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Chapter 19 Examination

 

True/False

Indicate whether the sentence or statement is true or false.

 

____       1.                Employees who deal with third parties are agents of their employers.

 

____       2.                Agency relationships do not exist outside employment relationships.

 

____       3.                There must be a written agreement between two parties to create an agency relationship.

 

____       4.                All agency relationships are based on contract.

 

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

 

____       5.                Nora is an executive for Omega Corporation. When acting for Omega in an ordinary business situation, Nora is

a.

an agent only.

b.

a principal only.

c.

an agent and a principal.

d.

none of the above.

 

 

____       6.                Helen retains Jack to act as her authorized business agent. Helen does not know that Jack is a minor. Jack enters into a contract on Helen’s behalf. The contract is

a.

binding on Helen.

b.

binding on Jack.

c.

void.

d.

voidable.

 

 

____       7.                Donna employs Executive Representatives, Inc., as an agent. They sign an agreement that describes the rights and duties of both parties. This is

a.

apparent authority.

b.

equal authority.

c.

express authority.

d.

implied authority.

 

 

____       8.                Lynn may hire employees to work in the computer store she manages despite the fact that her employment agreement with the owner says nothing about her being able to hire employees. This is

a.

apparent authority.

b.

equal authority.

c.

express authority.

d.

implied authority.

 

 

____       9.                Phil is an agent for Quality Products Corporation. Whether it is reasonable for Reserve Supply Company to believe that Phil has the authority to enter a particular contract on Quality’s behalf, when Phil does not actually have that authority, is a question of

a.

apparent authority.

b.

general authority.

c.

power of authority.

d.

special authority.

 

 

____       10.                A-One Auto Sales, Inc., employs Best Collection Company as a collection agent. While repossessing goods from Carl, one of A-One’s customers, Best causes an accident in which Carl is injured. Carl can recover from

a.

A-One only.

b.

Best only.

c.

A-One or Best.

d.

none of the above.

 


Chapter 19 Examination

Answer Section

 

TRUE/FALSE

 

              1.              ANS:              T              REF:              447              OBJ:              TYPE: =

 

              2.              ANS:              F              REF:              447              OBJ:              TYPE: =

 

              3.              ANS:              F              REF:              449              OBJ:              TYPE: +

 

              4.              ANS:              F              REF:              451              OBJ:              TYPE: =

 

MULTIPLE CHOICE

 

              5.              ANS:              A              REF:              446              OBJ:              TYPE: =

 

              6.              ANS:              A              REF:              449              OBJ:              TYPE: =

 

              7.              ANS:              C              REF:              457              OBJ:              TYPE: +

 

              8.              ANS:              D              REF:              457              OBJ:              TYPE: =

 

              9.              ANS:              A              REF:              457              OBJ:              TYPE: =

 

              10.              ANS:              C              REF:              463              OBJ:              TYPE: +