Chapter 20b Agency relationships do not exist between employers and employees

1. Agency relationships do not exist between employers and employees.

1. Employment laws apply only to the employer-employee relationship.

1. An independent contractor may not act in the capacity of an agent.

1. A person must have contractual capacity to be a principal.

1. All agency relationships are based on contract.

1. An agent is required to notify the principal of all matters concerning the

subject matter of the agency.

1. An agent’s actions must be strictly for the benefit of the principal.

1. An agent has a duty to follow all clearly stated instructions of the

principal, lawful or not.

1. A principal owes an agent a duty of obedience.

1. An agent has the right to perform agency duties without interference by

the principal.

1. In general, for every duty of the principal, the agent has a

corresponding right.

1. If an agent contracts outside the scope of his or her authority, the

principal cannot become liable.

1. An agent’s implied authority can be inferred by the position the agent

occupies.

1. Apparent authority usually comes into existence through a principal’s

pattern of conduct over time.

1. A principal can ratify an agent’s unauthorized act in its entirety or

merely in part.

1. A principal whose identity is not known by a third party with whom an

agent contracts on the principal’s behalf is an apparent principal.

1. A principal is exposed to tort liability whenever a third person sustains

a loss due to an agent’s misrepresentation.

1. Under the doctrine of respondeat superior, a principal is liable for

any harm to an agent.

1. A party to an agency may have the right to terminate the relationship

but not the power.

1. When an agency relationship is terminated, the principal has a duty to

personally notify third parties who knew of its existence.

1. Espresso Roast Company hires Forrest to work on Espresso’s shipping

dock, checking outgoing loads and dispatching Espresso’s drivers. With

respect to Forrest, Espresso is most likely

a. an agent.

b. an independent contractor.

c. a principal.

d. a work for hire.

1. Carol agrees with Dede and other performers to sign contracts with

promoters and others on the performers’ behalf. Carol is

a. an agent.

b. an employee.

c. an employer.

d. a principal.

1. Ester is a lighting technician who hires out on a per-project basis to

film and television production companies, as well as theatres and other

venues that stage dramatic and musical performances. In this capacity,

Ester is

a. an agent.

b. an employee.

c. an independent contractor.

d. a principal.

1. Dizzy is not Edwina’s agent but enters into a contract with Frida on

Edwina’s behalf. Edwina later contacts Frida to approve the contract.

This is

a. an agency by agreement.

b. an agency by estoppel.

c. an agency by ratification.

d. not the creation of an agency relationship.

1. Rita is appointed as an agent for Superior Sales, Inc. The agency

agreement is silent as to the level of sales that Rita is expected to

achieve. She must

a. achieve nothing because the agreement says nothing on the

issue.

b. attain the level that Rita achieved with her previous employer.

c. maintain the level Superior attained before Rita became an agent.

d. use reasonable diligence and skill in selling.

1. Elle is an agent for Fine Cosmetics, Inc. Elle owes Fine Cosmetics the

duty of

a. avoidance.

b. compensation.

c. indemnification.

d. performance.

1. Prospective Enterprises (PE) employs Quinn to buy property for a

possible commercial development. Quinn secretly buys some of the

property and sells it to PE at a profit. Quinn has breached

a. no duty.

b. the duty of accounting.

c. the duty of loyalty.

d. the duty of notification.

1. Mona is an agent for Nationwide Restaurant Corporation (NRC). In act–

ing as an agent, Mona follows all of NRC’s clearly stated instructions.

This responsibility arises under

a. no agent’s duty.

b. the agent’s duty of loyalty.

c. the agent’s duty of notification.

d. the agent’s duty of obedience.

1. Jody is an agent for Kwik Credit Company (KCC). In the course of

Jody’s performance for KCC, Jody pays Leo for certain auto

maintenance and repair services. Jody’s right to obtain the amount of

those payments from KCC arises under the principal’s duty of

a. avoidance.

b. cooperation.

c. indemnification.

d. reimbursement.

1. National Computer Corporation (NCC) employs Cynthia as an agent.

NCC gives her an exclusive territory in which to sell NCC products.

NCC cannot compete with her in that territory under the duty of

a. compensation.

b. cooperation.

c. indemnification.

d. reimbursement.

1. Neighborly Insurance Company and Ollie put their agency agreement

into a written document that describes the rights and duties of both

parties. Ollie, as the agent, has

a. apparent authority.

b. equal authority.

c. express authority.

d. implied authority.

1. Based on Bluto’s conduct, Cass reasonably believes that Dee has the

authority to act on Bluto’s behalf even though Dee does not have the

actual authority to do so. Bluto has

a. apparent authority.

b. equal authority.

c. express authority.

d. implied authority.

1. Geoff serves in a representative capacity for Huck. To accomplish the

objectives of this relationship, Geoff’s authority can be implied

a. by contradiction.

b. by custom.

c. by lack of reason.

d. under no circumstances.

1. Jock hires Kym to act as his agent to purchase Lifetime Gym &

Fitness, Inc. Jock tells Kym to reveal that she is buying the firm on

behalf of a third party and to tell the seller who that third party is. Jock

is

a. a disclosed principal.

b. an apparent principal.

c. an undisclosed principal.

d. an identified principal.

1. Bud approves on behalf of Cody—but without authorization—a contract

with Devon to build a new silo. Cody does not ratify the contract.

Later, Devon tries to enforce the deal. This attempt will be

a. partly successful.

b. partly unsuccessful.

c. totally successful.

d. totally unsuccessful.

1. Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo

would most likely be considered acting outside the scope of her

employment if she

a. crashed into a car at the airport while off duty.

b. hit a pedestrian in a parking lot during a “working” lunch.

c. ran over an attendant at a gas station while refueling the truck.

d. smashed into a store-front while intoxicated on-duty.

1. Eppie hires Franz to do some remodeling work in her office.Refer to

Fact Pattern 20-1B. The relationship between Eppie and Franz is

a. client and independent contractor.

b. employer and employee.

c. master and servant.

d. principal and agent.

1. Eppie hires Franz to do some remodeling work in her office.Refer to

Fact Pattern 20-1B. While working, Franz drops a tool on Gibby,

Eppie’s customer, causing an injury. Eppie is

a. liable to Gibby because he was injured on Eppie’s property.

b. liable to Gibby unless Franz’s act is intentional.

c. not liable because Franz is an independent contractor.

d. not liable to Gibby because Franz is Eppie’s employee.

1. Chelsea, an agent for Bountiful Seafood, Inc., has often done business

with Alvin’s Dockside Diner on Bountiful’s behalf. When Chelsea and

Bountiful terminate their agency, to avoid liability for later deals, Alvin’s

must be notified by

a. Chelsea and Bountiful.

b. Chelsea only.

c. Bountiful only.

d. no one.

1. Maia hires Nero, a real estate broker, to sell her warehouse. The ware–

house burns down before being sold. Nero is

a. Maia’s agent until Maia’s insurer pays Nero’s commission.

b. Maia’s agent until the burnt warehouse is sold.

c. Maia’s agent until the warehouse is rebuilt and sold.

d. no longer Maia’s agent.

1. Harbor Bay Development hires Guthrie to act as its agent to buy a

100-acre waterfront tract of land from Frankie for $1,000 per acre.

Harbor Bay does not want Frankie to know that it is the principal or

that Guthrie is its agent. Harbor Bay wants the land for a new marina,

and believes that Frankie may not sell the land for that purpose or

may demand a premium price. Guthrie makes the purchase, signing

only his name on the contract as the buyer and not disclosing to

Frankie the agency relationship. Harbor Bay gives Guthrie the amount

to pay for the land, but Guthrie absconds with the funds. Frankie soon

learns of Harbor Bay’s identity. Can Frankie enforce the contract

against Harbor Bay? against Guthrie?

1. Pete’s Pizza employs Quincy as a delivery driver. Pete’s guarantees

that an order will be delivered within thirty minutes or there is no

charge, and insists that its drivers meet the limit. One night, while

making a delivery, Quincy is caught in a traffic jam. To deliver the

pizza within the thirty-minute time limit, Quincy drives onto a sidewalk

and hits Ruth, a pedestrian. Is Pete’s liable to Ruth for her injuries? Is

Quincy liable to Ruth? Why or why not?