90) Frank Hannigan sees a grand piano that his musician friend Scott Kristoff had been looking
for in an antique store. Frank enters into a contract to purchase the grand piano from the antique
seller and signs the contract, “Frank Hannigan, agent for Scott Kristoff.” But because Frank is
not Scott’s agent, Scott is not bound by the contract. If Scott decides to accept the contract, what
kind of agency would be created?
A) express agency
B) implied agency
C) agency by ratification
D) power of attorney
91) An agency by ratification occurs when the principal ________.
A) accepts an unauthorized act created by an unauthorized agent
B) accepts an authorized act created by an authorized agent
C) creates the appearance of an agency that in actuality does not exist
D) accepts an act carried out under the implied authority of an agent
92) Which of the following describes an agency by estoppel?
A) an agency that arises when a principal ratifies a contract created by an unauthorized agent
B) an agency created when a principal and an agent expressly agree to enter into an agency
agreement
C) an agency that is not expressly stated but is implied and inferred in the conduct of the parties
D) an agency that arises when a principal creates the appearance of an agency that in actuality
does not exist
93) Which of the following is true of an apparent agency?
A) The authority of an apparent agent is implied from the conduct of the parties.
B) The third-party is not bound to a contracted created by an apparent agent.
C) The principal is bound to the contracts entered into by an apparent agent.
D) The actions of an apparent agent create an apparent agency.
94) Ronald, the purchasing manager of Tellys Supermarket in Georgia, was asked to buy an
order of the latest videogame console, FunCase, to keep in the supermarket. However, due to a
truckers’ strike, he had to make a trip to the FunCase warehouse, which was in Florida. Ronald
paid for the trip himself, went to the warehouse, procured the shipment, and returned. After he
got back, Tellys Supermarket paid Ronald for the trip he made to Florida. What duty of the
principal did Tellys Supermarket perform here when they paid Ronald for the trip to Florida?
A) duty to cooperate
B) duty to reimburse
C) duty to compensate
D) duty to indemnify
95) What is imputed knowledge?
A) information collected by a principal prior to engaging in an agency
B) information collected by a principal on an agency
C) information learned by an agent that is attributed to the principal
D) information learned by a principal that is attributed to an agent
96) Which of the following is a fiduciary duty owed by an agent not to act adversely to the
interests of the principal?
A) duty of loyalty
B) duty of undertaking
C) duty of discharge
D) duty of resolution
97) Which of the following statements is true of an agent taking an opportunity?
A) An agent can legally take an opportunity that is entitled to the principal.
B) A third-party offer to an agent need not be conveyed to the principal.
C) An agent cannot appropriate an offer for himself or herself once the principal rejects it.
D) A principal is permitted to recover a usurped opportunity from an agent.
98) Which of the following is a course of action for a principal if an agent is found competing
with him or her?
A) The principal can recover damages from the agent if the competition continues after the
agency has ended.
B) The principal can recover profits made by the agent.
C) The principal is given an option of buying the agent’s competing venture.
D) The principal is not allowed to recover for lost sales due to the agent’s competing venture.
99) Which of the following is an instance of misuse of confidential information?
A) An agent gives the seller the principal’s name and phone number in a fully disclosed
transaction.
B) A principal gives the contact details of an agent to a third-party without the agent’s
knowledge.
C) An agent withholds critical information from the principal about the agency.
D) An agent divulges details of his past employer to his principal.
100) Ashley owns a piece of vacant real estate through which a small river runs. Ashley hires
Warren, a licensed real estate broker, to list the property for sale and help sell the property.
While inquiring in the neighborhood, Ashley’s neighbor Lenny tells Warren that a chemical plant
upstream has polluted his property and that Warren should have environmental engineers test the
soil on Ashley’s property as well. Warren does not tell Ashley about Lenny’s suggestion. Warren
manages to find a buyer for Ashley’s property in Martha. It is later discovered that the property
Martha bought from Ashley is also polluted. What important agent’s duty has Warren failed to
perform?
A) duty to indemnify
B) duty to account
C) duty to reimburse
D) duty to notify
101) If a casting agent works for two Hollywood actors, the agent is liable for ________.
A) dual agency
B) competing with the principal
C) usurping an opportunity
D) self-dealing
102) Which of the following is true of dual agency?
A) An undisclosed dual agent is allowed to retain compensations of the transaction provided he
or she discontinues the dual agency.
B) Examples of dual agents are finders and middlemen.
C) Dual agency is permitted if all parties in the transaction agree to it.
D) Dual agency is permitted as long the interests of both principals are similar.
103) Which of the following is true of tort liability for principals and agents?
A) A principal is responsible for the tortious conduct of an agent irrespective of the scope of his
or her authority.
B) An agent is fully liable for his or her tortious conduct while on duty for the principal.
C) An agent is liable for the principal’s tortious conduct if he or she participates in it.
D) An agent and a principal cannot be held responsible for the same tort.
104) What is vicarious liability?
A) non-liability
B) liability for multiple torts
C) liability without knowledge
D) liability without fault
105) Minksine Corporation employs Sandy as its marketing manager. Sandy is driving her
automobile to attend a meeting with a client on behalf of her employer. On her way to the
meeting, Sandy is involved in an automobile accident that is caused by her negligence. Several
people are seriously injured in the accident. Which of the following is true of this case?
A) Sandy is solely liable for damages caused by the accident.
B) The injured people cannot recover damages from Sandy.
C) Minksine Corporation is liable for the injuries caused by Sandy.
D) The injured people can only claim medical reimbursement from Minksine Corporation.
106) ________ occurs where a principal is liable for an agent’s tortious conduct because of the
employment contract between the principal and agent, not because the principal was personally
at fault.
A) Vicarious liability
B) Negligence
C) Liability with fault
D) Misrepresentation
107) ________ is a situation in which an agent does something during the course of his or her
employment to further his or her own interests rather than the principal’s.
A) Coming and going
B) Frolic and detour
C) Self-dealing
D) Dual-purpose mission
108) According to the coming and going rule, what is the liability of the principal for injuries
caused by its agents and employees while they are on their way to or from work?
A) complete liability
B) vicarious liability
C) limited liability
D) no liability
109) Fiona works for Open Heart Hospital and lives 10 miles away from her place of work. The
hospital has provided her with a car to commute and also pays for its upkeep. If she accidentally
injures a person while driving to work in the morning, which of the following would be true?
A) Open Heart Hospital is completely liable for the injury caused.
B) The injured person can sue Open Heart Hospital but can only recover reimbursement for his
or her medical expenses due to the injury.
C) Both Fiona and Open Heart Hospital are liable to the injured person.
D) Only Fiona is liable for her negligence.
110) A dual-purpose mission is a situation that occurs when ________.
A) an agent works for two or more principals with conflicting interests
B) a principal requests an agent to run an errand when the agent is on his or her own personal
business
C) an agent who works for more than two principals but has similar agency relationships with
both
D) an agent competes with the principal in a business with interests similar to the principal’s
business, after their agency has ended
111) Which of the following is considered an intentional tort?
A) negligence
B) innocent misrepresentation
C) fraud
D) dual-purpose mission
112) In which of the following cases is a motivation test used to establish the employee’s
motive?
A) An employee commits a tort to promote the principal’s business, outside work premises.
B) An employee commits an intentional tort against another employee at work premises.
C) An employee commits an unintentional tort that helps promote the principal’s business.
D) An employee assaults another employee due to personal reasons.
113) Under the ________ test, if the agent committed an intentional tort to promote the
principal’s business, the principal is liable for any injury caused by the tort.
A) work-related
B) motivation
C) promotional
D) dual agency
114) A ________ is a deceit in which an agent makes an untrue statement that he or she knows is
not true.
A) partially disclosed agency
B) misrepresentation
C) respondeat superior
D) dual-purpose mission
115) Which of the following is true of misrepresentation?
A) An intentional misrepresentation by an agent is not considered fraud or deceit.
B) The principal is not liable for an agent’s intentional misrepresentation.
C) A third party cannot recover damages from the principal due to an agent’s intentional
misrepresentation.
D) The principal is liable for an agent’s innocent misrepresentation.
116) Which of the following torts committed by an agent is the liability of the principal?
A) substantial frolic and detour
B) accidents caused by an agent on the way to work
C) accidents caused by an agent on the way from work
D) negligence
117) In a fully disclosed agency, the contract is between ________.
A) a principal and an agent
B) a principal and a third party
C) an agent and a third party
D) a principal, an agent, and a third party
118) Which of the following is true of a fully disclosed agency?
A) The third party does not know the identity of the principal.
B) The third party knows the name of the principal, but all transactions are done with the agent.
C) The contract is between the principal, agent, and the third party.
D) The principal is liable on the contract with a third party.
119) Which of the following best describes a partially disclosed agency?
A) an agent with multiple principals who do not know each other’s identities
B) a transaction in which the third party does not know the identity of the agent
C) a transaction in which the third party knows the agent, not the principal
D) an agent who discloses only the name of his or her principal in a transaction
120) Which of the following is true of an undisclosed agency?
A) The third party has no knowledge of the agency.
B) The third party knows the agent, not the principal.
C) All transactions with the third party are made by the principal without involving the agent.
D) Transactions under such an agency are considered unlawful.
121) Jamie is a lawyer who runs her own law firm specializing in real estate law. Raymond, a
real estate developer, hires Jamie to represent him in the purchase of land. Jamie is the
________.
A) principal
B) agent
C) third-party
D) independent contractor
122) On the advice of her colleague, Stacey hires Harold, a lawyer and an independent
contractor, to represent her in a court case. While driving to the courthouse to represent Stacey at
trial, Harold negligently causes an automobile accident in which a bystander, Mildred, is
severely injured. Who is liable to Mildred?
A) Stacey
B) Harold
C) Stacey’s colleague
D) the firm that represents Harold
123) Which of the following is true of an independent contractor’s liability?
A) The agent is liable for torts committed by an independent contractor.
B) The contractor is personally liable for all his or her torts.
C) The principal is liable for the independent contractor’s torts.
D) Both the principal and the independent contractor are liable for the contractor’s torts.
124) Gerard wants to get some land cleared in Texas. With the help of a consulting agency, he
hires Carlos, an independent contractor. Carlos procures dynamite from a legitimate dealer, to be
used in clearing the land. However, the explosion of dynamite causes cracks to appear in the
outer walls of a nearby house. Who is liable to the owner of the damaged house?
A) Gerard
B) Carlos
C) both Gerard and Carlos
D) the consulting agency
125) A client hires a lawyer as an independent contractor to represent her in a civil lawsuit
against a defendant to recover monetary damages. If the client authorizes the lawyer to settle a
case within a certain dollar amount and the lawyer does so, which of the following would be
true?
A) The agreement is invalid after the lawyer’s contract with the principal terminates.
B) The agreement is void because independent contractors cannot enter into contracts.
C) The agreement is binding only when there is no financial settlement involved.
D) The settlement agreement is binding for the client.
126) If an independent contractor enters into a contract with a third party on behalf of the
principal without express or implied authority from the principal to do so, who among the
following is liable on the contract?
A) the principal
B) the independent contractor
C) the third party
D) both the principal and independent contractor
127) Which of the following is true of a principal-independent contractor relationship?
A) Principals are bound by the authorized contracts of their independent contractors.
B) Independent contractors cannot be authorized by principals.
C) Independent contractors are employees of the principals.
D) Principals cannot directly employ independent contractors.
128) Which of the following qualifies as termination of an agency by impossibility of
performance?
A) the loss of a required qualification
B) the bankruptcy of the principal
C) the insanity of either the principal or the agent
D) the conviction of either the principal or the agent
129) Which of the following would lead to the termination of an agency by operation of law?
A) loss or destruction of the subject matter of the agency
B) death of either the principal or agent
C) loss of a required qualification
D) a change in the law
130) The termination of an agency contract in violation of the terms of the agency contract is
referred to as ________.
A) termination by an unusual change in circumstances
B) termination by impossibility of performance
C) terminated by operation of law
D) wrongful termination
131) What is an implied agency?
132) Why can an agent not take an opportunity meant for the principal? When is an agent
permitted to take such an opportunity? Give an illustration depicting an agent’s violation of his or
her duty of loyalty.
133) Describe the operation of a fully disclosed agency.
134) Who is an independent contractor?
135) Explain in brief the liability for an independent contractor’s torts.
136) List the circumstances that can lead to termination by impossibility of performance.
137) A party who employs another person to act on his or her behalf is known as a(n) ________.
138) A(n) ________ is a contract a principal and agent enter into that says the principal cannot
employ another agent other than the one stated.
139) A power of attorney where a principal confers powers on an agent to act in specified
matters on the principal’s behalf is referred to as ________.
140) A duty that a principal owes to pay an agreed-upon amount to the agent either upon the
completion of the agency or at some other mutually agreeable time is known as a principal’s
________.
141) The ________ is a principal’s duty to cover the agent for any losses the agent suffers
because of the principal’s conduct.
142) An agency, that occurs when a principal and an agent do not expressly create an agency but
it is inferred from the conduct of the parties, is known as a(n) ________.
143) Harrison hires an agent to look for a three-bedroom house in Atlanta. Elaine, the agent,
finds a three-bedroom house in Harrison’s budget but buys it herself without informing Harrison.
This is an instance of the agent’s ________.
144) ________ is a rule that says an employer is liable for the tortious conduct of its employees
or agents while they are acting within the scope of the employer’s authority.
145) Gem’s principal asked her to pick up his dry-cleaning on her way to work. After she had
picked up the dry-cleaning and while driving to work, Gem knocked over an old man crossing
the street as she did not apply the brakes in time. Under the theory of ________, Gem’s principal
is liable to the injured man.
146) Agents sometimes do things during the course of their employment to further their own
interests rather than the principal’s interests. This is commonly referred to as ________.
147) Sometimes, principals request that agents run errands or conduct other acts on their behalf
while the agent or employee is on personal business. This is an instance of ________ for the
agent.
148) Most jurisdictions hold the ________ liable for injuries caused on a dual-purpose mission.
149) Under the ________ test, the principal is liable for any intentional torts committed by an
agent during working hours on the principal’s premises.
150) An employee, motivated by jealousy, injures a colleague who dated her boyfriend on work
premises and during work hours. Based on the ________ test, the principal is liable.
151) A car salesperson is employed to sell the principal’s car, and the principal tells the agent
that the car was repaired after it was involved in a major accident. If the agent intentionally tells
the buyer that the car was never involved in an accident, the agent has committed the tort of
________.
152) If a person employs an architect to design the layout of his or her own home, it would
constitute a(n) ________ relationship.