288
MULTIPLE-CHOICE ANSWERS
l. d - - 7. c - - 13.
2. c - - 8. d - - 14.
3. c - - 9. c - - 15.
4. c - - 10. c - - 16.
5. d - - 11. b - - 17.
6. d - - 12. c - - 18.
MULTIPLE-CHOICE ANSWER EXPLANATIONS
A. Characteristics
1. (d) A power of attorney is written authority con-
ferred to an agent. It is conferred in a formal writing. A
power of attorney can be general or it can grant the agent
only restricted authority. Answer (a) is incorrect because the
power of attorney must be signed only by, the person grant-
ing such authority. Answer (b) is incorrect because the
power of attorney does not have to be for a definite, speci-
fied time period. Answer (c) is incorrect because the death
of the principal constitutes the termination of an agency
relationship by operation of law.
2. (c) The relationship between a principal and agent is
based upon the consent of both parties, also involving a
meeting of the minds. Answer (d) is incorrect because
specified consideration is not needed to create an agency
relationship; the relationship between theprincipal and the
agent need not be contractual. Answer (a) is incorrect be-
cause although the principal and agent relationship may be
written, a written agreement is not required. Answer (b) is
incorrect because power of attorney is not needed to create
an agency relationship.
3. (c) An employee is generally subject to control as to
the methods used to complete the work. An independent
contractor is typically paid for the completion of the project
rather than on an hourly, weekly, or monthly basis. Answer
(a) is incorrect because supervision by Sew Corp. personnel
shows an employment relationship. Answer (1;» is incorrect
because independent contractors typically provide their own
tools. Answer (d) is incorrect because the work of both
employees and independent contractors can require a high
degree of skill. . ties if the agent acts outside the grant of actual authority.
A.2. Employee (Servant)
4. ( c) Since Harris was acting within the scope of his
employment when he negligently injured Wolfe, both Harris
and his employer are liable. Wolfe can recover from either
one or both. Answer (a) is incorrect because both are liable
since Harris was acting within the scope of the employment.
The ownership of the vehicle does not change this. An-
swer (b) is incorrect because Harris is liable for his own tort
even though the employer can also be held liable. An-
swer (d) is incorrect because Wolfe may recover the full
damages from either or may recover a portion of the dam-
ages from both.
S. (d) Because the repairs Sherwin did were within the
scope of the employment, the 'employer is also liable. This
is true-even if the employer was diligent in creating excellent
rules that were not followed by an employee. Answer (a) is
incorrect because the repairs were within the scope of the
employment. Answer (b) is incorrect because the customer
can sue for negligence and hold both parties liable. An-
MODULE 29 AGENCY
d - - 19. c - - 25. c - -
b - - 20. b - -
a - - 2l. c - -
b - - 22. c - -
c - - 23. c - - 1st: _125 := - %
a - - 24. c - - 2nd: _125 := - %
swer (c) is incorrect because the customer may recover from
both under tort law.
6. (d) In general, the employer is not responsible for
the crimes of the employee unless the employer aided or
, permitted the illegal activity, even if the activity was within
the scope of the employment. Answer (a) is incorrect be-
, cause if the employer did nothing to instruct the employee
about the use of the weapon, this could help establish negli-
gence on the part of the employer and would not prevent the
use of the doctrine ofrespondeat superior, which makes
employers liable for the tortious acts of their employees
within the scope of the employment. Answer (b) is incorrect
because the employer is liable for torts of the employee
committed within the course and scope of the employment
even if the employee was violating the employer's instruc-
tions. Answer (c) is incorrect because even if the em-
ployee's suspicions were correct, the shooting <'1f an innocent
passerby should establish at least negligence for which the
employer and the employee are liable. )
A.S. Types of Principals
7. (c) A principal, whether disclosed, partially dis-
closed, or undisclosed is liable on contracts where the agent
has actual or apparent authority, or where the principal rati-
fies an agent's contract. Actual authority includes express or
implied authority projected by the principal to the agent.
Apparent authority of an agent is authority perceived by a
third party based on the principal's representations. There-
fore, apparent authority can exist only where there is a dis-
closed or a partially disclosed principal. It follows, then,
that an undisclosed principal will not be liable to third par-
B. Methods of Creation
8. (d) An agent must merely have sufficient mental
and physical ability 'to carry out instructions of hislher prin-
cipal. An agent can bind the principal even if the agent is a
minor. If the memorabilia collection was destroyed before
Trent found a purchaser, Post would not be liable to Trent.
Upon the loss or destruction of the subject matter on which
the agency relationship is based, the agency relationship is
terminated.
9. (c) The fiduciary duty is an important duty owed by
agents to their principals. Gage as Blue's agent was autho-
rized by Blue to appoint subagents to assist in the sales
transactions. Since Gage did appoint Vond as a subagent,
legally Bond is an agent both of Blue and Gage. Therefore,
Vond owes a fiduciary duty to both Blue and Gage making
(a), (b), and (d) all incorrect.
10. (c) Resulting authority is not one of the types of
authority that an agent might have. Answer (a) is not chosen
because actual express authority is a common type of au-