The Role of Agency in Business Law Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Harry hires Carol to be his financial broker. He asks Carol to invest $10,000 in a particular stock. Later he finds that Carol invested his money in a different stock. Carol has likely breached the duty of:

Question 2 2. Which of the following is NOT a requirement for a principal to be held liable using respondeat superior?

Question 3 3. Let's say Penny owns Penny's Pretty Papers, a stationery store. Penny hires Albert to manage the store. Penny specifically tells Albert that it's his job to negotiate and make purchases with the store's paper suppliers. Albert is Penny's agent, and therefore has to make contracts on behalf of Penny, the principal.

Question 4 4. Paul hires Andy to be his sports agent. Paul hires Andy specifically to negotiate his NFL contract for the upcoming football season. Shortly afterward, Paul breaks his leg and can't play football for several months. What is the state of this agency relationship?

Question 5 5.

Let's say the agency agreement expressly states that P. will give A. access to an office for the completion of agency duties. This agreement implies that the office will be conducive to conducting business. P. only provides A. with a small shed near a loud construction zone, preventing A. from making productive phone calls on behalf of P.

P. has not _ and has not cooperated with A.

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Question 6 6. Maggie hires Monty to be her real estate agent. Monty goes to several open houses and makes a bid on one house. Monty tells the homeowner that he's a real estate agent and that he's working on Maggie's behalf. What is this an example of?

Question 7 7. Which of the following is NOT a reason for a principal to be held directly liable for an agent's acts?

Question 8 8.

Under the doctrine of respondeat superior, in general, the principal can only be held liable for the agent's acts if which of these factors are met:

1. The agent was employed to perform that particular type of act

2. The agent's act occurred at an authorized place and during an authorized time of employment

3. The agent's act was inspired by an intent to assist the principal

4. The agent's method could have been anticipated by the principal

Question 9 9. Paul hires Andy to be his sports agent. Paul hires Andy specifically to negotiate his NFL contract for the upcoming football season. Andy tries, but there aren't any NFL teams currently interested in Andy and recruiting season is now over. What is the state of this agency relationship?

Question 10 10. Generally speaking, this means the agent must act with the principal's best interests in mind.

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Question 11 11. Parker hires Lenny to be a limousine driver for his company. While working one night, Lenny starts a fight with a passenger. Lenny pulls out a knife and threatens to stab the passenger. What is the likely legal result?

Question 12 12. Bart hires Bernie to be his talent agent. Bart tells Bernie to find work for him as an actor and provides Bernie with a full portfolio including his head shots and resume. Bart sends Bernie to meet with potential employers, but tells Bernie not to sign anything until Bart has a chance to review the offer. Bernie proceeds to negotiate and sign an acting contract on Bart's behalf. What is this an example of?

Question 13 13. Bart hires Bernie to be his talent agent. Bart tells Bernie to find work for him as an actor. Bernie then negotiates and makes an acting contract on Bart's behalf. What is this an example of?

Question 14 14. Pat hires Bob to be a bouncer at his nightclub. A patron starts a fight one night while Bob is working, and Bob tosses the patron out the door. Unfortunately, the patron landed on his head and died. What is the likely legal result?

Question 15 15. Most contracts that are made under an agency relationship use which of the following?

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Question 16 16. Bart hires Bernie to be his talent agent. Bart tells Bernie to find work for him as an actor. Bernie then negotiates and makes a contract for Bart to work as a bartender at a local restaurant. What is this an example of?

Question 17 17. Bob hires Charlene to be his financial broker. He asks her to invest $10,000 in a particular stock. Bob finds out that the stock isn't doing well, and that the company is about to declare bankruptcy. Charlene instead invests Bob's money in another, similar company. Bob is later surprised when he receives a stockholder letter from that company. Charlene has likely breached the duty of:

Question 18 18. Sally is a contractor and hires Steve to paint a client's house on her behalf. Sally tells Steve to buy 3 gallons of White House White paint for the house and gives Steve that money. However, it's not enough paint. Steve has to buy one more gallon in order to complete Sally's request. When Steve seeks reimbursement from Sally, she refuses. Sally has likely breached the duty of:

Question 19 19. This means the agent must respect the principal and act with deference to the principal's well-being.

Question 20 20.

Let's say that Rusty stopped by my store to give a sales pitch for his rawhide bones. I didn't have time to listen to him, so I had Wilma take care of it. Wilma's not authorized to place orders for my store, but Rusty doesn't know this, and I didn't tell him.

Wilma has apparent authority, and I'll be '' from denying the legality of any deal she makes with Rusty.

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Question 21 21. An agent can completely escape personal liability for a contract made with the authorization of the principal, as long as the principal:

Question 22 22. Karen hires Zack to be her financial broker. She gives him $10,000 to invest for her. Zack invests all of Karen's money in a risky startup company run by his best friend. Karen loses all of her investment. Zack has likely breached the duty of:

Question 23 23. Sally is a contractor and hires Steve to demolish a kitchen on her behalf so she can start building a new one. Steve gives Sally an estimate for his work. Sally agrees with the estimate and tells Steve she'll pay him when he finishes the demolition. Steve completes his work, and presents Sally with his bill. Sally then tells Steve she can't pay him until the end of the project, when the homeowners pay her. Sally has likely breached the duty of:

Question 24 24. Leigh and Jennifer are friends. Leigh is looking for a new house, and Jennifer happens to work in real estate. Leigh can't make it to a showing for a house she's interested in and asks Jennifer to go look at the house for her. Leigh never hired Jennifer, but she tells the owners that Jennifer is coming on her behalf. Jennifer sees the house and knows Leigh will love it, so she makes an offer for Leigh. What is this an example of?

Question 25 25. Leigh hires Jennifer to be her real estate representative. Jennifer will help Leigh find a house to buy and has the authority to place bids for Leigh after Leigh decides to make an offer. Leigh and Jennifer have a written contract. What is this an example of?

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Question 26 26.

Let's say Patricia hires Angelo as her real estate agent. Angelo is supposed to sell Patricia's house for her. Patricia tells Angelo to sell it for $100,000. But Angelo, instead, offers Patricia's house for $50,000 without Patricia's consent.

Which answer is correct?

Question 27 27. let's say P. tells A. to pay C. $50. This payment is expressly authorized by P., and P. must reimburse A. Now let's say P. hires A. to handle a business event, and A. finds it necessary to purchase certain supplies for the event. Even though P. didn't expressly authorize a particular purchase, A. made the purchase in the fulfillment of his agency duties. Therefore, P. must still reimburse A due to:

Question 28 28.

Let's say Patricia is also a well-known real estate investor. She builds large shopping malls, which sometimes isn't popular with residential neighbors and smaller businesses. She sends her employee, Angelo, to negotiate the purchase of several homes that have recently been rezoned, so she can acquire a large tract of land for her next mall. Patricia suspects that the neighbors won't sell to her, so she instructs Angelo not to identify her. Angelo discloses the fact that he's an agent for a real estate developer but doesn't say who it is.

Patricia is, therefore, a:

Question 29 29. Maggie hires Monty to be her real estate agent. Monty goes to several open houses and makes a bid on one house. Monty never tells the homeowner that he is a real estate agent and that he is making the bid on Maggie's behalf. What is this an example of?

Question 30 30.

Let's say that I always do the inventory buying for Barks and Bubbles. However, I'm out of the country when our supply of rawhide bones runs out. I left Wilma in charge of the store but never told her to purchase inventory. Wilma places an order for more bones through Rusty's Rawhide even though I didn't specifically tell her to do so.

This is an example of a(n):

The Role of Agency in Business Law Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

CLEP Introductory Business Law: Study Guide & Test Prep  /  Business Courses
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