Chapter 32 - Agency Formation & Duties

Midterm Flashcard based on homework problems, Question in order from Chapters 32,33,34,35,48,49

A principal owes his or her agent a duty to act in good faith

true

Delicious Coffee Company hires Elton to sell Delicious's products in a certain area. Delicious agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delicious's employee is

the control Delicious has over the details of the work

Fact Pattern 32-1A
Janet and Julie work at ABC Interiors. Janet is a designer who works with clients of ABC on interior design projects. ABC closely supervises all of its designers, and dictates their work schedules. Julie works part-time in the evenings cleaning the offices.
Refer to Fact Pattern 32-1A. Janet is ABC’s

employee and agent

Louis, a certified public accountant and investor, and Maria, an insurance salesperson and a realtor, may create an agency relationship for

a legal purpose only

An agent's deviation from the lawful, clearly stated instructions of the principal is a violation of the duty of obedience.

true

A person must have contractual capacity to be an agent.

false ( even a minor can be an agent in most states)

Agency relationships normally are consensual.

true

Independent contractors have no control over the details of their work performance.

false

An agent is authorized to act on behalf of a principal in doing business with third parties.

true

Calvin is a minor. In most states, Calvin may be

an agent, but not a principle

Diego is a truck driver for Entertainment Supplies Company (ESC). Diego does exactly what ESC tells him. Diego is

an employee

Home Development Company employs llya to buy property for a future residential development. Ilya secretly buys some of the property and sells it to Home Development at a profit. Ilya has breached

the duty of loyalty

Miracle Motors employs Norris as a sales agent for a trial period. At the end of the period, Miracle Motors and Norris disagree on the amount of the commissions Norris is due for sales that he made. Norris may demand

an accounting

An agreement to form an agency relationship can be oral.

true

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

true

Fact Pattern 32-1A
Janet and Julie work at ABC Interiors. Janet is a designer who works with clients of ABC on interior design projects. ABC closely supervises all of its designers, and dictates their work schedules. Julie works part-time in the evenings cleaning the offices.

Refer to Fact Pattern 32-1A. Julie is ABC's

employee or independent contractor, depending on whether ABC controls the details of her physical performance

Employment laws do not apply to independent contractors.

true

Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of

safe working conditions

Glen is an agent for Hi-Flite, Inc. On Hi-Flite's behalf and at its request, Glen pays Ian for certain plane maintenance and repair services. Glen's right to obtain the amount of those payments from Hi-Flite arises under the principal's duty of

reimbursement

An employee may not act in the capacity of an agent.

false

Normally, all employees who deal with third parties are deemed to be agents.

true

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely

an agent

Clearview 3D HD TV Company grants its agent Blossom an exclusive territory in which to sell Clearview products. Clearview cannot compete with Blossom in that territory under the principal's duty of

cooperation

A person cannot be both an independent contractor and an agent.

false

Sela agrees to act on Thom's behalf, subject to Thom's control, and Thom trusts Sela to so act. They set out the terms in a written document, which they both sign. This is

an agency by agreement (can be either express or oral)

Agency relationships exist only within employment relationships.

false