Law of Agency Quiz

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Questions and Answers

What legal effect does a contract entered into through an agent have?

It is only binding on the agent.

It cannot be enforced in court.

It has no legal consequences.

It has the same legal consequences as if the principal entered into the contract personally. (correct)

Who can employ an agent according to the law of agency?

Anyone regardless of their mental capacity.

Any person of the age of majority and of sound mind. (correct)

Only individuals over the age of 30.

Only corporations and businesses.

What is required for an agent’s actions to bind the principal?

The principal must be present during the transaction.

The agent must be related to the principal.

The agent must act within the scope of their instructions. (correct)

The agent must be an adult.

Which of the following statements is true regarding agents and principals?

An agent is a person employed to represent another in dealings with third parties. Signup and view all the answers

What does the Latin phrase 'Quit facit per alium facit per se' imply?

The principal is responsible for the agent's actions as if they were their own. Signup and view all the answers

Can minors act as agents?

Minors may serve as agents regardless of their status as principals. Signup and view all the answers

What happens if an agent exceeds their authority?

The agent is solely responsible for any repercussions. Signup and view all the answers

What type of principals can jointly appoint one agent?

Several principals, irrespective of their type. Signup and view all the answers

What is necessary for creating an agency contract?

No consideration is necessary Signup and view all the answers

What can an agent do when they have the authority to act?

Take any lawful measures for the specific purpose Signup and view all the answers

What happens when an agent receives notice or information?

It is treated as if it was communicated to the principal Signup and view all the answers

What distinguishes an agent from a servant?

An agent can negotiate contracts with third parties Signup and view all the answers

Which statement about mercantile and non-mercantile agents is true?

Mercantile agents deal with the sale or purchase of goods Signup and view all the answers

What is the role of a sub-agent?

To act under the control of the original agent Signup and view all the answers

What is the effect of misrepresentations made by an agent within their authority?

The principal may be held liable as if they made the misrepresentation Signup and view all the answers

Which of the following is an incorrect statement regarding agency contracts?

Consideration is needed to validate an agency Signup and view all the answers

What is the primary consequence if an agent improperly appoints a sub-agent?

The principal is not bound by the appointment. Signup and view all the answers

Which of the following best describes the concept of Agency by Estoppel?

It arises when a person is presumed to be an agent based on others' beliefs. Signup and view all the answers

Under what conditions can Agency of Necessity be validly created?

It must be impossible to obtain the principal's instructions. Signup and view all the answers

If a servant, acting on behalf of the master, buys unauthorized items on credit, what is likely the outcome?

The master is required to pay the shopkeeper because of the agency created. Signup and view all the answers

Which statement correctly reflects the agent’s responsibility regarding a sub-agent's actions?

The agent is personally accountable for the sub-agent's acts toward third parties. Signup and view all the answers

In the case of a wife acting as an Agent of Necessity, what determines whether she has the authority to pledge her husband's credit?

Whether the husband provides her with a monthly allowance. Signup and view all the answers

What defines an express agreement in creating an agency?

An agreement that is either oral or written. Signup and view all the answers

Which of the following scenarios does NOT create Agency of Necessity?

A person acts without any need or urgency. Signup and view all the answers

What is the primary condition under which a wife can act as an agent for her husband?

There must be special circumstances and purposes. Signup and view all the answers

What is NOT a duty of an agent towards their principal?

To seek compensation for personal losses. Signup and view all the answers

In what scenario can a principal revoke an agent's authority?

Whenever the principal feels it is necessary. Signup and view all the answers

What happens if an agent deals in business on their own account without the principal's knowledge?

The principal can claim any benefits from that transaction. Signup and view all the answers

When does an agent's remuneration become due according to general rules?

Upon completion of the act for which they were appointed. Signup and view all the answers

Which of the following is a duty of the principal towards the agent?

To compensate for injury due to neglect. Signup and view all the answers

What right does an agent have in the absence of a special contract?

To retain the principal's property until paid. Signup and view all the answers

Which statement about the relationship between agents and principals is true?

An agent must act exclusively in the principal’s interest. Signup and view all the answers

Study Notes

Law of Agency

Contracts made through an agent are legally binding as if the principal executed them personally.
Agent acts to create contractual relationships with third parties on behalf of the principal.
An example illustrates that when an agent collects payment, the principal releases the debtor from obligations.

Agent and Principal

Any person of legal age and sound mind may appoint an agent.
An agent is defined as a person authorized to act on behalf of another.
A principal can have multiple agents; several principals can appoint one agent jointly.

Authority of Agents

Agents must operate within a specific scope of authority as defined by the principal.
Agents can bind principals through actions taken within the scope of their authority.
Misrepresentations or fraud committed by an agent bind the principal if within authority; otherwise, they do not.

Types of Agents

Agents are categorized into mercantile agents (involved in trade) and non-mercantile agents (involved in other professional capacities).
A sub-agent can be appointed by an agent and must act under the agent’s control; the agent is liable for the sub-agent’s actions.

Creation of Agency

Express agreements can create agency either orally or in writing.
Implied agency can arise from the conduct of parties or their relationship.
Agency by estoppel prevents a principal from denying an agent's authority when they've led third parties to believe in its existence.

Agency of Necessity

Allowed when it’s impossible to contact the principal, there’s an urgent need, and actions taken are honest and in the principal's interest.
A wife can act as an agent of necessity for household expenses unless provided with a financial allowance, which limits her authority.

Duties of Agents

Agents must follow the principal's directions or industry customs.
Agents have to provide proper accounts of transactions to the principal upon request.
They must communicate difficulties to the principal and seek instructions during challenging situations.

Rights and Duties of Principals and Agents

Principals must compensate agents for damage caused by their negligence.
Principals have the right to claim compensation for agent breaches and can revoke authority.
Agents typically earn remuneration upon completing the assigned task.
Agents can retain the principal's property until compensation for their services is fulfilled.

Conclusion

The agency relationship is grounded in trust and responsibility, establishing rights and obligations for both agents and principals in contractual arrangements.

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Description

Test your understanding of the Law of Agency, focusing on contracts entered into and obligations arising from agents' actions. Explore case examples that illustrate how these legal principles apply in real-life situations. See how the authority of an agent can affect contractual obligations.