Test Bank For The Law of Corporations and Other Business Organizations 6th Edition by Angela Schneeman
MULTIPLE CHOICE1. Agency is a legal relationship in which
- the principal acts on behalf of the agent.
- the principal becomes personally liable forall actions of the agent.
- awrittencontractmustspecifyallauthorityof the agent.
- the agent acts for or represents the principalby the principal’s authority.
ANS: D2. When used in relation to the agency relation- ship, the master
- retains some control over his or her servant (employee).
- gives his or her servant (employee) full discretion to act on the master’s behalf.
- hires the employee for a specific task for which the master is not responsible.
- is not liable for any actions taken on his or her behalf by the servant (employee).
ANS: A3. A special type of power of attorney designed to continue for certain purposes even after the incapacity of the principal is referred to as aA. specialpowerofattorney.B. willpowerofattorney.C. durablepowerofattorney. D. generalpowerofattorney.ANS: C4. An agency relationship may not be createdA. byexpresscontract.B. byconductoftheprincipalandagent.C. without the principal’s knowledge or con-sent.D. byratification.ANS: C5. When the principal intentionally or negligently causes a third party to reasonably believe that an individual is acting as the principal’s agent, and the third party relies on that belief, thenA. no agency relationship exists.B. anexpressagencyagreementiscreated.112©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
C. thepurportedagentassumespersonalliabil- ity for his or her actions.D. an apparent agency may exist.ANS: D6. An agent’s duties to the principal includeA. thedutyofloyalty.B. thedutytoactwithoutcompensation.C. the duty to perform any tasks requested bythe principal.D. thedutytocompensatetheprincipal.ANS: A7. The principal’s duties to the agent do not include
- the duty to compensate the agent as agreed on.
- thedutytocooperatewiththeagent.
- thedutytoexercisereasonablecaretoavoidplacing the agent in harm’s way.
- the duty to always put the agent’s interestsfirst.
ANS: D8. A principal is not liable for the torts of his or her agent if the
- tort is committed by the agent acting in the scope of his or her employment by the principal.
- agent’s action is unrelated to the agency relationship.
- principal is negligent or reckless in super- vising the agent.
- agent is acting under the principal’s direc- tion when committing the tort.
ANS: B TRUE/FALSE
- Disputes concerning agency law are typically resolved under the contract or common law of the state where the agency was created.ANS: T
- A power of attorney need not be put in writing.
ANS: F
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