship determines whether or not a principal must pay wage taxes and
withhold income taxes.
a. True
b. False
2. In a master/servant relationship, the principal exercises little control over the agent.
a. True
b. False
3. An independent contractor is not controlled directly by the principal.
a. True
b. False
a. True
b. False
4. The Restatement of Agency has been adopted in all states.
a. True
b. False
5. Express authority must be in writing.
a. True
b. False
6. An agency contract must be evidenced by a record to be valid.
a. True
b. False
7. An agency at will is a relationship in which there is no definite ending date.
a. True
b. False
8. Personnel manuals have been held to constitute an employee contract.
a. True
b. False
9. The public policy exception to employment at will does not afford protection for whistle-blowers.
a. True
b. False
10. In an agency relationship, both the principal and agent must have legal capacity.
a. True
b. False
11. An unincorporated association is a group that acts as an entity but has no legal existence.
a. True
b. False
12. Implied authority is the extension of express authority by custom.
a. True
b. False
13. The ability of a clerk in a store to accept payment for goods is an example of implied authority.
a. True
b. False
14. Apparent authority and agency by estoppel are the same thing.
a. True
b. False
15. A principal cannot ratify an act of an agent retroactively.
16. Ratification requires full knowledge of the transaction.
a. True
b. False
17. In a master/servant relationship, the principal is liable for the torts of the agent committed within the scope of
employment.
a. True
b. False
18. A principal is not liable for an accident caused by its delivery person.
a. True
b. False
a. True
b. False
19. A real estate agent who fails to disclose his interest as a buyer to his seller principal has violated his duty of loyalty.
a. True
b. False
20. There is no liability of employers for the acts of independent contractors.
a. True
b. False
21. Principals and agents have a fiduciary relationship.
a. True
b. False
22. Express and implied authority together are called real authority.
a. True
b. False
23. Agents can collect payoffs made during the course of conducting the principal’s business.
a. True
b. False
24. Agents are liable to principals for negligence in performing their duties.
a. True
b. False
25. A gratuitous agency is one in which the agent is not paid.
a. True
b. False
26. A gratuitous agency is void.
a. True
b. False
27. Firing an agent does not end apparent authority.
a. True
b. False
28. Constructive notice of termination of an agent is public notice.
a. True
b. False
29. Public notice of termination of an agent is not required.
a. True
b. False
30. Courts view non-compete agreements against the employees and for the employers.
a. True
b. False
31. The intentional torts of agents are never the responsibility of the principal.
a. True
b. False
32. All states recognize non-compete agreements as enforceable contract clauses.
a. True
b. False
33. The employment-at-will doctrine prohibits the firing of nonunion or noncontract employees.
a. True
b. False
34. Apparent authority ends when an agent is fired.
35. Apparent authority ends when an agent quits.
a. True
b. False
36. Ratification of a contract by a principal releases the agent from all liability to the third party.
a. True
b. False
37. In a fully disclosed principal situation in which the agent is acting with authority, only the principal is liable on the
contract.
a. True
b. False
38. Unless protected by a statute, an agent for an unincorporated association has full liability on contracts entered into
on behalf of that association.
a. True
b. False
39. Agents in undisclosed principal situations never have personal liability.
a. True
b. False
40. A master-servant relationship is one in which the principal has little control over the agent.
a. True
b. False
41. A power of attorney is an example of an agency relationship.
a. True
b. False
42. The Uniform Unincorporated Nonprofit Association Act provides for limited liability of the members of a nonprofit
organization that is not incorporated.
a. True
b. False
43. The duty of loyalty of an agent to a principal does not cover conflicts of interest.
a. True
b. False
44. Post-employment non-compete agreements are void.
a. True
b. False
45. Post-employment non–compete agreements are unenforceable.
a. True
b. False
46. An employer is only liable for its actions when hiring, not its failure to do something.
a. True
b. False
47. A real estate agent who represents both buyer and seller in a transaction without disclosure to both has breached
the duty of loyalty.
a. True
b. False
48. There is no apparent authority in an undisclosed principal relationship.
a. True
b. False
49. Respondeat superior is no longer applied in agency relationships.
a. True
b. False
50. There is no employer liability for negligent hiring.
a. True
b. False
51. An independent contractor is not an agent of the principal.
a. True
b. False
52. A sales clerk at a department store is an example of an independent contractor.
a. True
b. False
53. An employee who is asked to take company cash to the bank on his lunch hour is not in the scope of employment
during that lunch hour.
a. True
b. False
54. Real estate agents would not customarily have the authority to enter into sales contracts for their clients.
a. True
b. False
55. “I’ll make good on my employee’s promise,” is an example of a ratification.
a. True
b. False
56. “Talk to Ann. She used to work here, but I think she is the best one to get this deal done for us,” is an example of
express authority given to an agent.
a. True
b. False
57. Which is a requirement for the creation of an agency relationship?
a. a written agreement
b. principal with capacity
c. agent with capacity
d. none of the above
58. Which is not an example of an independent contractor relationship?
a. master/servant
b. lawyer/client
c. accountant/client
d. All of the above are not independent contractors.
59. The Restatement of Agency:
a. is a summary of the common law agency.
b. has been adopted in all states.
c. is legislative law.
d. none of the above
60. Express authority:
a. must be in writing.
b. can limit the agent‘s authority.
c. includes customary authority.
d. none of the above
61. An employment-at–will relationship is:
a. one in which there is a definite ending date.
b. rare in the employment market.
c. now illegal.
d. none of the above
62. A personnel manual:
a. can constitute a contract in an employment-at-will relationship.
b. can disclaim any promises made therein.
c. is never a contract.
d. none of the above
63. The public policy exception to the employment–at–will doctrine protects:
a. employees who are fired with cause.
b. employees who engage in illegal conduct.
c. whistle-blowers.
d. none of the above
64. An unincorporated association:
a. has no liability for its members.
b. is not a principal with capacity.
c. can have agents.
d. none of the above
65. Mary Scoot was hired to manage the Cactus Cart, a tiny kiosk located in Sky Harbor Airport in Phoenix. No
specific duties were listed, but the business owner who hired Mary told her, “Just sell the plants and deposit the
money.” Mary would have the implied authority to:
a. take checks as payment.
b. change the business name.
c. sell the kiosk.
d. all of the above
66. Under apparent authority:
a. a principal is never liable for the acts of an agent.
b. a principal is liable for creating the appearance of an agency relationship.
c. there is no agency relationship.
d. none of the above
67. Which is a requirement for establishing apparent authority?
a. underlying express authority
b. an agency agreement
c. both a and b
d. none of the above