Agency Law Basics Quiz

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Questions and Answers

Which of the following persons is an agent?

Person 1

Person 2

Person 3

All of the above (correct)

Which of the following is not required of an agency relationship?

Legality

Capacity

Consideration (correct)

Consent

The equal dignities rule relative to agency law applies to an agent:

Written agreements

Oral agreements

Both written and oral agreements (correct)

None of the above

Which statement is correct regarding Mohammad's case?

Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency. Signup and view all the answers

How can an agency relationship be created?

By the conduct of the parties. Signup and view all the answers

Has Ron violated his fiduciary duty to Kansas Sunshine?

Yes. It appears that Ron put his own interests ahead of his principal's interests. Signup and view all the answers

In the case of John and Tim, which statement is correct?

John is Tim's principal. Signup and view all the answers

What is the correct statement for Nikki's situation?

Nikki has breached a fiduciary duty to HBR since she is competing with HBR. Signup and view all the answers

The doctrine of estoppel would most often apply in situations of:

Apparent authority Signup and view all the answers

What must Cameron do regarding Jim's libel claim?

Cameron must indemnify Jim for Maureen's claim. Signup and view all the answers

What behavior is prohibited for an agent?

An agent may not engage in inappropriate behavior that reflects badly on the principal. Signup and view all the answers

What can Lena do regarding the business?

Lena can buy the business only with Pamela's permission. Signup and view all the answers

An agency will be terminated in all but which one of the following situations?

A travel agent files for individual bankruptcy under Chapter 13 Signup and view all the answers

Can Janet keep the bracelet given by the customer?

Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet. Signup and view all the answers

Who can Judy hold liable for her injury?

Judy can hold Chance but not the company liable. Signup and view all the answers

What is the status of the contract finalized by Jenna?

The contract is void since the agency terminated May 29. Signup and view all the answers

What is Jim's liability regarding the stolen car?

Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence. Signup and view all the answers

Study Notes

Agency Basics

An agent can be any person acting on behalf of another, encompassing various roles.
Consideration is not a necessary element for establishing an agency relationship.
The equal dignities rule applies to an agent regarding the formality of their authority.

Confidentiality and Fiduciary Duty

Agents have a duty to maintain confidentiality about their principal's sensitive information.
An agent may breach fiduciary duty by competing against their principal or prioritizing personal interests.

Agency Creation and Termination

Agency relationships can be formed through the actions and conduct of the parties involved.
Various scenarios can lead to the termination of an agency relationship, with bankruptcy by a travel agent being an exception.

Legal Accountability

Agents and their principals can have liability in instances such as negligence or defamation linked to their professional roles.
An indemnification obligation exists for agents when facing claims arising from their work events, even if they acted appropriately.

Personal Conduct and Gifts

Agents should maintain conduct that does not reflect poorly on their principal, regardless of whether they are on duty or off.
Agents can accept gifts from clients only if disclosed and consented to by the principal.

Agent's Authority and Transactions

Permission is required for an agent to engage in transactions that are personally beneficial, such as purchasing property.
Contracts finalized after the principal's death are void due to the termination of agency authority.

Liability in Accidents

In cases of negligence, only the agent (independent contractor) may be held liable, not the associated company.

Special Scenarios

Gratuitous agents have limited liability for losses incurred under gross negligence.
Agents must ensure they do not surpass their given authority or act against the principal's interests.

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Description

Test your understanding of the fundamental aspects of agency law, including agent roles, fiduciary duties, and how agency relationships are created and terminated. This quiz will also explore the legal accountability of agents and principals in various scenarios.