Business Law, 8e: Chapter 30

Chapter 30
Agency: Liability for Contracts:

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1. A vice president of operations would have implied authority to enter into contracts for materials on behalf of the company he or she worked for.: a. True
b. False

2. A principal will be liable for all contracts entered into by his or her agents.: a. True
b. False

3. In Makins v. District of Columbia, the court grappled with the issue of the agent's apparent authority.: a. True
b. False

4. As a general rule, the third party can successfully sue the agent of a disclosed principal for damages upon breach of the contract by the principal.: a. True
b. False

5. An agent for an undisclosed principal can be held liable for damages if the principal breaches the contract with the third person.: a. True
b. False

6. The Statute of Frauds may require some agency agreements to be in writing.: a. True
b. False

7. An agent cannot reveal the trade secrets or confidential materials of her principal.: a. True
b. False

8. Incidental authority is authority that the agent causes the third person to believe the agent possesses.: a. True
b. False

9. An agent who enters into a contract with a third person on behalf of an undisclosed principal is personally liable to the third person if the principal does not perform the contract.: a. True
b. False

10. In the course of her job at Exclon, Marta entered into a contract on Exclon's behalf. Marta signed the contract as follows, "Exclon, Inc., by Marta Hess, purchasing agent." Marta can be held personally liable on the contract.: a. True
b. False

11. When Ken comes home from work one day, his neighbor Nick is waiting for him. "Your lawn is a mess," says Nick, "and you really should do something about it." Ken says, "I'm going on vacation tomorrow. Can you get someone to do a nice job on the lawn for me?" Nick says, "Sure." Nick hires Carlos, a professional landscaper, to fix up Ken's lawn and yard. When Ken returns, Carlos presents him with a bill. Ken says that he never authorized Nick to promise that Ken would pay this amount. Is Ken obligated to pay Carlos?: a. Yes, because of Nick's express authority.
b. Yes, because of Nick's incidental authority.
c. Yes, because of Nick's ratification authority.
d. Yes, because of Nick's estoppel authority.

12. Apparent authority is:: a. an express grant of authority.
b. ratification of the agent's act by the principal.
c. conduct by the principal that gives the third party the impression that the agent had the authority.
d. conduct by the agent that gives the third party the impression that the agent had the authority.

13. In the course of her job at Exclon, Yoko entered into a contract on Exclon's behalf. Yoko signed the contract as follows, "Yoko Miagi." In this situation,: a. Yoko is not liable on the contract because she acted with authority.
b. Yoko is not liable on the contract because she was acting on behalf of Exclon.
c. Yoko is not liable provided she is a servant of Exclon.
d. Yoko can be held personally liable on the contract.

14. On behalf of Yahoo!, Myron entered into a contract with Earthlink. Earthlink was not aware that Myron was acting on Yahoo!'s behalf. If the contract is breached, Earthlink could potentially sue:: a. Myron only.
b. Yahoo! only.
c. Both Yahoo! and Myron.
d. Neither Yahoo! nor Myron.

15. Raul appointed Rick as his agent to purchase property for a shopping center on his behalf. Raul told Rick to disclose that he was an agent, but not to disclose who the principal was. This relationship would be:: a. partially disclosed.
b. disclosed.
c. undisclosed.
d. quasi-disclosed.