An agency relationship exists between Bill, and Trucks o' Plenty, a trucking firm that he founded five years before and of which he is currently the CEO. Bill signs contracts for Trucks o' Plenty with his own name, including one with Andrew, who knows that Bill owns a trucking firm but is unsure of its name. Given that, Bill is a(n) ___________ principal, and he is likely ________ on these contracts.

Multiple Choice

disclosed; liable

unidentified; liable

disclosed; not liable

fully disclosed; not liable

undisclosed; not liable

You are vice president of acquisitions for a medium-sized food company, Good Time Foods. The company's board of directors has given you authority to negotiate acquisitions of food brands on behalf of Good Time. The board has told you in written and oral instructions that you have the power to acquire any food brand if the acquisition price is not greater than $10 million, which is the authority typically given to vice presidents in the industry. Will Good Time be bound on a contract for $40 million that you sign if you present the contract to the board, the board decides to accept the contract, but later rejects it as too costly? Why, or why not?

Multiple Choice

Yes, because of a valid ratification.

No, because of a lack of only express and implied authority.

No, because of a lack of express, implied, or apparent authority.

No, because of a lack of only express authority.

No, because of an invalid ratification.

A principal is _______ if a third party knows or has reason to know that the agent is acting for a principal, but lacks knowledge or reason to know the principal's identity.

Multiple Choice

nonexistent

undisclosed

fully disclosed

partially disclosed

disclosed

Jerry tells Tom that he wants to buy Tom's house. In fact, Jerry is buying it for Sam. Jerry contracts with Tom on Sam's behalf to buy the house. What is Jerry's liability on this contract? Assume that Jerry had authority to make the contract.

Multiple Choice

Jerry is liable because Sam is a legally non-existent principal.

Jerry is liable because Sam is an undisclosed principal.

Jerry is liable because Sam is a partially disclosed principal.

Jerry only can be liable if Jerry expressly agreed to be liable.

Jerry is not liable because Sam is an undisclosed principal.

At a bar, Lynn overhears Wanda say, "I would like to find a good painting for my house." Without Wanda's knowledge, Lynn buys a painting from Peter purportedly "as Wanda's agent." Which of the following is true?

Multiple Choice

Lynn cannot be held liable on the contract with Peter.

Lynn lacks the capacity to act as an agent for Wanda in this situation.

A ratification occurred, so the agreement is authorized and valid.

Wanda is a disclosed principal in this situation.

The requirements for a principal-agent relationship are not met in this situation.

Terry and Timmy both work for Alert, a coffee distributor. Terry, who's Timmy's boss, asks Timmy to handle purchasing a shipment of coffee from Colombia. This will require entering into contracts with several coffee farms. Entering into the contracts is an example of:

Multiple Choice

Undisclosed authority.

Disclosed authority.

Express authority.

Apparent authority.

Implied authority.

A principal is _______ if a third party knows or has reason to know that the agent is acting for a principal, and the principal's identity.

Multiple Choice

disclosed

undisclosed

partially disclosed

fully disclosed

nonexistent

Eric tells Cynthia that he wants to buy Cynthia's car "on behalf of a party who wishes her identity not to be known." (That party is Mary.) Eric contracts with Cynthia on Mary's behalf to buy the car. What is Eric's liability on this contract? Assume that Eric had authority to make the contract.

Multiple Choice

Eric only can be liable if Eric expressly agreed to be liable.

Eric is not liable because Mary is an undisclosed principal.

Eric is not liable because Mary is an undisclosed principal.

Eric is liable because Mary is a legally non-existent principal.

Eric is liable because Mary is a partially disclosed principal.

Which of the following is not an example of a disclosed principal?

Multiple Choice

A sales agent for Microsoft calls on Honda and presents a Microsoft business card.

A government official goes to a foreign country to negotiate a trade deal and shows credentials.

An associate at a law firm pays a visit to a client and presents his firm business card.

A recent college graduate goes to a job fair and shows a business card for a made up company.

A professor goes to a conference and shows proof that she is from a particular university.

You are vice president of acquisitions for a medium-sized food company, Good Time Foods. The company's board of directors has given you authority to negotiate acquisitions of food brands on behalf of Good Time. The board has told you in written and oral instructions that you have the power to acquire any food brand if the acquisition price is not greater than $10 million, which is the authority typically given to vice presidents in the industry. If you make a contract in the name of Good Time to buy a brand of canned soup for $40 million, will Good Time be bound on the contract?

Multiple Choice

Yes, because you had apparent authority.

No, because of a lack of only express authority.

Yes, because you had implied authority.

No, because of a lack of express, implied, or apparent authority.

No, because of a lack of only express and implied authority.

Jerry tells Tom that he wants to buy Tom's house for Sam. Jerry contracts with Tom on Sam's behalf to buy the house. What is Jerry's liability on this contract? Assume that Jerry had authority to make the contract.

Multiple Choice

Jerry is not liable because Sam is a disclosed principal.

Jerry is not liable because Sam is an undisclosed principal.

Jerry is liable because Sam is a legally non-existent principal.

Jerry is liable because Sam is a partially disclosed principal.

Jerry only can be liable if Jerry expressly agreed to be liable.

An agency relationship exists between Bill, and Trucks o' Plenty, a trucking firm that he founded five years before and of which he is currently the CEO. Bill signs contracts for Trucks o' Plenty with the name of a fictitious company, Truck Time, including one with Andrew, who knows that Bill owns a trucking firm but is unsure of its name. Given that, Bill is a(n) ___________ principal, and he is likely ________ on these contracts.

Multiple Choice

undisclosed; not liable

disclosed; liable

fully disclosed; not liable

nonexistent; liable

disclosed; not liable

You are vice president of acquisitions for a medium-sized food company, Good Time Foods. The company's board of directors has given you authority to negotiate acquisitions of food brands on behalf of Good Time. The board has told you in written and oral instructions that you have the power to acquire any food brand if the acquisition price is not greater than $10 million, which is the authority typically given to vice presidents in the industry. Will Good Time be bound on a contract for $40 million that you sign if you present the contract to the board, and the board decides to reject the contract? Why, or why not?

Multiple Choice

Yes, because of a lack of express, implied, or apparent authority.

No, because of a lack of only express and implied authority.

No, because of an invalid ratification.

No, because of a lack of ratification.

Yes, because of ratification.

Josh is the Executive Director of Feed America, a non-profit foundation fighting hunger. Recently, the Board of Directors of Feed America limited Josh's authority to make certain purchases, particularly of trucks. Despite this restriction, Josh purchases a truck from a local dealer to deliver food. It is customary for Executive Directors to have the authority to make purchases like trucks. When the Board learns of Josh's purchase, they decide to do nothing since Josh got such a good deal on the truck leading the dealer to believe that the Board consented to the purchase. Three years later, the truck breaks down, and the Board seeks to hold both Josh and the dealer liable. The Board's lawsuit will likely be _____________, due to _______________.

Multiple Choice

unsuccessful; an undisclosed principal

successful; a partial disclosed principal

successful; a disclosed principal

unsuccessful; ratification

successful; ratification

Which of the following is a common example of implied authority?

Multiple Choice

A management consultant telling a client that the firm is sending a representative to perform an audit.

A factor foreman telling a worker to speed up inspection.

An accountant being told by his boss to come in over the weekend to catch up on paperwork.

A salesman makes a warranty on a new type of tire.

A lawyer being told by a partner to negotiate a contract for a client.

Leah is a big fan of LeBron James. Leah just knows that LeBron would love to endorse a new type of basketball that her firm has been working on, so she enters into an agreement and signs for LeBron. When he hears about the agreement, LeBron is initially upset, but eventually decides that he will agree to part of the contract. This is an example of ________, which is ___________

Multiple Choice

ratification; impermissible.

implied authority; permissible.

ratification; permissible.

assumption of the risk; impermissible.

express authority; impermissible.

Which of the following is not a common example of implied authority?

Multiple Choice

A salesman makes a warranty on a new type of tire.

An entrepreneur starts a new business and hires an assistant to manage his calendar.

An assistant manager is hired to help manage a restaurant.

An assistant manager is hired to help at a busy pharmacy.

An office manger is hired to help manage an apartment complex.

Leah is a big fan of LeBron James. Leah just knows that LeBron would love to endorse a new line of baksetballs that her firm has been working on, so she enters into an agreement and signs for LeBron. When he hears about the agreement, LeBron is initially upset, but eventually decides that he loves the deal. This is an example of"

Multiple Choice

Ratification.

Express authority.

Apparent authority.

Implied authority.

Assumption of the risk.