Chapter 29

TRUE/FALSE.  Write 'T' if the statement is true and 'F' if the statement is false.

1)  An agency relationship is created by the mutual consent of a principal and an agent.

2)  A corporation must conduct all of its business affairs through agents.

3)  Agency is a fiduciary relationship.

4)  In order to be an agent, someone working for another must be an employee rather than an independent contractor.

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.

5)  Which is true about agency agreements?

A) Agents must disclose their agency status to those with whom they are dealing.

B) An agency agreement must have consideration on both the principal's and agent's side.

C) A minor may generally be a principal.

D) A minor may generally be an agent.

6)  The primary function of an agent in a principal-agent relationship is to:

A) enter into contracts with the principal.

B) conduct business on behalf of the principal.

C) maintain the principal's status quo.

D) operate as a partner with the principal.

E) protect the principal from legal liability.

7)  Someone authorized to act on behalf of another is generally known as a(n):

A) independent contractor. B)  employee.

C) agent. D)  surety.

8)  Compared to an employee, an independent contractor is characterized by:

A) less ability to hire others to assist her.

B) not being paid as much for the work performed.

C) a lack of liability for her own actions.

D) more freedom to do her work in the manner she determines.

9)  An express agency requires:

A) no agreement if the conduct indicates an implied agreement.

B) an ongoing arrangement for a reasonable period of time.

C) an oral or written agreement between the principal and agent.

D) a written agreement between the principal and agent.

10)  Apparent authority can be best described as a situation where:

A) the agent has made representations to a third party that he is acting as an agent for another.

B) the conduct of two parties indicates that they are acting in a principal and agent capacity.

C) the principal has made representations to a third party that someone is to act as her agent.

D) the principal and agent undertake actions in accordance with their earlier agreement that one act as agent for the other.

E) both B and C

TRUE/FALSE.  Write 'T' if the statement is true and 'F' if the statement is false.

1)  TRUE

2)  TRUE

3)  TRUE

4)  FALSE

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.

5)  D

6)  B

7)  C

8)  D

9)  C

10)  C