activity based questions

question 1

1. An agent’s knowledge is imputed to the principal.

Question 2

1. A principal is obligated to pay any judgments against an agent who incurred liability to a third party while carrying out the principal’s orders. This duty to hold the agent “harmless” is the duty to___________.

Question 3

1. Jim was called to active duty in the military. Knowing that he would be out of the country for a year or more, he gave his sister Peg authority to pay bills in his name, access his bank accounts, buy and sell stock in his brokerage accounts, and incur expenses to maintain his house and car and boat. Peg is Jim’s______________.

Question 4

1. What is the status of an agency agreement when a principal files for Chapter 7 bankruptcy?

Question 5

1. An agency will terminate by operation of law if the principal files for Chapter 7 bankruptcy.

Question 6

1. A person who is given power of attorney is called a(n)______________.

Question 7

1. If a third party does not know that he is dealing with an agent and believes that the agent is acting on his own behalf and will perform on the contract, the principal in this situation is ______________.

Question 8

1. A store manager is an example of a general agent.

Question 9

1. Mike is a sole proprietor who buys, sells and repairs kilns and other equipment used in pottery making. He has an arrangement with K&M, a large equipment maker, to sell K&M’s kilns in both his own name and in K&M’s name and to receive payments from customers. Mike’s relationship with K&M is that of a ________________.

Question 10

1. Sam is retiring and selling his business to Ed, an employee. They want Larry Lawyer to draw up a sales contract that protects both Sam’s interests as the seller and Ed’s interests as the buyer. If Larry agrees to this dual agency, which agency duty would he most risk violating?

Question 11

1. A principal whose identity is known to a third party is a disclosed principal.

Question 12

1. The legal test to determine whether someone is a general agent or a special agent is whether or not the agent is paid for his services.

Question 13

1. Please see problems #2, #3 and #4 above. Jim received several dividend checks from his stock broker while he was gone. Peg deposited the checks in her own bank account because her funds were low. Several weeks later she made out a personal check for the amount of the dividends and deposited it into Jim’s account. Has Peg breached any agency duties?

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Question 14

1. A minor may act as an agent for an adult principal.

Question 15

1. An agent operating under a written power of attorney is called an attorney-at-law.

Question 16

1. A principal whose identity is known to a third party is a (n) _____________principal.

Question 17

1. Which of the following statements about an agent’s duty to inform is false?

1. When a third party knows that an agent is acting on behalf of a principal, but dies not know the identity of the principal, the principal is________________.

Question 19

1. If an agency agreement does not state how much an agent is to be paid

Question 20

1. Ann Agent was hired by Buyer to locate a piece of property suitable for building an office complex. Ann and her cousin jointly owned a piece of property that suited Buyer’s needs. Without telling Buyer of her ownership interest, Ann negotiated the purchase on Buyer’s behalf. The price for the property was its fair market value. What options are available to Buyer when he learns that Ann was the seller?

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Question 21

1. If the agent dies, the agency agreement terminates by operation of law.

Question 22

1. Please see problems #2 and #3 above. Because Peg is not compensated for the activities she is performing on her brother’s behalf, she owes him

Question 23

1. A multiple listing agreement lists real property with several brokers, but only the selling broker earns a commission on the sale.

Question 24

1. Please see problem #2 above. Jim will be out of the country when a piece of land he sold goes to settlement. He wants to give Peg the authority to convey the deed and sign any necessary settlement papers in his name. To do this he should give Peg _______________.

Question 25

1. Ted was hired under a one year contract to manage Sue’s sub shop. Eight months into the contract, Sue fired Ted in order to hire a new manager who had just graduated with a degree in marketing and had a lot of ideas for increasing sales. Ted had not breached the contract in any way. Which statement best describes Sue’s rights in these circumstances?

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Question 26

1. The primacy source of law governing the relationship between the principal and the agent is

Question 27

1. Pat hired Mike, a dealer in livestock, to sell his herd of cattle. Mike was to receive a 20% commission on the sale. Before a buyer could be found, the herd had to be destroyed because of an outbreak of mad cow disease. Which statement best describes the status of the agency agreement?

Question 28

1. Matt is employed as the manager of Local Steak House, with wide-ranging responsibilities for all aspects of the business. In this position, Matt is a(n)________

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Question 29

1. If the principal dies, the agency agreement terminates by operation of law.

Question 30

1. Which of the following would not terminate an agency by operation of law?

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