Question 1

Able tells his agent Baker to bid "up to $1,000, but no more," on an item at an auction. Prior to the auction, Able tells the auctioneer that "Baker speaks for me with full authority." At the auction, Baker bids $1,200 in order to get the item. Able tries to back out of the deal, telling the auctioneer that Baker had specific instructions to limit his bid to $1,000.

Able will be unsuccessful because:

Group of answer choices

Baker had implied authority to bid $1,200.

Able is not liable to pay anything.

Baker had express authority to bid $1,200.

Baker had apparent authority to bid $1,200.

Question 2

Agency relationships arise when one party unilaterally determines to act on behalf of another party.

Group of answer choices

True

False

Question 3

Cyrus Coe (Psycho) is a deranged fan of Miley Cyrus. Psycho goes to a local landscaping company. He pretends to be Miley's personal assistant and asks the company to cut Miley's grass and trim her hedges. Miley arrives home just after the landscapers finish. She says thank you and leaves. The landscaping company sues Miley for refusing to pay. She correctly points out that Psycho had no authority to act on her behalf.

Who is more likely to win the lawsuit?

Group of answer choices

The landscaping company, because they were entitled to rely on Psycho's apparent authority.

Miley, because Psycho was only an independent contractor.

Miley, because Psycho lacked any type of agency authority.

The landscaping company, because Miley's actions after arriving at home can reasonably be determined to constitute a ratification.

Question 4

Darcy Enterprises (Darcy) decided to expand its operations in the city of Newport. To acquire the properties needed for expansion, Darcy retained the Niles real estate firm. Frasier is another real estate firm in Newport. Hearing a rumor that Darcy was interested in Newport real estate, Frasier began contracting to buy properties. Although Darcy never contracted Frasier, Frasier believed (correctly) that Darcy would want the properties it was purchasing. While negotiating with several sellers, Frasier claimed it was acting on behalf of Darcy.

Is Darcy liable for the contracts that Frasier has entered into?

Group of answer choices

If Darcy now indicates to Frasier that it wants land that Frasier has contracted to buy on the terms that Frasier negotiated, Darcy may be liable on Frasier's contracts by ratification.

Darcy is liable to sellers who dealt with Frasier because Frasier created its own apparent authority.

Darcy is liable on Frasier's contracts because Frasier was acting on behalf of Darcy.

No answers are correct.

Question 5

Jones is considering a business venture with Smith but Jones is suspicious of Smith's other business dealings. Jones hires Davis to follow Smith and gather information. While trailing Smith on foot, Davis becomes worried that he is too far behind Smith and may lose him. He quickens his pace and shoves aside an elderly woman who is in his way. The woman falls into the street and is severely injured.

What is most likely to be the determining factor in a jury's decision whether to award the woman damages against Jones?

Group of answer choices

Whether or not an agency relationship existed between Jones and Davis.

Whether Davis' conduct occurred substantially within his authorized time and space limits.

Whether Davis's conduct was at least partially initiated by a purpose to do the work requested by Jones.

Whether Davis' shoving the woman in order to keep Smith in sight was something that could reasonably be expected by Jones.

Question 6

Parker begins working for Main Street Properties, a real estate development company, and signs a letter of employment in which he consents to "devote my full work time and efforts to the business and affairs of Main Street." He is told that the company expects him to work Monday-Friday from 9 a.m. to 5 p.m. and every other Saturday from 9 a.m. to noon.

Which of the following best describes Parker's fiduciary responsibilities to Main Street?

Group of answer choices

Parker is free to engage in similar business activities while not in his office at Main Street so long as those activities are not directly competitive with Main Street.

Because he is not an owner and does not share in company profits, Parker has no fiduciary obligation to Main Street other than to exercise his duties in a careful and professional manner.

Parker owes a duty of loyalty to Main Street notwithstanding his status as an employee who does not share in company profits.

Once he leaves his employment with Main Street, his fiduciary obligations to that company end regardless of his subsequent use of information learned while employed there.

Question 7

Paul owns an apartment building and has hired Ann to manage it. Paul tells Ann to hire a company to cut the grass. Ann does it.

Is Paul bound by the contract?

Group of answer choices

No, if Paul's instructions to Ann are not in writing.

No, because the law of agency does not apply to employee-employer.

Yes, because Ann's authority is implied unless the contract is of an unusual nature.

Yes, because Ann has actual express authority.

Question 8

Paul owns an apartment building and has hired Ann to manage it. Suppose Paul specifically instructs Ann not to hire a pest control company but Paul brags to a friend who owns a pest control company that "Ann is the best manager I've ever hired. What she says, goes. I trust her completely."

If Ann later hires that company and Paul refuses to honor the contract, will Paul win if he is sued?

Group of answer choices

No, because Ann had apparent authority.

Yes, because Ann had no implied authority.

No, because Ann had implied authority.

Yes, because express authority was never granted.

Question 9

Paul owns an apartment building and has hired Ann to manage it. Without express instructions, Ann hires a janitor to clean the building.

Is Paul bound by the contract with the janitor?

Group of answer choices

Yes, because Ann has implied authority.

No, because Ann is acting without express authority.

Yes, because Ann has actual express authority.

No, because Ann is acting without apparent authority.

Question 10

Principals can be liable to third parties for the torts of their agent if the agent is an employee.

Group of answer choices

True

False