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Law Revision 06

Question 1: Which of the following is true of how agency relationships are created?

  • Solution 1: They can be created by contract or by agreement.
    Question 2: Which of the following is true of how agency relationships are created?
  • Solution 2: Agency relationships can be express or implied.
    Which of the following is true of how agency relationships are created?
  • They can be created orally.
    Max and Maura, a retired couple, decide to travel around the world for a year.
    They need someone to manage their financial affairs while they’re gone, so they
    sign a written document authorizing their daughter to act on their behalf in any
    financial matters.
    Which type of agent relationship does this represent?
  • Power of attorney agency
    Phinneas asks a travel agent to reserve a flight and hotel for his upcoming
    vacation to Mexico.
    Which type of agent relationship does this represent?
  • Special agent
    Jonathan is a real estate agent. A builder tasks him with finding a suitable piece of
    land for a new condo development. Once the condos are complete, John has the
    exclusive right to list them.
    Which type of agent relationship does this represent?
  • Special agent coupled with an interest
    Which of the following is true of a principal’s duty to an agent?
  • A principal’s duty includes submitting payments to an agent.
    Which of the following is true of an agent’s duty to a principal?
  • An agent has a fiduciary duty to a principal.
    Which of the following is true of an agent’s duty to a principal?
  • An agent owes a duty to perform with allegiance to a principal’s interests.
    Which of the following most clearly represents a lawful termination of
  • A lifeguard quits her job in the middle of the summer even though the pool
    will not be able to find a replacement for her on such short notice.
    Which of the following most clearly represents an illegal termination of
  • A hospital CEO fires an administrator who recently filed for bankruptcy,
    because she’s concerned that other employees will lose confidence in him.
    Which of the following most clearly represents a lawful termination of
  • A restaurant manager lays off a waitress because he no longer needs as
    many staff members. The manager doesn’t ask the waitress if she has another
    source of income before letting her go.
    Samantha signs a contract with a lawyer to help her with her divorce. The lawyer
    uses a courier on a regular basis to deliver court documents. The courier sends
    Samantha a bill for the services ordered by the lawyer after checking the terms of
    the contract.
    Is Samantha liable for the courier’s bill?
  • Yes, due to implied authority.
    In April, Ursula quits her job as the manager of a local branch of a restaurant
    chain. In May, she orders five cases of wine from the restaurant’s usual liquor
    supplier. The liquor supplier charges the restaurant, since the restaurant has not
    notified it of Ursula’s departure.
    Is the restaurant liable for the charges?
  • Yes, due to apparent authority.
    Greg finds a checkbook on the street that belongs to a local business. He writes a
    check to himself, signs it, and cashes it at a bank across town. The owner of the
    local business sues the bank to recover the money.
    Is the business owner liable for the money paid to Greg?
  • No, the business owner is not liable.
    Pacey, an insurance agent, is told by his employer at his annual review meeting
    that he needs to “boost his sales of insurance policies in the next quarter by 50%.”
    To meet this goal, Pacey decides to blackmail several people that he knows. He
    threatens to expose their secrets unless they purchase an insurance policy from
    him. Someone reports Pacey to the police and he’s arrested and charged with
    Is Pacey’s employer liable for his criminal act?
  • No, the employer is not liable because it did not authorize a criminal act
    Hillary is a real estate agent working with a buyer to find a new home in town. She
    is authorized to assist the buyer in identifying a suitable home to purchase and
    negotiating a contract. Hillary finds a house that the buyer loves, so she quickly
    decides to sign a purchase and sale contract to prevent anyone else from doing so
    Is Hillary personally liable for the contract when the buyer refuses to pay the
    price agreed upon by Hillary and the seller?
  • Yes, because Hillary exceeded her authority as an agent when she signed
    the contract.

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